Afternoon Coffee: Apple, suppliers and Chinese labor law; PRO recap: Workday Strategic Sourcing, DSW/S vendor market, Kissflow and Mastercard Track

AdobeStock/Ivan Kruk

In 2014, China enacted a labor law meant to protect workers’ rights requiring that no more than 10% of a factory’s workforce to be temporary workers, according to The Information, a news website. However, for years, Apple took no major action against its suppliers for violating the law out of concerns it would create costs, drain resources and delay product launches.

New data and insight from former Apple employees suggest that Apple’s strategy for supply chain management makes it difficult for its three biggest contract manufacturers — Foxconn Technology, Quanta Computer and Pegatron — to remain compliant with labor restrictions. Last year, Apple admitted that Foxconn broke the law at its massive iPhone factory in Zhengzhou, which employs as many as 300,000 workers.

Apple employs many temporary workers — which China calls “dispatch labor” that are dispatched to factories by labor agencies. Temporary workers do not have as much access to benefits and higher wages, the article said. Former Apple employees blame Apple’s just-in-time manufacturing philosophy. Apple suppliers dramatically boost their hiring in the months leading up to a new product launch and then shed as much as two-thirds of their workforce once demand slows.

Apple executives know that this production strategy causes an increase demand for temporary workers, the article reported. “Our ‘surprise and delight’ business model requires a huge volume of labor for only a short period of time as we ramp products,” according to an internal Apple presentation in 2015. “We are making it difficult for our suppliers to comply with this law as 10% dispatch is simply not enough to cope with the spikes in labor demand we require during our ramps.”

Spend Matters' analysts look at Workday Strategic Sourcing, DSW/S market, Kissflow and Mastercard Track

This week, Spend Matters PRO analysts assessed solutions from Workday Strategic Sourcing, an e-sourcing platform from the Scout RFP acquisition, and Kissflow, a procure-to-pay solution. Analysts also delved into the market landscape for vendors of direct sourcing of workers/services (DSW/S). One analyst also provided an update to the Mastercard Track Business Payment Service.

Our PRO subscribers can read the full articles, but all readers can see the lengthy intros that frame the issues being discussed. This week:

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