Reference no: EM133167143

In 2010 Apple Inc. faced accusations that they relied on poorly treated, over-worked, and under-paid laborers in their supplier's Chinese factories. Foxconn, once the sole supplier of Apple's iPhones and iPads, required long hours from migrant laborers, paid minimal wages, and provided severely cramped quarters on the manufacturing-site campus. After a rash of employee suicides, Foxconn installed safety nets to prevent employees from throwing themselves off balconies. Audits conducted internally since labor practices within Apple's supply chain became publicly suspect have discovered instances of underage workers, discrimination and wage problems throughout Apple's sprawling global supply chains. Tim Cook, the Chief Executive taking con- trol after founder Steve Jobs stepped down in 2011, has made commitments to improve supply chain transparency through extensive internal audits and to comply with an independent audit by the Fair Labor Association. While continuing to work with Foxconn, Apple has since shifted a portion of its supply chain toward Pegatron. Senior Vice President of Operations Jeff Williams says the company has increased focus on their most chal- lenging issues: ensuring there are no child workers in its supply chain and limiting working hours to 60 hours per week. Smaller suppliers face less oversight than the larger suppliers, and have earned greater scrutiny from Apple, which has either brought them into compliance or fired them. "We go deep in the supply chain to find it," Williams said. "And when we do find it, we ensure that the underage workers are taken care of, the suppliers are dealt with." In 2013, Apple is focusing on student internships within suppliers in China, where many colleges mandate students to complete a business internship in order to graduate. The situation lends itself to intern abuse, where employers can threaten or mistreat student interns whose education and future careers are dependent upon com- pleting the internship.

1. Assume you are the Supply Chain Manager for a com- puter manufacturing company that receives portions of its components from an overseas supplier that you suspect uses unfair labor practices. After conducting a supply chain audit, you determine that the supplier has failed to take action on past instances of sexual harass- ment and hazing style abuse of student interns, some of them as young as 16 years old.

A. Is the supplier guilty of human trafficking?

B.Would you (1) do nothing, (2) fire the supplier, or (3) engage the supplier in ongoing training to improve their labor standards? Why?

2.Assume your first tier supplier has recently merged with another company with a bad environmental track record. One of the newly-acquired legacy facilities caused a massive spill of hazardous waste, and work- ers have developed respiratory illnesses caused by poor indoor air quality and exposure to toxins.

A. Does the supplier's environmental record pose a supply chain risk to your company?

B. Would you (1) do nothing, (2) fire the supplier, or (3) engage the supplier in ongoing training to improve operating conditions? Why?