Operational Risk – No quick fixes for Apple’s Foxconn problem

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Operational Risk


No quick fixes for Apple’s Foxconn problem

SUMMARY: Apple can’t appease critics of the working conditions at Foxconn where it manufactures its iProducts, even with a formal statement from CEO Tim Cook, its own internal inspections and now an independent audit by the Fair Labor Association. Apple’s latest effort sounds promising. The company has enlisted an organization founded by anti-sweat shop groups hoping to improve overseas abuses. Still, to some, it looks like more of a PR play than appropriate action.

ANALYSIS By Oz Hill, Firestorm Principal

Although the Fair Labor Association’s President, Auret van Heerden’s, initial assessment of the Foxconn facilities is favorable, “the facilities are first-class; the physical conditions are way, way above average of the norm;” van Heerden also suggests that monotony and boredom associated with repetitive assembly tasks may be among the most significant threats to workers’ all-around health at the Foxconn facilities.

The initial assessment clearly indicates a requirement for detailed inspection, proactive and participative planning, and monitoring.

Multi-national corporations and global brands, such as Apple, must understand how supply chain globalization and working conditions at their suppliers’ manufacturing and production factories shape marketplace perceptions about their products and effect sales. Most importantly, global brands must understand the role they can play in influencing the working conditions at suppliers’ facilities in developing countries.

An approach that appears to be most effective in improving working conditions at factories and facilities of suppliers in developing countries is to provide technical assistance and encourage management to empower employees, including them in planning, production design/development, and monitoring processes that address employee working conditions. Best practices research indicates this methodology is more effective than monitoring codes of conduct, which is a commonly accepted way that global brands and labor rights organizations address poor working conditions.

The following considerations should be addressed in developing a viable, effective, and solutions-oriented approach to improve working conditions.

  • Identify and define the nature of problems confronting workers.
  • Develop/use a checklist both for detecting problems and to get practical ideas to standardize the approach and ensure methodology consistency.
  • Focus on achievement and avoid criticism in the planning process to build consensus and support for initiatives.
  • Empower and encourage managers, supervisors and workers to take appropriate action using their knowledge of local conditions and workable solutions.
  • Develop practical solutions to improve working conditions that are both functionally and financially achievable.
  • Develop solutions which increase both productivity and a quality working environment.
  • Develop improvements that are consistent with existing management goals.
  • Use culturally sensitive examples of best practices as they are available, as opposed to using examples from other countries and work environments that are not likely to be understood by managers, supervisors and employees due to different cultural, economic, and regulatory conditions.
  • Identify good examples of improvements and encourage the expansion of the idea to other areas of the workplace where similar improvements could be applied.
  • Make incremental improvements to validate how well an improvement idea will work prior to full-scale implementation.

Finally, just as Apple has done with the engagement of the Fair Labor Association to address challenges at Foxconn, organizations should consider using supply chain and labor subject matter experts external to their corporate staff/enterprise, such as Firestorm.

This practice would ensure objectivity, rigor in auditing and monitoring, and the development of solutions which incorporate best practices and standards from all relevant supply chain management competencies without burdening internal corporate staff resources.

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