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TÜV SÜD South Asia

Supply Chain Integrity: Companies Must Learn from Apple

Niranjan Nadkarni, CEO of TÜV SÜD South Asia, one of the world's leading providers of testing, inspection and certification services, comments on the results of Apple's recent supply chain audit, which revealed only 38 percent of the company's suppliers adhered to its internal standard of a 60 hour, six day working week.

"The results of Apple's supplier audit demonstrate the severity and prevalence of inhumane working conditions within global supply chains and the drastic requirement for immediate action. But they also highlight the pervasive challenge of securing supply chain integrity in today's global business environment. Unlike 15 years ago, for example, corporations now seek efficiencies not only through direct suppliers but suppliers' suppliers, and often even further down the supply chain. Subsequently, supply chain management has become increasingly challenging. However, complexity is no excuse for negligence and ultimately brands need to take more control. In this case, Apple has recognised this and is now taking appropriate action. What's important now, however, is that other companies learn from Apple's experience and follow suit.

The most effective way for a company to secure supply chain integrity is to ensure their entire supply chain adheres to a relevant and recognised international standard such as SA8000® – a voluntary certification governed by Social Accountability International (SAI). SA8000® certification is based on standards set by organisations such as the International Labour Organisation (ILO) and addresses several social issues including child labour, forced labour, worker health and safety, discrimination, discipline, working hours and compensation on an on-going basis. The first step in this process is to conduct robust independent on-sites audits to evaluate the factory's compliance to the chosen standard, as Apple has just done. Necessary corrective actions as well as continuous improvements must then be identified and put into practice throughout the supply chain.

Being 'socially responsible' is often a very complex challenge in several developing economies where working at a young age may be essential for survival. The "young worker" ethical dilemma has been debated vigorously amongst all stakeholders in the supply chain. Standards such as SA 8000 and BSCI have developed into effective tools to address these issues in a balanced and humane manner, allowing organisations to educate the young workers and re-integrate them into society.

This approach may sound exhaustive and costly but compliance to a selected standard not only improves working conditions but makes business sense. Supply chain integrity offers a number of social, branding, productivity and risk management benefits. For example, it ensures workers' health and safety, which helps boosts production efficiency, facilitates further penetration into international markets, and protects brands against the often irreparable consequences of a scandal. It is also worth noting that demand for ethically produced products over the last five years has skyrocketed."