APICS is the premier professional association for supply chain management.

Western Brands Auditing Asian Factories

by APICS staff |   2014 | 14 | 2
After several high-profile factory accidents and protests at factories in Asia, companies are performing more audits and making greater investments in supply chain monitoring, the Wall Street Journal reports. Meanwhile, many brands also may be rethinking their focus on low-price production.

Asian factory audits increased 61 percent in 2013, according to data from AsiaInspection, a Hong Kong-based audit and product-testing firm. The company’s research also indicates that audits in Bangladesh, China, and India rose about 50 percent on average. However, despite the increase in audits, Sebastian Breteau, CEO of AsiaInspection, says only about 20–25 percent of clients run them. “It costs money … and it doesn’t generate direct revenue,” he says.

Brands such as H&M recently unveiled plans to raise wages in their Asian factories. And retailers including Walmart and Target are reported to be pushing less for lower costs. “With the tragedies in Bangladesh, the apparel industry placed a stronger focus on workers’ safety, vendor compliance, quality control and sustainability among industry players,” reads a report from Li & Fung, a buying agent for many large Western brands.

The news media has been full of reports of deadly accidents at Asian factories in the last few years. Notably, in Bangladesh, a fire killed about 100 people in late 2012, and a building collapse last spring killed more than 1,100 people. Additionally, last week, a fire at a Chinese shoe factory resulted in the deaths of 16 workers.

United Kingdom Faces Manufacturing Skills Shortage

Although unemployment remains relatively high, particularly among young people, a significant shortage of skilled manufacturing workers exists in the United Kingdom, the New York Times reports. In response, the government and manufacturers are trying to find ways to get young people into apprenticeships to close the gap.

The apprenticeship programs, however, are relatively untested and face challenges, especially compared to those of Germany and Switzerland, which have roots in the ancient guild system. And even Germany and Switzerland do not have enough workers with the skills necessary to meet the demand for innovation-based jobs. About one-third of European employers say a lack of skills is costing businesses, according to a survey from consulting firm McKinsey. And about 27 percent of respondents have left an entry-level position unfilled because of a shortage of qualified applicants.

Another survey, by British trade group EEF, says four out of five manufacturers have trouble recruiting workers, and applicants often lack even basic technical skills. “We’re 10 years too late in being proactive in getting apprenticeships,” says Jim Mcilrath, a welding engineering manager and training leader at Alstom. “We need skilled workers just to keep the lights on in this country.”

Ford Unveils Lighter, More Agile Aluminum Pickup

Ford’s pickup trucks have been built from steel for about 66 years. But now, the company has unveiled an F-150 model pickup truck made almost entirely out of aluminum, the Associated Press reports. Shaving as much as 700 pounds from the 5,000-pound vehicle, the aluminum truck is Ford’s response to demand by small-business owners for a vehicle with more fuel efficiency and better agility. The truck also has an unconventional design compared to regular Ford pickups.

Comprised of 97 percent aluminum, the body represents the largest use of aluminum in any truck. Dealers who have seen the vehicle expect to encounter some buyer skepticism about the changes. Recent Ford releases have experienced quality issues, such as the 2013 Escape, which received seven product recalls since its launch.

While aluminum is more expensive than steel, Ford representatives say the truck will stay within the current price range for vehicles. Ford also expects to make up the aluminum premium by reducing recycling costs and slimming down the engine and other components. “You’re either moving ahead and improving and making it more valuable and more useful to the customer or you’re not,” says Ford CEO Alan Mulally. “I think [we have] absolutely a laser focus on what the customer wants and values.”

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