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Don’t Dictate – Collaborate

The electronics supply chain faces a number of challenges when it comes to establishing compliance with various laws and practices. Just as the industry seems to have RoHS figured out, the REACH chemical-restriction initiative comes along. Most recently, the US government is poised to ask companies to prove they don’t use so-called “conflict minerals.” (See: The Great Congo Paper Chase.)

Forward-thinking companies figured out a long time ago that it’s better to move voluntarily into social responsibility rather than be forced to comply. A number of companies, such as Texas Instruments, regularly audit their suppliers to track efforts such as environmental friendliness and carbon footprint reduction. But what happens when a partner is found not to comply?

Premier Farnell's Manager for Corporate Social Responsibility, Charlie Denham, discusses the global catalogue distributor’s approach.

Distributors are in the unenviable position of being the “middleman” among suppliers, component makers, customers, OEMs, and EMS providers. Premier Farnell tries to influence both sides toward better business practices. “As a distributor, you are in contact with such a broad reach of companies. We see suppliers that already have the answers [regarding compliance] and we try to take those issues to customers. We ask, ‘Do you know this will be an issue in the future, and are you thinking about this now?’ As a distributor, you have to understand issues in both [supplier and customer] directions and look at how helpful you can be.”

Yet it’s difficult for any company to force a customer or supplier into compliance. In Premier Farnell’s case, the company tries to work with its partners toward realizing the value of good business practices and provide guidance when possible. “I think it can depend on what you are asking people to do,” says Denham. “Very often you can present the case: Why is this valuable for them? Then comes the question: Are you willing to de-list them [as a supplier]? You have to look at the business case.”

Denham cites the case of EMS provider Foxconn, which was accused of mistreating its employees. “In the case of Foxconn, there was a definite backlash. If we come across any noncompliance issues we tell [our partners] it’s better for your reputation to publicly maintain high standards and to have respected and well treated employees that feel safe in their workplace.”

The message should be more of a carrot than a stick, Denham says. And companies can lead by example. “We do ask people to comply with boycotting conflict minerals. We got in touch with our largest suppliers in tantalum. We want to tell our customers we don’t use [conflict minerals].” It’s difficult for some companies to assure compliance, he acknowledges. “It’s important that you get on paper that you asked your partners [about conflict minerals] and that you told them they should be doing their part and be able to prove that you have done your due diligence.”

Premier Farnell, he says, prefers to collaborate rather than dictate. “If you are looking at compliance, we see that as dictating that you must do x, y, and z. Collaboration is ‘We think you should be doing x, y, and z.’ Let’s work together on the compliance side. It doesn’t make good business sense to deal with a company that has poor management practices and doesn’t see the value in treating their employees right. It makes no sense to ignore such an issue whether it is a law or not.”

Companies that have partners willing to help on compliance and human rights issues should take advantage of those resources. Get ahead of good practices before they become law.

7 comments on “Don’t Dictate – Collaborate

  1. tioluwa
    October 12, 2010

    I really agree with Barbara, it's a teamwork, a distributor seeking to uphold social responsibility and high standards, will find it hard if its suppliers or even customers don't care about it.

    The distributor has to find a way to sell the idea to suppliers and customers alike, and as Barbara mentioned, they need to be made to see the benefit to them in the long run.

    Regardless of the cost of these social responsibilities, it pays in the long run.

    Any business finding it too difficult to do, probably isn't managing its business well in the first place.

     

  2. Barbara Jorgensen
    October 12, 2010

    When business conditions are challenging, I'd imagine it would be easy for businesses to say: “Do this or else.” Companies with enough market clout could also do the same: 15 years ago Motorola told its partners they must have Six Sigma quality or they'd be cut from the AVL. Wal-Mart recently required products use RFID tags. While these actions rapidly drive change, I think I'd prefer the collaborative approach

  3. Ashu001
    October 12, 2010

    Barbara,

    I am not sure if simple audits(like which you are suggesting here) would have solved the Foxconn problem.The whole organizational culture at Foxconn needed ac change and that has to be enforced from Top Down.

    Unfortunately it very often takes a Tragedy for such changes to set-up in an organization.

    Regards

    Ashish.

  4. SP
    October 12, 2010

    Yes it is beneficial for the companies to keep good habits before they become a law. But the key question is how can one foresee that RoHS would have come. And now about these minerals restrictions. And also I guess there is a tendency in many small and moderate business firms unless its a law  or unless it affects the revenues, dont allocate budget for these good habits.

  5. Barbara Jorgensen
    October 12, 2010

    I agree that I have laregly viewed good habits or social responsibility as a luxury that is addressed when the rest of the day's work is done. I hope it isn't just the realm of big companies–those are the ones that happen to be more visible. I'd love to hear from a small company that has integrated environmental friendliness into its business plan without spending a fortune

  6. itguyphil
    October 15, 2010

    More times than not, companies, much like humans, need a kick in the rear to initiate change. In Foxconn's situation, that might be it. Let's just hope that they can realize the error in their ways and make a positive out of this negative. And also be an example for other organizations.

  7. Barbara Jorgensen
    October 22, 2010

    I agree that audits don't solve problems although they can help flag them. But had Apple recognized Foxconn's probelms before workers died and had stepped in either privately or publicly, the likelihood is these deaths would not have happened. I think Apple is one of a few businesses today that can dictate to their supply chain by virtue of their size and power as a customer. Even Foxconn can't afford to ignore Apple.

    Any thoughts?

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