SUMMARY REPORT Q1/2015
IDH, the Sustainable Trade Initiative (IDH), together with Dell, HP, Philips, Apple, Microsoft, ELEVATE, ERI and civil society organizations, has developed a program to improve the working conditions and environmental impact of over 75 electronics factories in China, reaching over 200,000 workers. A wide variety of training on labor, health & safety and environmental performance is being offered, however the innovative focus of the IDH Electronics Program is the development of effective worker-management dialogue to strengthen the ‘continuous improvement muscle’ of local manufacturers, as a prerequisite to addressing the root causes of social and environmental performance issues.
ELEVATE believes sustained, impactful improvement in social and environmental performance requires sincerity of intent and a responsible balance between maximizing financial return and meeting supplier responsibility requirements. We call this Business Driven Sustainability. ELEVATE’s mission is to help our clients design and implement customized programs that provide complete insight into risk and improve supply chain social, environmental and business performance. Within the IDH Electronics Program ELEVATE is responsible for the executive facilitation of the program as well as the implementation of the ‘non-dialogue’ (business performance) curriculum.
The Economic Rights Institute (ERI) is a non-profit organization, registered in Hong Kong, with a mission to support alliances of stakeholders to actualize economic development that respects the rights of all. Within the IDH Electronics Program, ERI is responsible for designing the methodology to promote worker-management (employer employee) dialogue, for support to service providers who implement this methodology and for appraisals of the evolution of dialogue and where this promotes wider enterprise improvements.
2
Index of Contents:
Supplier uptake Comments on program progress (Q1 ’15) Progress status overview on supplier implementation Work-plan completion vs work-plan agreed timelines by supplier Program trend analysis KPI’s Appendix 1: Worker satisfaction index Appendix 2: Worker management dialogue maturity index
3
Supplier Uptake Overview of Supplier On-boarding Status by Brands Total 30/6/2014
Dell
HP
Philips
Apple
Microsoft
Regular Program
46
11
7
14
12
2
Fast Track Program
7
0
0
7
0
0
Geographic Location by Brands Program
Dell
HP
Philips
Apple
Microsoft
TOTAL
46 + 7
11
7
14 + 7
12
2
Guangdong Area
35 + 4
10
6
8+4
9
2
Shanghai Area
9+3
0
1
5+3
3
0
2
1
0
1
0
0
Other
Number of Fast Track Program suppliers is in blue lettering
4
Total Factories on board (by Jan 1st, 2015)
Geographic location, total factories (by Jan 1st, 2015)
Total: 53
Total: 53 2
12
2
11
12 7 39
21 Dell
HP
Philips
Apple
Microsoft
South
Shanghai Area
Other
Comment on Progress During Q1’15 IDH completed the MTA (mid-term assessment) reporting and feedback with the sample of 13 factories. This involved on site surveys, interviews and analysis. This was a major effort for the program facilitators, service providers and the factories themselves. In addition the program team worked on the feedback collected at the brand / supplier conference (Dec ’14) and prepare for the later stages of the program (legacy package). It should also be noted that due to business changes, one of the factories in the program has dropped out, reducing the number of active factories to 53. Implementation focus During Q1 the program team continued to focus on implementation for both worker-management dialogue and non-dialogue (capacity building) training. The IDH program team is focused on factories in need of support to complete the training implementation by July 2015. Most factories in the Worker Management Dialogue training have now completed, or will complete, core curriculum session 6 (out of 7) shortly. KPI trend analysis (1) The peak average program turnover rate in 2015, at 19% worker turnover, shows a reduction compared to previous years. The worker turnover trend in Q1’15 follows the traditional increase, in line with seasonal averages during Q1 (celebrating CNY). However, the peak average program turnover rate in 2015 was 19% worker turnover, a significant reduction compared to 26% and 29% in Q1 of 2014 and 2013 respectively. (2) Rework rates showed a corresponding increase in Q1, which is likely to be related to the increased worker turnover, noted above. This strong correlation can also be seen during previous seasonal peaks in worker turnover. (3) Average salaries and working hours reduced in Q4, in line with seasonal holidays. Key Focus Points: 1) Implementation must be completed by July 2015, the IDH program team is focused on this with the factories and brands, to ensure training activities are completed. 2) As observed in the MTA, KPI reporting is a key element of the program. It’s an important factor for the factories and brands to focus on collecting and reporting the monthly KPI data. The factories not reporting KPI’s can be seen in the chart below.
5
Progress Status – Summary of the status of the active suppliers in the program and the WMD service providers they are working with. No.
By Brand
1
D1
2
D2
3
D3
4
D4
5
D5
6
D6
7
D7
8
D9
9
D10
10
D11
11
D12
12
H1
13
H2
14
H4
15
H5
16
H8
17
H9
18
H10
19
P3
Status
EPA
Implementation Starting Point
Work Plan
KPI Collection
On Track
Completed
Jan. 2013
On Track
Submitted by Mar. 2015
TUV, TIMELINE
On Track
Completed
Jan. 2013
On Track
Submitted by Mar. 2015
TIME LINE
On Track
Completed
Jan. 2013
On Track
NOT SUBMITTED
CLSN, TIMELINE
On Track
Completed
Jan. 2013
On Track
Submitted by Dec. 2014
TIMELINE
On Track
Completed
Jan. 2013
On Track
Submitted by Jul. 2014
LESN, TIMELINE
On Track
Completed
Mar. 2013
On Track
Submitted by Mar. 2015
TIMELINE
On Track
Completed
Oct. 2013
On Track
NOT SUBMITTED
TIMELINE
Move to new location
May 2014
On Track
-
BLC
On Track
Re-doing EPA on new location Completed
Jan. 2014
On Track
NOT SUBMITTED
Taos
On Track
Completed
Jan. 2014
On Track
Submitted by Feb. 2015
Taos
On Track
Completed
Jan 2014
On Track
Submitted by Mar. 2015
TUV
On Track
Completed
Jan. 2013
On Track
Submitted by Nov. 2014
TUV
On Track
Completed
Jan. 2013
On Track
Submitted by Mar. 2015
Timeline
On Track
Completed
Sep. 2013
On tract
Submitted by Mar. 2015
Timeline
On Track
Completed
Jun. 2012
On track
NOT SUBMITTED
TUV
On Track
Completed
Oct. 2013
On track
Submitted by Mar. 2015
TUV
On Track
Completed
Jan. 2014
On track
Submitted by Oct. 2014
Taos
On Track
Completed
Jan 2014
On track
Submitted by Jun. 2014
TBD
Re-joined
Completed
Aug. 2013
On Track
Submitted by Mar. 2015
TAOS
6
Involving WMD SPs
20
P5
21
P6
22
P7
23
P8
24
P9
25
P10
26
P11
27
P12
28
P13
29
P14
30
P15
31
P16
32
P18
33
PFT19
34
PFT20
35
PFT21
36
PFT22
37
PFT23
38
PFT24
39
PFT25
40
A1
41
A2
On Track
Completed
Jan. 2013
On Track
Submitted by Oct. 2014
Timeline
On Track
Completed
Mar. 2013
On Track
Submitted by Nov. 2014
TUV
On Track
Completed
Mar. 2013
On Track
Not Submitted
TUV
On Track
Completed
Mar. 2013
On Track
Submitted by Feb. 2015
LESN
On Track
Completed
Sep. 2013
On Track
Submitted by Aug. 2014
TUV
On Track
Completed
Oct. 2013
On Track
Submitted by Mar. 2015
TUV
On Track
Completed
Oct. 2012
On Track
Submitted by Feb. 2015
SUSA
On Track
Completed
Oct. 2013
On Track
Submitted by Nov. 2014
TUV
On Track
Completed
Oct-. 2013
On Track
Submitted by Feb. 2015
E&T
On Track
Completed
Nov. 2013
On Track
Not Submitted
BLC
On Track
Completed
Oct. 2013
On Track
Submitted by Mar. 2015
BLC
On Track
Completed
Oct. 2013
On Track
Not Submitted
TAOS
On Track
Completed
Mar. 2014
On Track
Submitted by Mar. 2015
E&T
On Track
Completed
May 2014
On Track
Submitted by Mar. 2015
Timeline
On Track
Completed
May 2014
On Track
Submitted by Mar. 2015
Timeline
On Track
Completed
May 2014
On Track
Submitted by Nov. 2014
Timeline
On Track
Completed
Jun. 2014
On Track
Submitted by Mar. 2015
Taos
On Track
Completed
Jun. 2014
On Track
Submitted by Dec 2014
TUV
On Track
Completed
Jun. 2014
On Track
Submitted by Dec 2014
Hengyi
On Track
Completed
Jun. 2014
On Track
Submitted by Dec 2014
Hengyi
On Track
Completed
Mar. 2013
On Track
Submitted by Mar. 2015
LESN
On Track
Completed
Mar. 2013
On Track
Submitted by Mar. 2015
LESN
7
42
A3
43
A4
44
A5
45
A6
46
A7
47
A9
48
A10
49
A11
50
A12
51
A13
52
N2
53
N3
On Track
Completed
Mar. 2013
On Track
Submitted by Mar. 2015
CLSN
On Track
Completed
Mar. 2013
On Track
Submitted by Mar. 2015
LESN
On Track
Completed
Aug. 2013
On Track
Submitted by Feb. 2015
TAOS
On Track
Completed
Oct. 2013
On Track
Submitted by Mar. 2015
Timeline
On Track
Completed
Oct. 2013
On Track
Submitted by Mar. 2015
Timeline
On track
Completed
Oct. 2013
On Track
Submitted by Mar. 2015
Taos
On Track
Completed
Jan. 2014
On Track
Submitted by Dec. 2014
E&T
On Track
Completed
Jan. 2014
On Track
Submitted by Dec. 2014
BLC
On Track
Completed
Jan. 2014
On Track
Not submitted
Timeline
On Track
Completed
Mar. 2014
On Track
Submitted by Feb. 2015
BLC
On Track
Completed
Completed
On Track
Submitted by Mar. 2015
Taos
On Track
Completed
Completed
On Track
Submitted by Mar. 2015
Timeline
8
Program Status Overview: Work Plan Completion VS Work Plan Timeline Summary showing the progress of each supplier on their WMD and Non-Dialogue WP (work plan) vs the agreed project timeline from the EPA (Entry Point Assessment). 0%
20%
40%
60%
80%
100%
P3 P5 P6 P7 P8 P9 P10 P11 P12 P13 P14 P15 P16 P18 PFT19 PFT20 PFT21 PFT22 PFT23 PFT24 PFT25 H1 H2 H4 H5 H8 H9 H10 D1 D2 D3 D4 D5 D6 D7 D9 D10 D11 D12 A1 A2 A3 A4 A5 A6 A7 A9 A10 A11 A12 A13 N2 N3
WP Timeline WMD Completeness Non-D Completeness
9
Trend Analysis - KPI’s measuring worker and productivity data to indirectly link social factors with business performance. Worker Turnover (%)
Rework Rate (%)
The worker turnover shows an increase in Q1, in line with seasonal trends (CNY), however, the peak turnover in Q1 at 19% is significantly reduced compared to Q1’14 (26%) and 30% in 2013.
Rework rates show a significant increase in line with CNY, but at a reduced rate vs CNY in 2013 and 2014.
10
Average Monthly Net Wages (RMB)
Average Weekly Working Hour (Hours)
Program average wages reduced in Feb, in line with seasonal trends, and followed the reduction in working hours (below). The program average is slightly above China average.
Working hours reduced in Q1, in line with seasonal trends for CNY holidays in previous years, but the program trend is increasing marginally over the program.
11
Program average and leader KPI data points KEY PERFORMANCE INDICATORS – Comparative Analysis (LATEST QUARTER) *Compared to last quarter data in bracket Factory Name
Program Average
Leader
WMD Benchmarks (Non-rep comm systems) in EPA
6.08
9.20
WMD Benchmarks (Rep systems) in EPA
4.29
6.50
6.39
8.27
# of work-related injuries
0.71
0.00
# of days lost due to work-related injuries
9.11
0.00
Average weekly working hours in the calendar month
51.24
29.00
Average # of rest days
6.57
11.97
481,868.20
N/A
15.25
0.00
Average monthly net wage (RMB)
2,995.09
4,290.25
Average monthly gross wage (RMB)
3,272.76
4,616.25
Ratio of OT Premium to Gross Wages
31.12
N/A
1st quartile of monthly net wage (RMB)
2,318.49
3,186.67
2nd quartile of monthly net wage (RMB)
2,946.32
4,046.75
1st quartile of monthly gross wage (RMB)
2,549.58
3,564.33
2nd quartile of monthly gross wage (RMB)
3,188.39
4,230.13
298.21
0.000059
Unit Produced Per Hour (UPPH)
43.90
532.85
Rework Rate (%)
2.21
0.24
Turnover (%)
15.24
9.12
Worker-Management Dialogue
Worker Satisfaction Worker Satisfaction Indicator from EPA Working Condition
Total monthly working hours in the calendar month % of workers working more than 60h in the week
Environmental Condition Kilowatts used per product unit Business Impact
12
Appendix 1 Worker Satisfaction Index Comparison by Supplier: Measured at Entry Point Assessment & repeated at Exit Point Assessment (no suppliers completed Exit Point Assessment yet). Directly measuring program impact through 6 dimensions on worker satisfaction before & after. (Remark: 1 means unsatisfied/not living up to expectations, and 10 means satisfied/living up to expectations. Overall scale is generated by the 6 dimensions score in even weight)
Working Relationships Wage Fairness and Transparency Working Hours Facilities Health and Safety Career/Personal Development
Overall Scale
Working Relationships
Wage Fairness and Transparency
Working Hours
Facilities
Health and Safety
Career/Person al Development
(1-10)
(1-10)
(1-10)
(1-10)
(1-10)
(1-10)
(1-10)
Above Average Below Average
6.0
6.9
6.3
4.1
5.8
6.5
6.3
1
A1
6.0
2
A2
5.2
6.5 6.3
6.4 6.4
6.0 2.3
5.6 4.7
5.6 5.9
5.8 5.5
3
A3
5.9
6.8
6.8
3.7
5.9
6.0
6.4
4
A4
5.9
6.8
6.0
2.5
6.5
7.0
6.5
5
A5
6.5
6.6
6.8
6.5
6.2
6.8
6.3
6
A6
6.0
6.5
5.8
5.3
5.1
6.7
6.4
7
A7
6.3
6.9
6.4
4.7
5.6
7.0
7.3
8
A8
6.2
6.5
6.5
4.5
6.0
7.1
6.6
9
A9
5.8
6.3
6.1
5.4
4.7
6.7
5.8
10
A10
5.9
6.6
5.8
6.0
5.2
6.4
5.2
11
A11
4.8
6.3
5.3
1.5
3.1
6.4
6.0
12
A12
5.7
6.7
6.7
2.8
6.0
5.8
6.2
13
A13
5.6
6.9
6.0
1.8
6.0
6.2
6.6
14
D2
7.3
7.8
7.8
5.8
7.0
8.2
7.2
15
D3
5.2
6.3
5.4
3.2
5.1
5.8
5.5
16
D4
6.3
7.0
7.1
4.5
6.2
7.2
6.0
17
D5
4.9
6.4
5.4
2.9
4.9
4.6
5.2
18
D6
6.3
6.8
7.4
4.6
6.0
7.0
6.2
Factory Name
13
19
D7
5.2
6.5
5.5
3.7
4.4
5.1
5.9
20
D8
5.1
6.3
5.1
2.7
4.2
6.2
5.8
21
D10
5.5
6.7
6.0
3.3
4.6
6.3
5.9
22
D11
5.4
6.7
6.4
2.0
4.8
5.7
6.4
23
D12
5.2
6.6
5.6
1.8
5.6
6.1
5.7
24
H1
5.1
6.5
5.4
3.1
5.0
4.5
5.8
25
H2
5.8
6.7
6.0
2.8
6.0
7.5
5.8
26
H3
6.1
6.6
7.2
4.8
6.7
6.1
5.4
27
H4
5.8
6.3
5.8
6.0
5.7
6.0
5.3
28
H5
5.3
6.3
5.8
3.4
5.6
6.1
4.5
29
H6
6.3
6.7
7.0
4.2
6.3
7.3
6.4
30
H8
7.5
7.9
7.3
6.5
7.1
8.2
8.0
31
H9
4.9
6.3
6.4
1.4
4.4
5.8
5.3
32
H10
4.9
6.9
5.1
2.6
4.0
4.4
6.3
33
N1
6.3
6.7
6.0
6.0
6.5
6.5
6.3
34
N2
5.5
6.4
5.8
5.2
3.6
6.3
5.9
35
N3
7.1
7.6
7.1
5.0
7.2
8.3
7.6
36
P3
7.7
7.9
7.7
7.7
7.2
8.6
7.1
37
P4
8.1
8.4
8.3
6.7
8.1
9.1
7.8
38
P5
5.6
6.6
6.5
1.0
6.5
6.8
6.2
39
P6
5.8
6.7
6.6
2.9
6.1
6.4
5.8
40
P7
6.7
7.0
7.1
5.9
6.1
7.8
6.3
41
P8
4.7
6.5
4.9
1.8
4.7
4.2
6.3
42
P9
7.0
7.8
7.1
3.8
8.6
6.6
7.9
43
P10
5.4
7.0
4.1
3.0
5.1
6.3
6.7
44
P11
5.5
6.8
5.3
3.1
6.4
5.0
6.6
45
P12
6.4
7.1
6.7
3.8
6.2
7.9
6.8
46
P13
5.0
6.8
4.7
3.7
4.1
4.8
6.1
47
P14
5.7
6.6
6.2
3.9
4.6
6.4
6.4
48
P15
7.2
7.8
7.7
5.8
6.8
7.5
7.8
49
P16
8.4
8.6
8.3
6.8
9.2
9.0
8.7
50
P17
6.3
7.4
6.9
3.6
6.2
7.1
6.7
51
P18
7.1
7.3
6.2
6.8
7.4
7.8
7.0
14
Appendix 2 Worker Management Dialogue Maturity Index Comparison by Supplier: Measured at Entry Point Assessment & repeated at Exit Point Assessment (no suppliers completed Exit Point Assessment yet). Directly measuring program impact on WMD before & after by covering below criteria:
Non-representative communication systems System & roles Rep structures Depth of worker rep role Representation & participation Selection of employee reps Employee reps & employees Scope of discussion Resources Time Funding Peer network
(Remark: 1 means no functioning systems/ no resources available; 10 means well functioning systems/ required sources available. The overall score of Rep. system is generated by 8 KPIs divided in 3 areas weighing 25% (system & roles), 37,5% (representation & participation) and 37,5%(resources))
Rep systems
Non-Rep Supplier/ Factory Name
Above Average Below Average 1
A1
2
A2 A3
3 4 5 6 7 8 9 10 11
A4 A5 A6 A7 A8 A9 A10 A11
comm systems Representa tion & participa tion (1~10)
Overall (1~10)
System & roles (1~10)
Resources (1~10)
6.1
3.2
4.3
5.1
4.3
4.8 5.6 5.6 6.0 6.4 5.2 6.4 6.8 5.6 6.8 4.0
3.0
6.7
5.3
5.0
4.0
8.7
3.0
6.0
4.7
2.0
2.0
4.7
3.0
2.0
7.3
3.0
4.7
4.0
3.0
4.7
5.3
3.0
5.3
5.3
2.0
2.7
3.3
3.0
4.7
4.0
5.0
7.3
4.7
5.3 6.0 4.8 3.0 4.3 4.0 4.5 4.8 2.8 4.0 5.8
15
Overall (1~10)
12
A12
13
A13 D6
14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40
D7 D8 D9 D10 D11 D12 H6 H7 H8 H9 H10 N1 N2 N3 P3 P5 P6 P7 P8 P9 P10 P11 P12 P13 P14 P15
42
P16 P17
43
P18
41
6.8 6.0 6.4 4.4 4.0 4.4 5.2 5.6 4.4 6.4 5.2 8.8 5.2 4.8 7.2 4.8 8.4 8.4 6.4 6.0 6.4 4.8 8.0 5.6 5.6 6.4 4.8 5.2 8.4 9.2 7.6 7.6
4.0
6.7
8.0
2.0
3.3
5.3
3.0
8.0
4.0
4.0
6.0
8.0
3.0
4.0
3.3
4.0
2.7
3.3
3.0
4.0
6.0
3.0
5.3
4.7
3.0
5.3
5.3
4.0
6.0
7.3
3.0
5.3
5.3
3.0
4.0
4.0
2.0
2.7
2.7
3.0
2.0
3.3
4.0
6.7
6.0
3.0
5.3
4.0
5.0
5.3
6.0
3.0
2.7
4.0
2.0
2.7
3.3
2.0
2.0
5.3
2.0
2.7
4.0
2.0
2.7
4.0
4.0
6.7
5.3
3.0
4.0
5.3
4.0
2.0
4.7
5.0
4.7
8.0
3.0
6.7
4.7
2.0
3.3
5.3
3.0
2.7
5.3
4.0
4.0
6.0
2.0
2.7
3.3
4.0
2.0
4.7
6.5 3.8 5.3 6.3 3.5 3.3 4.5 4.5 4.8 6.0 4.8 3.8 2.5 2.8 5.8 4.3 5.5 3.3 2.8 3.3 3.0 3.0 5.5 4.3 3.5 6.0 5.0 3.8 3.8 4.8 2.8 3.5
16