As we noted on the blog recently, Apple manufacturing partner Foxconn recently raised salaries 25% for some Chinese workers as part of a move to improve conditions. Apple is unfortunate in that its success puts it in the spotlight, but it is unfair to single it out; there can be little doubt that similar issues affect workers in supply chains across China’s manufacturing sector.
It is easy to look at the supply chain through a lens that focuses on efficiency and margin. However, the Apple-Foxconn story tells us is that there is a human dimension to cost across the supply chain that it is perilous to ignore. From the perspective of corporate social responsibility (CSR) it is simply unacceptable that the health & safety of workers is compromised in delivering products to meet consumer demand.
Apple products carry a premium price tag, and much cachet is attached to the product slogan “Designed by Apple in California”. But if we expand this to include the hidden sub-text, “Designed by Apple in California by the worlds most valuable corporation, built in China by workers whose welfare is of little consequence”, it starts to lose its attraction.
Raising workers salaries and improving conditions creates implications for Apple’s pricing model and the relationship with Foxconn:
- Does it raise consumer prices to maintain margin?
- Or does it reduce its margin expectations by swallowing the increased manufacturing costs that result from paying workers more?
If you faced this dilemma in your wholesale distribution business you would need to be certain that you have the latest real time data across your supply chain, coupled to the analytical and reporting tools to enable you to interpret the information.
NetSuite’s cloud-based ERP solution lets you get control of the supply chain and enables mid-market wholesale distributors to better understand and deal with business issues. BlueBridge One is a UK NetSuite 3 Star Award solution provider that focuses on integrating NetSuite ERP to meet the specific needs of customers.
Low cost manufacturing may be pivotal for delivering products at the best cost point to price sensitive consumer markets, but the ethical and CSR issues raised by this strategy may force many managing supply chains in a global market to deal with dilemmas similar to Apple.
If you want access to real time business intelligence from across your supply chain that helps you deal with the dilemmas that face your business, click here and register with BlueBridge One for a 14-day FREE trial of NetSuite.