SUMMARY REPORT Q3/2013
Supplier Uptake Progress On-Boarding Progress in 2013 (by Sept. 30) 10
2
5
2012 Q4
4 5
5
4
0
2
2012 Q3
2
2012 Q1-2
0
4 1 1
2 1 1
9
2
2013Q3
3
1 2
2
2013Q2 2013Q1
Nokia
4
Apple
1
1
HP
6
Dell
8
Philips
On-Boarding Progress in 2012
Overview of Supplier On-boarding Status by Brands Program
Dell
HP
Philips Apple
Nokia
TOTAL
49
11
10
14
11
3
Contract signed (Move to implementation)
37
9
6
13
8
1
Pending
3
0
3
0
0
0
EPA in implementation
7
0
1
1
3
2
EPA in preparation (newly onboard)
3
2
1
0
0
0
2
Geographic Location by Brands Program Dell
HP
Philips Apple
Nokia
TOTAL
49
11
10
14
11
3
Guangdong Area
39
10
9
8
9
3
Shanghai Area
9
1
1
5
2
0
Other
1
0
0
1
0
0
Total Factories on board (by Sept. 30)
Geographic location, total factories (by Sept.30)
Total=49
Total=49
11
3
10
11
1
10 14 Dell
HP
38 South
Philips
Apple
Shanghai Area
Other
Nokia
3
Program KPI’s Trend Analysis Data Tracked Back To January 2012 June 2012 January 2013 March 2013 June 2013 September 2013
Worker Turnover (%)
Number of Suppliers 11 1 1 4 16 10
Program trend is flat, but the underlying worker turnover, excluding seasonal peaks at CNY and summer workers, is declining.
35% 30% 25% 20% 15% 10% 5% 0% Jan, Feb, Mar, Apr, May, Jun, Jul, Aug, Sep, Oct, Nov, Dec, Jan, Feb, Mar, Apr, May, Jun, Jul, Aug, Sep, 2012 2012 2012 2012 2012 2012 2012 2012 2012 2012 2012 2012 2013 2013 2013 2013 2013 2013 2013 2013 2013 Program Average
Rework Rate (%)
Program Leader
Linear (Program Average)
Program trend is reducing, with some peaks related to specific factories, possibly related to production shifts and worker turnover.
3% 3% 2% 2% 1% 1% 0% Jan, Feb, Mar, Apr, May, Jun, Jul, Aug, Sep, Oct, Nov, Dec, Jan, Feb, Mar, Apr, May, Jun, Jul, Aug, Sep, 2012 2012 2012 2012 2012 2012 2012 2012 2012 2012 2012 2012 2013 2013 2013 2013 2013 2013 2013 2013 2013 Program Average
Program Leader
Linear (Program Average)
4
Average Monthly Net Wages (RMB)
Program trend is increasing as minimum wages increases are applied. The seasonal low at CNY is due to lower hours and workers leaving.
4,300 3,800 3,300 2,800 2,300 1,800 1,300 Jan, Feb, Mar, Apr, May, Jun, Jul, Aug, Sep, Oct, Nov, Dec, Jan, Feb, Mar, Apr, May, Jun, Jul, Aug, Sep, 2012 2012 2012 2012 2012 2012 2012 2012 2012 2012 2012 2012 2013 2013 2013 2013 2013 2013 2013 2013 2013 Program Average
Average Weekly Working Hour (Hours)
Program Leader
Linear (Program Average)
Program working hours are showing a marginally increasing trend, with seasonal lows at CNY. Average working hours are up approximately 5% YoY. This needs to be reviewed further.
60 50 40 30 20 10 0 Jan, Feb, Mar, Apr, May, Jun, Jul, Aug, Sep, Oct, Nov, Dec, Jan, Feb, Mar, Apr, May, Jun, Jul, Aug, Sep, 2012 2012 2012 2012 2012 2012 2012 2012 2012 2012 2012 2012 2013 2013 2013 2013 2013 2013 2013 2013 2013 Program Average
Program Leader
Linear (Program Average)
5
Comment on Progress Over the last three months, the program has continued to make progress with 37 suppliers implementing Work Plans and 10 suppliers conducting/preparing EPA. There are currently 49 suppliers in total in the program. On Boarding Phase Two Supplier Kickoff Events were held this year, one in Shenzhen (March) and one in Shanghai (May). A total of 26 suppliers joined the Program in Q2 and Q3 after the Kick-off event, including 9 from the Shanghai area and 15 from South China. Among them, 10 suppliers are in the process of conducting EPA. Work Plan Implementation Phase After the EPA, suppliers move into execution of their Work Plan, which is customized for each factory. Worker-Management Dialogue training is the first activity to roll out at this stage. In the first quarter of 2013, Work Plans for suppliers from the first uptake were reviewed and revised to incorporate the Dialogue structure and link the implementation modules to the improvement areas. Dialogue Core Curriculum resumed in Q3 after the revision of the training content by the Coaching Organization. The enhancement of the Continuous Improvement Team (CIT) establishment and short-term action plan development, will be facilitated by service providers. By Oct. 31, the suppliers received a total of 31 CC1, 18 CC2 and 6 CC3. We cannot understate the impact of the brand’s support and encouragement, which also helps to engage suppliers in worker-management dialogue, especially at the early stages. Additional non-dialogue modules have been lined up for implementation during Q3. The 2nd round of Frontline-supervisor ToT rolled out in July, and it has been scheduled in November for the suppliers in Shanghai area. This module is being well received by the factories and generally well supported. The Canteen Improvement Project and EHS Intensive Training were rolled out to suppliers in July. As was previously noted in the supervisor ToT sessions, suppliers who had been pro-active in training preparation and participation have shown better progress, getting more impact. This should also be noted and pro-actively supported by the brands. To reduce the ‘per supplier’ participation cost, group training was organized again in Q3. However, due to the number of suppliers requesting the same topic, it was limited in the current pool of suppliers, and progress was slowed down. This situation will be improved as more suppliers come onboard and we increase capacity. Key Learning Points: 1) To reach the target of 75 suppliers by December 2013, the Fast Track has been proposed and confirmed by SC. This will be launched in Q4 and start at the beginning of 2014. 2) Factory management commitment and active participation from workers is key to a dynamic dialogue and overall impact. The project team is encouraged to explore different ways to
6
ensure better commitment from factory management, as well as ways to build up the workers’ confidence, capacity and capability to participate in dialogue with management. 3) Group training, with advantages in reduced costs, and bringing in more participants for wider discussion and interaction, will be continued to be offered in the future. With more suppliers onboard this process is expected to run quicker. Meanwhile, more individual modules will be offered to suppliers to suit their Work Plan implementation schedule at a different pace.
7
APPENDIX Progress Status No.
1 2 3
4 5 6 7 8 9 10 11 12 13
14 15 16 17 18 19
By Brand
Status
EPA
Implementation Starting Point
Work Plan
On Track
Completed
Jan-13
On Track
NOT SUBMITTED
TUV, TIMELINE
On Track
Completed
Jan-13
On Track
April and May sent
TIME LINE
On Track
Completed
Jan-13
On Track
NOT SUBMITTED
CLSN, TIMELINE
On Track
Completed
Jan-13
On Track
Submitted by July 2013
TIMELINE
On Track
Completed
Jan-13
On Track
Submitted by July 2013
LESN, TIMELINE
On Track
Completed
Mar-13
On Track
Submitted by Sep 2013
TIMELINE
New starter
Completed
Oct-13
On Track
-
TIMELINE
Completed
-
-
-
TBD
D8
On boarding
In progress
-
-
-
TBD
D9
On boarding
Scheduling
-
-
-
TBD
D10
On boarding
Scheduling
-
-
-
TBD
D11
On boarding On Track
Completed
Jan-13
On Track
Submitted by July 2013
TUV
On Track
Completed
Jan-13
On Track
Submitted by July 2013
Timeline
Suspended
Completed
-
-
-
TUV
Resumed
Completed
Sep-13
On tract
-
CLSN
On Track
Completed
Jun-12
On track
-
TUV
Suspended
Completed
-
-
-
ERI
Pending
Completed
-
-
-
ERI
New starter
Completed
Oct-13
-
-
TUV
D1 D2 D3
D4 D5 D6
KPI Collection
Involving WMD SPs
D7
H1 H2
H3 H4 H5 H6 H7 H8
8
20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37
38 39 40 41
H9
On boarding
H10
On boarding
In progress
-
-
-
TBD TBD
Re-joined
Completed
Aug-13
On Track
-
TAOS
On Track
Completed
Jan-13
On Track
Submitted by August 2013
Timeline
On Track
Completed
Mar-13
On Track
Submitted by August 2013
TUV
On Track
Completed
Mar-13
On Track
Submitted by July 2013
TUV
On Track
Completed
Mar-13
On Track
Submitted by July 2013
LESN
New starter
Completed
Nov-13
-
-
TBD
New starter
Completed
Oct-13
On Track
-
Timeline
New starter
Completed
Oct-13
On Track
-
TAOS
New starter
Completed
Sep-13
On Track
-
TUV
New starter
Completed
Oct-13
On Track
Scheduled in Nov
TUV
New starter
Completed
Oct-12
On Track
Scheduled in Nov
SUSA
New starter
Completed
Oct-13
On Track
Scheduled in Nov
TUV
New starter
Completed
Oct-13
On Track
Scheduled in Nov
SUSA
New starter
Completed
Pending
-
-
TBD
On Track
Completed
Mar-13
On Track
Submitted by August 2013
LESN
On Track
Completed
Mar-13
On Track
Submitted by August 2013
LESN
On Track
Completed
Mar-13
On Track
Submitted by August 2013
CLSN
On Track
Completed
Mar-13
On Track
LESN
New starter
Completed
Aug-13
On Track
Submitted by September 2013 Submitted by August 2013
New starter
Completed
Oct-13
On Track
-
Timeline
P3 P5 P6 P7 P8 P14 P15 P16 P9 P10 P11 P12 P13 P17 A1 A2
A3 A4 A5
TAOS
A6
9
42 43 44 45 46 47 48 49
New starter
Completed
Oct-13
On Track
-
Timeline
New starter
Completed
-
-
To finalize the contract
TBD
New starter
Completed
Oct-13
On Track
-
Taos
Completed
A10
On boarding
-
-
-
TBD
A11
On boarding
Completed
-
-
-
TBD
Completed
Completed
Approve
-
TBD
N1
Phase I completed
Completed
Completed
Approve
-
TBD
N2
Phase I in progress
Completed
Completed
Approve
-
TBD
N3
Phase I in progress
A7 A8 A9
10
H5 A4 P6 P7 P8
Philips
P5
D6
D5
D4
Dell
D3
D2
D1
A7
A6
A5
Apple
A3
A2
A1
H8
H4
HP
H2
H1
Program Status Overview: Work Plan Completion VS Work Plan Timeline WP Completion WP Timeline WP Completion WP Timeline WP Completion WP Timeline WP Completion WP Timeline WP Completion WP Timeline WP Completion WP Timeline WP Completion WP Timeline WP Completion WP Timeline WP Completion WP Timeline WP Completion WP Timeline WP Completion WP Timeline WP Completion WP Timeline WP Completion WP Timeline WP Completion WP Timeline WP Completion WP Timeline WP Completion WP Timeline WP Completion WP Timeline WP Completion WP Timeline WP Completion WP Timeline WP Completion WP Timeline WP Completion WP Timeline WP Completion WP Timeline 0%
10%
W-M Dialogue
20% Non-Dialogue
30% Check & Act
40%
50%
60%
WP Timeline
11
KEY PERFORMANCE INDICATORS – Comparative Analysis *Compared to last quarter data in bracket In 3rd Quarter (July 2013 to Sept. 2013)
Program Average
Leader
-
-
-
-
# of work-related injuries
1.38
0.00
# of days lost due to work-related injuries
4.77
0.00
Average weekly working hours in the calendar month
51.15
41.02
Average # of rest days
4.95
7.15
649866
N/A
% of workers working more than 60h in the week
20%
0%
Average monthly net wage (RMB)
2789
3254
Average monthly gross wage (RMB)
2998
3586
Ratio of OT Premium to Gross Wages
41%
N/A
1st quartile of monthly net wage (RMB)
1978
2747
2nd quartile of monthly net wage (RMB)
2561
3141
1st quartile of monthly gross wage (RMB)
2144
2984
2nd quartile of monthly gross wage (RMB)
2764
3450
2.12
1.68
11.95
0.03
Rework Rate (%)
2%
0%
Turnover (%)
19%
11%
Worker-Management Dialogue Worker-Management Dialogue Benchmarks in EPA Worker Satisfaction Worker Satisfaction Indicator from EPA Working Condition
Total monthly working hours in the calendar month
Environmental Condition Kilowatts used per product unit Business Impact Unit Produced Per Hour (UPPH)
12
13