SUPPLY CHAIN MANAGEMENT
Bruised, Not Beaten
Apple’s supplier issues reveal challenges of global partnerships
In January, the world may have received the most convincing evidence yet of how difficult—and perhaps impossible—it is to know everything that occurs in a supply chain that spans the globe.
The lesson came courtesy of consumer electronics giant Apple Inc., which, in a span of two weeks, saw its reputation swing from an organization that carefully oversees its suppliers to one that struggles to keep its partners in line.
The socially responsible side of that duality stepped to the fore Jan. 13, when for the first time ever the notoriously clandestine company pulled back the curtain on its list of global suppliers. The move would have been unlikely at best under former CEO Steve Jobs but was viewed by many as a signal that new leader Tim Cook would be operating in a spirit of greater transparency.
According to the report, Apple increased its number of supplier audits conducted by 80% from the previous year for a total of 229 in 2011, including more than 100 at factories it had not visited before.1
"With every year, we expand our program, we go deeper in our supply chain, we make it harder to comply," Cook told Reuters News Agency. "All of this means that workers will be treated better and better with each passing year. It’s not something (where) we feel like we have done what we can do; much remains to be done."2
Less than two weeks later, an article in the New York Times revealed that Cook wasn’t kidding. The article detailed worker safety shortcomings at several suppliers, including one of the biggest cogs in the chain, Foxconn Technology.
The report described safety issues at Foxconn’s plant in Chengdu, China, including workers exceeding Apple’s mandated work limit of 60 hours per week and company dorms with as many as 20 people in a three-bedroom unit.3 But the centerpiece of the report was an explosion last May that killed four and injured another 18 at the iPad plant in Chengdu.
Highly combustible aluminum dust fueled the blast, after which Apple said it immediately contacted "the foremost experts in process safety" and created a plan to prevent future incidents.4 Seven months later, however, another explosion injured 59 workers at an iPad plant in Shanghai.
In its supplier report, Apple said the causes of the blasts were different, as were many of the corrective actions demanded by the company, which included ventilation requirements, ductwork inspections and the use of vacuums "rated explosive proof to prevent ignition." At the time the report was released, Apple said all suppliers but one had the new measures in place and that the outlier would remain shut down until it complied.5
The report shines a light on nearly every facet of Apple’s supply chain and provides statistics for compliance with safety measures—from prevention of underage labor (97% compliance) to working hours (38%). It also outlines Apple’s response in the form of corrective actions it requires to improve the situation.6
But according to the Times article, that watchful eye hasn’t been enough to deter suppliers from doing whatever it takes to deliver the cost-effective solutions Apple demands. "We’re trying really hard to make things better," one former Apple executive told the Times while requesting anonymity because of confidentiality agreements. "But most people would still be really disturbed if they saw where their iPhone comes from."7
That uphill battle hasn’t deterred Apple from becoming the first technology company to join the Fair Labor Association (FLA). The group will compare the performance of Apple’s suppliers with the FLA’s "Workplace Code of Conduct" and post the results on www.fairlabor.org, adding another level of transparency to the Apple supply chain.8
"We care about every worker in our worldwide supply chain," Cook wrote in a letter to his employees shortly after the Times article was published. "Any accident is deeply troubling, and any issue with working conditions is cause for concern. Any suggestion that we don’t care is patently false and offensive to us. As you know better than anyone, accusations like these are contrary to our values. It’s not who we are."9
—Brett Krzykowski, assistant editor
- Apple Inc., "Apple Supplier Responsibility: 2012 Progress Report," http://images.apple.com/supplierresponsibility/pdf/Apple_SR_2012_Progress_Report.pdf.
- Poornima Gupta, "Apple Reveals Supply Chain, Details Conditions," Jan. 13, 2012, www.reuters.com/article/2012/01/13/us-apple-suppliers-idustre80c1kq20120113.
- Charles Duhigg and David Barboza, "In China, Human Costs Are Built Into an iPad," New York Times, Jan. 25, 2012, www.nytimes.com/2012/01/26/business/ieconomy-apples-ipad-and-the-human-costs-for-workers-in-china.html?_r=1.
- Apple Inc., "Apple Supplier Responsibility: 2012 Progress Report," see reference 1.
- Duhigg, "In China, Human Costs Are Built Into an iPad," see reference 3.
- Apple Inc., "Apple Supplier Responsibility: 2012 Progress Report," see reference 1.
- Anand Krishnamoorthy, "Apple’s Cook Won’t Turn ‘Blind Eye’ to Problems With Suppliers’ Conditions," Bloomberg, Jan. 27, 2012, www.bloomberg.com/news/2012-01-27/apple-won-t-turn-blind-eye-to-supply-chain-problems-cook-says.html.
Survey: Students Worry About Barriers to Engineering Profession
Teenagers seem to like the idea of having a career in science, technology, engineering and math (STEM), but many worry about obstacles that might block their pursuit of professions in those areas, according to a recent ASQ-Harris Interactive survey.
Sixty-seven percent of sixth through 12th-graders who said in the survey they were interested in pursuing a STEM career also expressed concern about factors that might hold them back from doing so, which include perceptions such as:
- The cost and time to get a degree in STEM seems too high compared with other subjects (26%).
- Their grades in STEM subjects aren’t good enough (25%).
- STEM-degree careers involve too much work and study compared with other careers (25%).
"It’s encouraging to see that more students see the value of STEM careers like engineering, but clearly STEM professionals and educators can be doing more to support students along this career path," said Jim Rooney, ASQ chair and quality engineer with ABS Consulting in Knoxville, TN.
The survey included responses from 713 youths. A complementary survey of 327 parents of children aged 10 to 17 also was conducted. More than half of the parents who had children interested in STEM careers said they had concerns about their children pursuing a STEM-related career.
Twenty-six percent of parents said they believed their child was not being prepared enough in STEM subjects by teachers, and 18% said they worried about their child’s grades not being good enough in STEM subjects.
For more details on the survey, visit www.asq.org/media-room/index.html.
Who’s Who in Q
NAME: James L. Bossert
RESIDENCE: Fort Worth, TX
EDUCATION: Doctorate in technology management specializing in quality systems from Indiana State University in Terre Haute.
CURRENT JOB: Process design manager in the process optimization group of the legacy asset services organization at Bank of America.
INTRODUCTION TO QUALITY: Bossert built model cars when he was growing up. The hobby shop where he purchased the models had competitions in which those who built the best-looking models won gift certificates. The hobby forced Bossert to pay close attention to detail, use different tools and techniques, look for ways to make everything fit together and build the best possible item.
PREVIOUS QUALITY EXPERIENCE: Americas region vice president for quality at Nokia in the late 1990s.
ASQ ACTIVITIES: Bossert has been an active member for more than 30 years. He currently is on Six Sigma Forum Magazine’s editorial review board and participates in the Ask a Standards Expert program. Bossert is a member of ISO/technical committee 69, which deals with standardization in the application of statistical methods. He contributes to the development of the Six Sigma Master Black Belt exam.
OTHER ACTIVITIES: He was the first member of the John D. Hromi Center for Quality and Applied Statistics Academy at Rochester Institute of Technology in NY. He has also served as a Baldrige examiner.
PUBLISHED WORKS: Editor for the Supplier Management Handbook for the past 20 years. Co-author of Supplier Certification, and the glossary and tables in Statistical Quality Control. Contributor to Six Sigma Forum Magazine and QP.
RECENT HONORS: ASQ’s Distinguished Service Medal, which he will receive at this year’s ASQ World Conference on Quality and Improvement.
PERSONAL: Wife, Terri, two daughters, two stepsons and five grandchildren.
OTHER ACTIVITIES: Playing the guitar, spending time with his grandchildren, reading, golfing and brewing beer.
QUALITY QUOTE: Take a chance and try something new. Your learning will make you a more knowledgeable and interesting person.
Federal Study: Most Errors at Hospitals Go Unreported
Only one in seven errors, accidents and other events that harm Medicare patients in hospitals are recognized and reported by hospital employees, federal investigators wrote in a recent report.
Even after hospitals investigate preventable injuries and infections that have been reported, hospitals rarely change their practices to prevent adverse events from recurring, according to the study.
Adverse events include medication errors, severe bedsores, infections that patients acquire in hospitals, delirium resulting from overuse of painkillers and excessive bleeding linked to improper use of blood thinners.
The study was issued by Daniel R. Levinson, inspector general of the U.S. Department of Health and Human Services.
Robert Pear, "Report Finds Most Errors at Hospitals Go Unreported," New York Times, Jan. 6, 2012.
Preconceptions Keep Some Car Buyers Away
More than 40% of new-vehicle buyers who avoid a particular model because of quality or reliability concerns said their opinions were based on conventional wisdom or common knowledge rather than personal experience, reviews, ratings or recommendations, according to a recent J.D. Power and Associates study.
Among buyers who avoid a particular model due to concerns about quality and reliability, the study determined that a sizable proportion—43%—said their avoidance was because "the brand’s vehicles, in general, are known to have poor quality/reliability."
For more details on the study, visit http://businesscenter.jdpower.com/news/pressrelease.aspx?id=2012003.
World Conference Keynote Speakers Announced
Executives from two high-profile Fortune 100 companies are among the keynote speakers who will address audiences at ASQ’s World Conference on Quality and Improvement (WCQI) May 21-23 in Anaheim, CA.
James Albaugh is executive vice president of the Boeing Co. and president and CEO of Boeing Commercial Airplanes. A member of Boeing’s executive council, Albaugh is responsible for the company’s commercial airplanes programs and services, and is Boeing’s senior executive in the Pacific Northwest. He is scheduled to speak at 7:45 a.m. Monday, May 21.
Carletta Ooton is vice president and chief quality, safety and sustainable operations officer for the Coca-Cola Co. Ooton oversees policies and standards, audits, analytical services, food safety, customer quality, performance measures and operations support delivered by Coca-Cola’s global quality organization. She is scheduled to speak at 12:15 p.m. Monday, May 21.
Other keynote speakers scheduled to appear at the three-day conference are:
Simon Sinek, leadership expert and author of Start With Why: How Great Leaders Inspire Everyone to Take Action. Sinek’s presentation is slated for 8 a.m. Tuesday, May 22.
Majora Carter, president of MCG Consulting, a firm that advises organizations about climate adaptation, urban micro-agribusiness and leadership development strategies. She also hosts "The Promised Land," a public radio series that showcases leaders and visionaries making a difference in their communities. Carter is scheduled to appear at 10:45 a.m. Wednesday, May 23.
Joseph A. DeFeo, president and CEO of the Juran Institute, and a leading authority on transformational change systems and breakthrough management principles. He will be the featured speaker at 1:15 p.m. Tuesday, May 22.
Visit http://wcqi.asq.org/index.html for more about the speakers, the 100-plus conference sessions and a complete schedule of events and details. There’s also information on the other miniconferences sponsored by different ASQ divisions that will take place concurrently with WCQI, including the Quality Institute of Healthcare Conference, the Institute for Software Excellence, the Institute for Continual Quality Improvement and Quality in Sustainability.
Six New ASQ Officers Nominated to Board
ASQ’s Board of Directors will vote on six board candidates named by ASQ’s nominating committee earlier this year. The nominated officers are:
- Chair: John C. Timmerman, vice president of global guest experience and rooms operations, Marriott International Inc., Bethesda, MD.
- Past chair: James J. Rooney, director of quality management and lean Six Sigma services, ABS Consulting, Knoxville, TN.
- Chair-elect: Stephen K. Hacker, CEO and cofounder, Transformation Systems International, Portland, OR.
- Treasurer: Chava Scher, vice president of quality, Rafael Advanced Defense Systems, Haifa, Israel.
- Director: Alejandra Vicenttin, director of hotel operations, L’auberge Casino Resort, Baton Rouge, LA.
- Director: Bharat Wakhlu, resident director for public affairs, Tata Services Ltd., New Delhi, India.
Election results are scheduled to be announced during ASQ’s annual business meeting, which will be held at the World Conference on Quality and Improvement from May 21-23 in Anaheim, CA.
QP ONLINE ON PAPER
Quick Poll Results
Each month at www.qualityprogress.com, visitors can take an informal survey, and we post the results.
Here are the numbers from a recent Quick Poll:
"What type of customer survey do you find most annoying?"
- Phone 42.8%
- Website pop-up 37.6%
- In person 12.9%
- Email 5.1%
- Snail mail 1.2%
Visit www.qualityprogress.com for the most recent poll question:
"How would you describe your email use?"
- Can’t keep up with my overloaded inbox.
- Keeping up, but it takes too much time.
- Totally in control.
More Insight on Inboxes
THE JURAN INSTITUTE has acquired Baldrige.com, an online community for Baldrige supporters and others interested in learning about the Baldrige Performance Excellence Program. For more information, visit www.baldrige.com/sector/business/juran-institute-acquires-baldrige-com-2.
NATIONAL HEALTHCARE QUALITY WEEK is slated for Oct. 14-20 to highlight the need to influence professionals to improve patient care outcomes and healthcare delivery systems. The event is sponsored by the National Association for Healthcare Quality. For more information, visit www.nahq.org/membership/content/celebratehealthweek.html.
THE COMMITTEE OF SPONSORING Organizations of the Treadway Commission, commonly referred to as COSO, has released for public comment an updated "Internal Control—Integrated Framework" intended to help organizations improve performance with greater agility, confidence and clarity. The revised framework contains quality management inputs, such as requirements that objectives be measurable and organizations exhibit a commitment to competence. To access the complete framework and submit comments, visit www.ic.coso.org. Comments are due March 31. For more information, contact Sandy Liebesman at email@example.com.
THE BRITISH STANDARDS Institution has revised publicly available specification (PAS) 2050. PAS 2050 provides a method for assessing the life cycle greenhouse gas emissions of goods and services, the standard used to calculate the carbon footprint of an organization’s goods and services. For more information, visit www.bsigroup.com/pas2050.
THE AMERICAN SOCIETY for Nondestructive Testing (ASNT) is seeking applicants for its certification management council. The council is responsible for developing and managing ASNT’s certification programs. For more information, visit www.asnt.org/latestnews/cmcappl09.htm.
FELLOW HONORED Manu K. Vora, an ASQ fellow who has served on the ASQ Board of Directors, has been awarded the IIT Alumni Medal from the Illinois Institute of Technology in Chicago. An awards ceremony on the school’s campus is scheduled in April.
OTT APPLICATIONS Applications for the 2012-2013 Ellis R. Ott Scholarship are now available through ASQ’s Statistics Division. The $7,500 scholarships are for students in master’s degree or higher programs with a concentration in applied statistics or quality management. Last year’s recipients were Shilpa Shinde from Arizona State University, Wade Henning from Florida State University and Kristopher Hoover from North Carolina State University. For more information and an application form, visit www.asqstatdiv.org. Applications are due April 1. Direct questions about the scholarship to Lynne B. Hare at firstname.lastname@example.org.
FREUND SCHOLARSHIP Applications for the Richard A. Freund International Scholarship are due April 1. This scholarship recognizes graduate study in the theory and application of quality control, quality assurance, quality information and total quality management. The approximate amount of the yearly award is $5,000. Last year’s recipient was David Zepeda, a Juran fellow who is pursuing a doctorate in operations and management science at the Carlson School of Management at the University of Minnesota. For more information and an application form, visit http://asq.org/about-asq/awards/freundscholar.html.
ISO Certifications on the Rise
Certifications for management system standards for quality, environment, medical devices, food safety and information security from the International Organization for Standardization (ISO) increased 6.23% in 2010, according to a recent ISO survey.
The largest certification increases occurred in sector-specific ISO 22000:2005—Food safety management systems, which jumped 34%, and issue-specific ISO/International Electrotechnical Commission 27001:2005—Information security management systems, which increased 21%.
"Indicating nearly a million and a half users at the end of 2010, these figures illustrate the continuing attraction of the ISO management system model pioneered by ISO 9001 for quality management and since extended to meet other challenges faced by public and private sector organizations," said Rob Steele, ISO secretary-general.
For more information, visit www.iso.org/iso/pressrelease.htm?refid=Ref1491.
Study: Baldrige Benefits Far Outweigh the Costs
Months after federal funding to the Baldrige Performance Excellence Program was eliminated, a new study was released that touts the significant benefits the program has for individual organizations as well as the entire U.S. economy.
The National Institute of Standards and Technology’s (NIST) economic study shows the benefit-to-cost ratio of Baldrige Award applicants was 820:1. NIST says this and other study results "support the belief that the Baldrige program creates great value for the U.S. economy."
The latest study follows up on a 2001 analysis of potential benefits versus costs of the Baldrige program. Ten years ago, the authors—economists Albert N. Link and John T. Scott—estimated the total potential economic benefits of the Baldrige program to the U.S. economy at nearly $25 billion and its total operational cost at $119 million, or a 207-to-1 cost-to-benefit ratio. Last year, the authors estimated the benefits outweigh the overall cost of the program by a ratio of 820-to-1.
"The Baldrige Performance Excellence Program, with the imprimatur of national leadership and a prominent national award presented by the president, creates great value that could not be replicated by private-sector actions alone," the authors wrote.
Last year, Congress and President Obama approved a bill that eliminated $9.6 million in federal funding to the program for 2012. The Baldrige Foundation, a private, nonprofit organization that supports the program, agreed to maintain the program’s operations through this year.
The program had already started making contingency plans and has begun looking at business and funding models to keep the Baldrige program sustainable without federal funding for the long term.
The latest study surveyed 273 award applicants since 2006. From the results of the 45 organizations that responded, the economists used a counterfactual evaluation method to measure three categories of social benefits to come up with a net social value of the program. The categories were:
- Savings to the applicants in investment costs to achieve the same level of benefits from their performance excellence strategies as they realized from the Baldrige program.
- Gains by consumers in greater satisfaction from higher quality products and services.
- Gains to the economy from saving scarce resources through use of the Baldrige criteria.
Benefit-to-cost ratios were calculated using alternative measures of benefits, and each category was separately compared to the entire operating cost of the program. The 820-to-1 benefit-to-cost ratio uses only the benefits for the survey group of applicants for the award since 2006, but uses all the social costs of the program.
To download a PDF version of the report, visit www.nist.gov/director/planning/upload/report11-2.pdf.
- George, Steve, "Benefit-to-Cost Ratio for Baldrige: 820-to-1," Baldrige.com, Jan. 19, 2012, www.baldrige.com/tag/baldrige-award.
- Link, Albert N., and John T. Scott, "Planning Report11-2: Economic Evaluation of the Baldrige Performance Excellence Program," National Institute of Standards and Technology, Dec. 16, 2011.
- NIST Tech Beat, "Economic Study Shows Value of Baldrige-Based Performance Excellence," Jan. 18, 2012, www.nist.gov/baldrige/baldrige-011812.cfm.
BY THE NUMBERS
The number of world-class winners of the Global Performance Excellence Awards from the Asia Pacific Quality Organization (APQO). They are:
- Goodbaby International Holdings Ltd., Jiangsu Province, China.
- Singapore Technologies Engineering Ltd., StarHub Centre, Singapore.
- Shanghai No.7 Construction Co. Ltd., Shanghai.
- Global Indian International School Singapore, Queenstown Campus, Singapore.
- PUB, Singapore National Water Agency, Singapore.
- Housing and Development Board, Singapore.
Twelve other organizations received Best in Class Awards and Quest for Excellence Awards from APQO at a ceremony in Singapore. For more information about the honorees, visit www.apqo.org or www.begcapqc.com.
Word to the Wise
To educate newcomers and refresh practitioners and professionals, QP occasionally features a quality term and definition:
Pertains to sampling and the potential risk that bad products will be accepted and shipped to the consumer.
- "Quality Glossary," Quality Progress, June 2007, p. 43.