Friday Rant: Giving Apple a Sustainability Break

I spent some time this week going through Apple's 2011 Supplier Responsibility Progress Report in detail. The report itself is certainly more of a Cliff Notes version of specific findings and violations that could probably take up gigabytes of records within Apple's supply chain group (including facility surveys, photographs, videos, etc.). But in general, it's a marvelous piece of high-level (and one hopes not selective) disclosure and insight into Apple's supply chain CSR strategy. Now let's be clear -- Apple is not without its mealy spots. From reading the report, it becomes quite clear that they definitely aren't perfect in overall supplier CSR program design or execution. But let's dive in.

For example, it would be easy to quibble with what appears to be a brute-force auditing effort of largely upper tier suppliers, rather than one more thoroughly enabled and managed through a technology-driven supplier management program at all levels (I'll get more into this next week in a more informational-driven post). Moreover, while Apple goes to great lengths in the conflict minerals area, creating traceability down to the smelter level, there are no doubt potential holes in any traditional CSR measurement approach here as well. Incidentally, Spend Matters/MetalMiner will publish an exposé next week about how some players in the supply chain may be circumventing conflict mineral rules.

Yet overall, I think it's important to set the record straight and silence the naysayers who know very little about the world of global sourcing yet toss iTomatoes towards Apple as a result of the handful of supplier violations the high tech giant has voluntarily disclosed. After all, they could be doing much worse, and it's clear that many of Apple's earlier learnings (e.g., supply risk in the iPod supply chain) have cascaded into a broader, multi-tier supplier management program that provides more than lip service to CSR and additional risk areas, with what appears a particular emphasis on on-site audits.

Consider that according to the report, Apple made an example of its intolerance of child labor when it terminated a vendor with 42 individual infractions at a single facility (in the case of the other 49 examples it found of underage labor across 9 facilities, Apple took alternative courses of action designed to provide educational recompense to the workers as well as to put in place programs to avoid future infractions). In other areas of the report, we believe it's quite remarkable that in all of the audit records it presents, Apple found only one example of worker endangerment due to the exposure to certain chemicals and only a single facility which endangered worker safety due to working conditions that lacked sufficient safety equipment (e.g., harnesses/guardrails).

Spend Matters believes that from reading this report and talking to those close to the Apple supply chain that the company takes its vendor management practices and overall exposure to supply chain risk quite seriously relative to other competitors in the PC, notebook, tablet and smartphone market. However, Apple could be doing even more to champion what appears to be a world-class supply chain CSR program today. Our quick list of suggestions/areas of focus in an already impressive program would include:

  • Creating and sharing a scoring system with suppliers not just focused on audits and compliance, but proactive CSR behaviors and active management
  • Creating additional carrots for suppliers (and disclosing these practices) that come out at top rankings on a consistent basis. This might include everything from supplier awards to spend consolidation, leading to additional business
  • Deploying a more automated approach to managing different classes of supplier audits, leveraging supplier management and other technologies to make the process more efficient and rapidly transparent (in Spend Matters' view, Apple should set a goal to double its audit rate with the same number of resources it currently deploys)
  • Taking a more frequent, virtual auditing approach of supplier facilities and building greater traceability within its sub-tier components and parts supply chain
  • Making greater use of technology to guide, measure and manage corrective action requests and overall program administration
  • Extending the auditing of raw material specification/documentation in the area of conflict minerals to account for potential supplier workarounds that enable smelters to escape scrutiny and appear to be in compliance (when in fact they might not be)

Stay tuned as we examine some of the findings of Apple's Supplier Responsibility Report in more detail next week. And kudos to the company that provides much of Spend Matters' computing and smartphone technology for taking such an important topic so seriously.

Jason Busch

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