Apple: A Sustainable Example for Supply Chains

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APICS Magazine – Friday April 22, 2016
By APICS CEO – Abe Eshkenazi

Supply chain transparency is becoming more important to business leaders and consumers, both of whom increasingly are concerned about working conditions, human rights, and environmental preservation. Apple, a company well known to both groups, recently released its “Supplier Responsibility 2016 Progress Report,” which highlights the tech company’s rigorous push for corporate social responsibility standards. Based on the firm’s success, other companies should “take note, and look for ways they can improve their supply chain sustainability to stay competitive,” writes Jessica Lyons Hardcastle for Environmental Leader.

Apple audited 640 of its suppliers around the world in 2015, 1 percent more than in 2014, and 41 percent more than in 2013, according to Environmental Leader. This is the 10th year the company has released a supplier responsibility report.

“[The report] details the strides Apple has made in protecting human rights by stemming excessive work hours and addressing bonded and underage labor practices,” writes Jeff Williams, Apple’s chief operating officer, in the report’s introduction. Not only does Williams oversee the company’s entire supply chain, but he also leads Apple’s corporate social responsibility initiatives.

The numbers are significant. Apple reports that in 2015, its work-hour compliance among suppliers reached 97 percent. The tech company also is fighting bonded labor, an arrangement through which workers pay recruitment fees for jobs before they have a paycheck, sometimes forcing them into debt. When Apple discovers suppliers that are using bonded labor, it makes the suppliers repay the employees. According to the report, the process has resulted in more than $25.6 million repaid to workers since 2008—and $4.7 million in 2015 alone.

As for the environmental side of corporate social responsibility, Apple has pushed its suppliers, and they have

• diverted more than 73,000 metric tons of waste from landfills
• saved more than 3.8 billion gallons of freshwater
• prevented more than 13,800 metric tons of carbon emissions.

“We’re proud of the progress we’ve made so far,” Williams writes. “Yet, even as you read this, Apple continues to address challenges throughout the supply chain. We are openly working with industry partners, governments, [non-governmental organizations, and others who share our vision of improving lives and caring for the environment.”

Global supply chain improvement

Now think about this challenge posed in the Environmental Leader article: “The news of Apple’s supply chain audit has—or should have—other companies looking for ways that they can work with suppliers to improve their environmental performance. At the same time, growing demand for natural resources like water, minerals, and oil puts a strain on supply, making it harder for companies that want to implement sustainable practices and materials in the supply chain.”

The Supply Chain Operations Reference (SCOR) model could be a valuable tool as you consider how your company’s suppliers meet your business and management expectations. For example, consider the SCOR definition of “controls and compliance” in its “People” section: “Awareness of relevant regulations, laws and requirements, whether external or internal, and the ability to devise, implement, and document the relevant and necessary controls in order to maintain compliance and successfully pass auditing requirements.”

The SCOR framework links business processes, performance metrics, practices, and people skills into a unified structure. It is available to APICS Supply Chain Council affiliates and sponsors.