SUMMARY REPORT Q2/2014
Index of Contents:
Supplier uptake update Comments on program progress (Q2 ’14) 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
2
Supplier Uptake Overview of Supplier On-boarding Status by Brands Total 30/6/2014
Dell
HP
Philips
Apple
Microsoft (Nokia)
Regular Program
47
11
7
14
12
3
Fast Track Program
7
0
0
7
0
0
Geographic Location by Brands Program
Dell
HP
Philips
Apple
Microsoft (Nokia)
TOTAL
47 + 7
11
7
14 + 7
12
3
Guangdong Area
36 + 4
10
6
8+4
9
3
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
3
Total Factories on board (by June 30)
Geographic location, total factories (by June 30)
Total: 54
Total: 54 3
12
2
11
12 7 40
21 Dell
HP
Philips
Apple
Microsoft
South
Shanghai Area
Other
Comment on Progress During Q2’14 the program supplier group has stabilized. After 1 factory left the program, there are 54 suppliers in total, including the new ‘Fast Track’ factories. All suppliers are now implementing workplans including the 7 Fast Track suppliers, who have already completed their Entry Point Assessments. During Q2 most factories made good progress on implementation, and several factories have now caught up, or are ahead of, their work-plans. Implementation focus During Q2 IDH focused on following up on implementation timelines, to ensure all factories and brands made progress on completing the work-plans, and resolving any bottlenecks with the service providers or factory alignment. The results of this can been seen in the improved implementation completeness graphs, which show the progress made since the Q1 report. Mid-term assessments The IDH program team is reviewing the feasibility and considering conducting mid-term reviews and analysis with a sample of the factory candidates during Q3’14. The objective of this is to review and verify progress so far through on-site surveys, interviews and deeper data analysis of program impact with worker satisfaction indices and worker - management dialogue maturity. This activity is planned for Sept & Oct ’14. KPI trend analysis As is visible in the later section of this report, IDH now has over 24 months of monthly KPI data reporting from the factories involved in the program. At this stage the IDH program team is starting to review the KPI data for trends and indicators of impact. Initial review of the high level KPI data starts to indicate the following; (1) Worker turnover trend is showing signs of decreasing in the IDH factory group. Initially the program average worker turnover was approximately 16%+, and now the program average is below 14%, a reduction to date of approximately 12%. If seasonality effect is considered (ie worker turnover at CNY) then the net underlying worker turnover reduction is actually even higher.
4
(2) Rework Rates are also showing a corresponding reduction in the program average from 2.6%+ to approximately 1.8%, a reduction of around 30% in rework rates reported. Potentially this reduction in rework could be related to the reduction in worker turnover. (3) Average monthly net wages have increased from RMB2,200 to RMB2,800 over the period of the program reporting. An increase of around 27%. This can mostly be attributed to the increase in legal minimum wage requirements in China during this period. This observation is supported by the relatively flat-line on monthly wages during 2014, as there has been no increase in legal minimum salary rates. (4) Weekly working hours have been relatively flat during the program reporting period, at between 51 and 52 hours per week on average. The increase in net wages therefore cannot be attributed to increased working hours, but equally there has been no reduction in working hours, even as average net monthly salaries have actually increased. Key Focus Points: 1) The program closed for new factories to join (including the Fast Track) at the end of Q2’14. 2) During the Q1 progress reviews, and the steering committee meeting, the program team focused on highlighting any factories at risk due to implementation delays. This discussion helped to make key decisions on priorities, and has resulted in good progress on work-plans. This focus will continue in Q3. 3) 19 factories did not report KPI’s during Q2. IDH will jointly review this with the brands to try and ensure maximum data collection.
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
Involving WMD SPs
On Track
Completed
Jan. 2013
On Track
Submitted by Jun. 2014
TUV, TIMELINE
On Track
Completed
Jan. 2013
On Track
Submitted by Jun. 2014
TIME LINE
On Track
Completed
Jan. 2013
On Track
NOT SUBMITTED
CLSN, TIMELINE
On Track
Completed
Jan. 2013
On Track
Submitted by Apr. 2014
TIMELINE
On Track
Completed
Jan. 2013
On Track
NOT SUBMITTED
LESN, TIMELINE
On Track
Completed
Mar. 2013
On Track
Submitted by Dec. 2013
TIMELINE
On Track
Completed
Oct. 2013
On Track
NOT SUBMITTED
TIMELINE
Move to new location On Track
Re-doing EPA
May 2014
To be revised
-
TBD
Completed
Jan. 2014
On Track
NOT SUBMITTED
Taos
On Track
Completed
Jan. 2014
On Track
NOT SUBMITTED
Taos
On Track
Completed
Jan 2014
On Track
NOT SUBMITTED
TUV
On Track
Completed
Jan. 2013
On Track
Submitted by Jun. 2014
TUV
On Track
Completed
Jan. 2013
On Track
Submitted by Jun. 2014
Timeline
On Track
Completed
Sep. 2013
On tract
Incomplete
Timeline
On Track
Completed
Jun. 2012
On track
NOT SUBMITTED
TUV
On Track
Completed
Oct. 2013
On track
Submitted by Jun. 2014
TUV
On Track
Completed
Jan. 2014
On track
NOT SUBMITTED
Taos
On Track
Completed
Jan 2014
On track
Submitted by Jun. 2014
TBD
Re-joined
Completed
Aug. 2013
On Track
Submitted by May 2014
TAOS
6
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
On Track
Completed
Jan. 2013
On Track
Submitted by Jun. 2014
Timeline
On Track
Completed
Mar. 2013
On Track
Submitted by Jun. 2014
TUV
On Track
Completed
Mar. 2013
On Track
Not Submitted
TUV
On Track
Completed
Mar. 2013
On Track
Submitted by May 2014
LESN
On Track
Completed
Sep. 2013
On Track
Submitted by Apr. 2014
TUV
On Track
Completed
Oct. 2013
On Track
Submitted by Jun. 2014
TUV
On Track
Completed
Oct. 2012
On Track
Submitted by Apr. 2014
SUSA
On Track
Completed
Oct. 2013
On Track
Incomplete
TUV
On Track
Completed
Oct-. 2013
On Track
Submitted by May 2014
E&T
On Track
Completed
Nov. 2013
On Track
Not Submitted
BLC
On Track
Completed
Oct. 2013
On Track
Submitted by Jun. 2014
BLC
On Track
Completed
Oct. 2013
On Track
Not Submitted
TAOS
On Track
Completed
Mar. 2014
On Track
Submitted by Jun. 2014
E&T
On Track
Completed
May 2014
On Track
Not Submitted
Timeline
On Track
Completed
May 2014
On Track
Not Submitted
Timeline
On Track
Completed
May 2014
On Track
Not Submitted
Timeline
On Track
Completed
On Track
Completed
On Track
Completed
On Track
Completed
On Track
Completed
Mar. 2013
On Track
Submitted by Jun. 2014
LESN
7
41
A2
42
A3
43
A4
44
A5
45
A6
46
A7
47
A9
48
A10
49
A11
50
A12
51
A13
52
N1
53
N2
54
N3
On Track
Completed
Mar. 2013
On Track
Submitted by Jun. 2014
LESN
On Track
Completed
Mar. 2013
On Track
Submitted by Jun. 2014
CLSN
On Track
Completed
Mar. 2013
On Track
Submitted by Jun. 2014
LESN
On Track
Completed
Aug. 2013
On Track
Submitted by Mar. 2014
TAOS
On Track
Completed
Oct. 2013
On Track
Submitted by Jun. 2014
Timeline
On Track
Completed
Oct. 2013
On Track
Not submitted
Timeline
On track
Completed
Oct. 2013
On Track
Submitted by Jun. 2014
Taos
On Track
Completed
Jan. 2014
On Track
Submitted by Jun. 2014
E&T
On Track
Completed
Jan. 2014
On Track
Submitted by Mar. 2014
BLC
On Track
Completed
Jan. 2014
On Track
Not submitted
Timeline
On Track
Completed
Mar. 2014
On Track
Submitted by Jun. 2014
BLC
On Track
Completed
Completed
On Track
Not submitted
TBD
On Track
Completed
Completed
On Track
Submitted by Mar. 2014
Taos
On Track
Completed
Completed
On Track
Submitted by Jun. 2014
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).
Nokia
Apple
Dell
HP
Philips
0% P3 P5 P6 P7 P8 P9 P10 P11 P12 P13 P14 P15 P16 P18 H1 H2 H4 H5 H8 H9 H10 D1 D2 D3 D4 D5 D6 D7 D10 D11 D12 A1 A2 A3 A4 A5 A6 A7 A9 A10 A11 A12 A13 N1 N2 N3
20%
40%
60%
80%
100%
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 (%)
Worker turnover is now showing a clear downwards trend, which is even more significant if seasonal spikes at CNY and summer workers are considered.
Worker Turnover 35 30 25 20 15 10 5
Program Average
Rework Rate (%)
Program Leader
jun-14
apr-14
mei-14
mrt-14
jan-14
feb-14
dec-13
nov-13
okt-13
sep-13
aug-13
jul-13
jun-13
mei-13
apr-13
feb-13
mrt-13
jan-13
dec-12
nov-12
okt-12
sep-12
jul-12
aug-12
jun-12
apr-12
mei-12
mrt-12
feb-12
jan-12
0
Linear (Program Average)
Program trend is reducing overall and rework rates stabilized in Q2 after the peak in Q1, possibly realted to worker turnover at CNY.
Rework Rate (%) 4,50 4,00 3,50 3,00 2,50 2,00 1,50 1,00 0,50
Program Average
Program Leader
jun-14
apr-14
mei-14
mrt-14
jan-14
feb-14
dec-13
nov-13
okt-13
sep-13
aug-13
jul-13
jun-13
mei-13
apr-13
mrt-13
feb-13
jan-13
dec-12
nov-12
okt-12
sep-12
aug-12
jul-12
jun-12
mei-12
apr-12
mrt-12
feb-12
jan-12
0,00
Linear (Program Average)
10
Average Monthly Net Wages (RMB)
Program trend has increased slowly, which mostly reflects the adjustments of legal minimum wage. Q2’14 wages stabilized at RMB2,800 on average.
Average Monthly Net Wages 5.300 4.800 4.300 3.800 3.300 2.800 2.300 1.800
Program Average
Average Weekly Working Hour (Hours)
jun-14
apr-14
mei-14
feb-14
mrt-14
jan-14
dec-13
okt-13
nov-13
sep-13
jul-13
Program Leader
aug-13
jun-13
mei-13
apr-13
mrt-13
jan-13
feb-13
dec-12
nov-12
okt-12
sep-12
jul-12
aug-12
jun-12
apr-12
mei-12
feb-12
mrt-12
jan-12
1.300
Linear (Program Average)
Working hours are showing a marginally increasing trend over the course of the program, But generally flat around 51 hours per month on average.
Average Weekly Working Hours 60 50 40 30 20 10
Seasonal Adjusted Average
Program Average
Program Leader
Linear (Program Average)
jun-14
mei-14
apr-14
mrt-14
feb-14
jan-14
dec-13
nov-13
okt-13
sep-13
aug-13
jul-13
jun-13
mei-13
apr-13
mrt-13
feb-13
jan-13
dec-12
nov-12
okt-12
sep-12
aug-12
jul-12
jun-12
mei-12
apr-12
mrt-12
jan-12
feb-12
0
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
6.1
9.2
WMD Benchmarks (Rep systems) in EPA
4.3
6.5
6.0
8.4
# of work-related injuries
0.74
0.00
# of days lost due to work-related injuries
33.34
0.00
Average weekly working hours in the calendar month
51.16
18.09
Average # of rest days
5.07
9.67
414,466.44
N/A
18.81
0.00
Average monthly net wage (RMB)
2,803.84
4,043.67
Average monthly gross wage (RMB)
2,972.11
4,346.33
Ratio of OT Premium to Gross Wages
38.55
N/A
1st quartile of monthly net wage (RMB)
2,377.44
3,597.53
2nd quartile of monthly net wage (RMB)
2,896.51
5,068.50
1st quartile of monthly gross wage (RMB)
2,603.99
4,792.67
2nd quartile of monthly gross wage (RMB)
3,101.68
5,181.50
411.21
0.00
25079.62
549154.45
Rework Rate (%)
2.09
0.29
Turnover (%)
12.89
4.78
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 Unit Produced Per Hour (UPPH)
12
Appendix 1 Worker Satisfaction Index Comparison by Supplier: Measured at Entry Point Assessment & repeated at Exit Point Assessment (no suppliers completed exit point as 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
Factory Name
13
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
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 as yet). Directly measuring program impact on WMD before & after by covering below criteria:
Non-rep comm systems System & roles Rep structures Depth of worker rep role Representation & participation S/election 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
Overall (1~10)
15
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