Chain of Thought

Social Responsibility in the Supply Chain

If you've got the most popular brand name on the planet, if your products consistently rank at the very top of the “most desirable” list of tech gadgets, and if a much-publicized analyst ranking says you're the top supply chain in the world, then what do you do for an encore? If you're Apple, the first thing you should do is thank your lucky stars that people have short attention spans.

For the third year in a row, Apple ended up No. 1 in a list of the top 25 supply chains, an annual ranking that analyst firm Gartner inherited a year ago when it acquired AMR Research. True, the “rankings” are largely a popularity contest, in a process loosely analogous to Major League Baseball's All-Star balloting procedures where reputation tends to count much more significantly than recent performance. So, just as players on the disabled list can still wind up being voted into the All-Star game, so too can companies with somewhat suspect operational practices wind up on a list of the top supply chains.

There was a time, and not so very long ago, that multinational companies based in the United States would be publicly excoriated by the popular media if it became well known that the company was offshoring its production to sweatshops employing child laborers. And if conditions at its main offshore facility were so onerous that more than a dozen workers had committed suicide there, that company would be facing boycotts wherever its products were being sold. And can you imagine the outrage if a combustible dust explosion at that facility cost three workers their lives while injuring a dozen others?

Imagine all you want, but apparently while apparel companies and toy companies have felt plenty of outrage in the recent past from the excesses of their offshore suppliers, the high-tech industry's global supply chain is somehow spared from any criticism leveled at their low-cost manufacturers. Does it make a difference that Foxconn, the Chinese manufacturer described in the preceding paragraph, produces Apple's wildly popular iPads and iPhones, and that the media seems more concerned about Apple's short-term production shortages due to the explosion than the working conditions at the plant itself?

Is there some unwritten double standard that says Japanese cars built in America by American autoworkers are bad, but iPads built in China at plants believed to exploit its workers are just fine, nothing to see here, move on? Even Apple's own 2011 Supplier Responsibility report acknowledges numerous instances of underage workers, unsafe working conditions and unethical hiring practices tantamount to indentured labor, if not outright slavery, at some of its Asian suppliers' facilities.

Of course, the Gartner rankings have always been heavily skewed in favor of high-tech/electronics companies. On this year's list, for instance, 9 out of the top 17 companies are high-tech companies, and at least two of them—Dell (No. 2) and Hewlett-Packard (No. 17) are also Foxconn customers. Interestingly enough, the largest single voting block for the peer opinion portion of the Gartner rankings also came from the high-tech industry. Coincidence? Maybe.

Until Gartner figures out a way to actually measure how well companies manage their global supply chains, and factor in some accountability metrics into the rankings, then let's just call it what it is: a popularity contest. How else can you explain how Johnson & Johnson, of all companies, made the list? Nobody would dispute Gartner's conclusion that Apple is the most popular company in the world right now. But top supply chain? That's a bit of a stretch. If somebody ever does a "Most Responsible Supply Chain" ranking, it's pretty clear that many of the companies on the Gartner list would fall short.

Related Articles:

The Dark Side of the Supply Chain

Reflections on Supply Chain Excellence

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