Supply Chain Risk Mitigation: Even Apple Needs to “Think Different”

The latest example of hidden risks lurking in the supply chain surfaced yesterday when China Labor Watch (CLW) published an investigative report detailing the labor violations of three factories of Pegatron Group – a major supplier to Apple.

According to CLW – an independent not-for-profit organization – Apple has increased its orders to these factories, which have benefitted from and relied upon labor violations to increase their competitive edge.

CLW’s investigations revealed at least 86 labor rights violations, including 36 legal violations and 50 ethical violations. The violations fall into 15 categories: dispatch labor abuse, hiring discrimination, women’s rights violations, underage labor, contract violations, insufficient worker training, excessive working hours, insufficient wages, poor working conditions, poor living conditions, difficulty in taking leave, labor health and safety concerns, ineffective grievance channels, abuse by management, and environmental pollution.

“In short, the Pegatron factories are violating a great number of international and Chinese laws and standards as well as the standards of Apple’s own social responsibility code of conduct,” said CLW.

We have long chronicled the vulnerability supply chain managers are exposed to by secondary suppliers. If an industry giant like Apple can be a victim, this risk clearly should be a concern for all U.S. manufacturers and their shipping partners.

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