You Cannot Build a Brand on a Foundation of an Abusive Supply ChainThursday, May 27, 2010 3:09
For long time readers of All Roads, you will know that one of the topics i have follows has been related to the systemic issues apple has faced within its supply chain. it is a topic that in the last few days has come to a head with the near daily suicides occurring on Foxconn’s various campuses, but this has been a long time coming.
Historically the issued faced by apple, through its suppliers, were really no different than anyone else. failed wags payments, unpaid overtime, and poor dormitory conditions. issues that could have been addressed easily, but often required line workers to go on strike before the supplier acted.. And apple ‘investigated’.
Over the last year this has changed. earlier this year reports of a strike at the Suzhou Wintek facility highlighted that overtime and wage payments had still gone unaddressed, but worse, it was at this time that the rumors of chemical exposure began to circulate. rumors that were later confirmed as cctv reported up to 100 line workers were being treated in local hospitals for n hexane exposure. A substance not legal in china. An incident that perhaps has left some employees paralyzed, and for me is probably the real story that should be followed, but with Foxconn’s campuses now stringing up net to prevent more suicides in the news it is easy to see how the focus has shifted.
So, where does this leave Apple now? in a word… Exposed.
3 years ago apple’s issues at Wintek largely flew under the radar in China and the announcement of an internal investigation ended the international coverage. It was a situation that I warned could have an impact IF Apple did not get a handle on it, and at the story pretty much died there as everything appeared to be “under control”. But time went on, the issues piled up, and now the recent suicides at Foxconn facilities have left Apple with two huge problems: one supply chain, and one brand
Both with I cover in my recent Supply Chain Asia article Coming to Terms with the True Costs of Outsourcing (download here), but in short, I will leave it with the following line from the article:
While developing the case for an offshore or outsourced production model, firms traditionally only looked at bottom line cost savings and will have to take a much more mature approach to making these decisions going forward so as to ensure their place and success in the market.
Firms are no longer simply outsourcing their products, they are trusting partners to safeguard their brand and the availability and safety of the product.
Apple’s supply chain is rotten, Foxconn is toxic, and action must be taken by Apple to rectify the systemic errors that exist.