The perils of neglecting supply relationship management have come under the spotlight recently, with news of human rights violations in a Chinese factory used by Amazon to manufacture products.
Company cost reduction and sourcing savings are major and legitimate concerns for all procurement professionals, but if they encourage a tendency to take an eye off the ball in regard to supply relationship management, organisations can suffer real damage to their reputations. China Labor Watch, an NGO, has claimed that agency workers in a factory supplying Amazon and run by the Chinese firm Hengyang Foxconn had received insufficient safety training, were denied mandatory social insurance contributions and had been refused sick pay.
The factory manufacturers the Kindle e-reader, as well as the Echo Dot smart speaker and tablets. The labour watchdog, which conducted its investigations between August 2017 and April 2018, found that while conventional employers at the factory received five days safety training, agency workers only received eight hours, far short of the legal minimum of 24 hours. Agency workers were also compelled to pay fees for physical examinations, which most conventional employees were not.
In addition to this, while conventional staff received an enhanced wage for overtime, agency staff (who comprised over 40% of the workforce, well above the mandatory upper limit of 10%) only received normal pay and were not paid sick leave. Moreover, they received no social insurance or contributions toward their housing provident fund and were placed on unpaid leave during off-season periods.
The report was uncompromising in its condemnation of these practices, accusing Amazon of profiting at the expense of employees subjected to “appalling” working conditions.
Amazon responded by insisting that it took violations of its supplier code of conduct exceptionally seriously and had already identified two areas of concern at this factory in March this year.
The statement continued: “We immediately requested a corrective action plan from Foxconn Hengyang detailing their plan to remediate the issues identified, and we are conducting regular assessments to monitor for implementation and compliance with our supplier code of conduct.”
Nick has over 30 years procurement experience in consulting, outsourcing and line roles within industry with international experience across many sectors and industries and led many procurement programs with blue chip organisations.