China: Labor, Safety and Quality Practices go Hand-in-Hand, Samsung and Beyond

Earlier in the week, we featured an editorial from Thomas Kase that explores supplier safety concerns in China, comparing Chinese occupational death numbers to those in the US. Thomas also shared his insights on quality perceptions based on his years as a manufacturing engineer in the region. Given the cultural challenges regarding Chinese production norms, perhaps it's no surprise that we continue to see infraction after infraction hitting the headlines. One of the most recent stories in this area comes from Samsung, which recently made the move to audit its Chinese suppliers for potential labor violations.

According to the AP, "Samsung Electronics Co. said it will carry out audits of 105 Chinese companies that are its exclusive suppliers this month ... The company will also review records of 144 Chinese firms that have contracts with Samsung and conduct on-site inspections if necessary. The move comes after Samsung's audit of a supplier, HEG Electronics, in response to an allegation it used child labor. According to a report released by China Labor Watch, HEG Electronics employs 2,000 workers. Of those, the organization listed seven workers they believed to be 16-years-old or younger, but estimated that there could be between 50 and 100 children working at the factory."

No doubt many Samsung suppliers will attempt to clean up their child labor act prior to the appearance of on-site auditors. But the larger story here that organizations working with Chinese suppliers (or lower tier suppliers) need to realize is that individual factory quality and labor practices can serve as a proxy for quality programs and practices. Last week, the Spend Matters team had a great discussion with Akoya's CEO, Karen Caswelch, about her previous experience as a CPO and manufacturing engineer. It was a role where she learned how to quickly size up a supplier's commitment to quality and continuous improvement by looking at safety practices. The two, it turns out, go almost hand-in-hand if you look at safety and quality metrics. Yet safety concerns are easier to spot proactively. Labor violations are undoubtedly a useful leading indicator of broader manufacturing practices as well.

- Jason Busch

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