Idh electronics program q1 2015 summary report new

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 Dec. 31, 2014)

Geographic location, total factories (by Dec. 31, 2014)

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 WMD training have now completed, or will complete CC session 6 (out of 7) soon.

KPI trend analysis (1) The peak average program turnover rate in 2015, at 19% worker turnover, shows a strong reduction compared to previous years. The worker turnover trend in Q1’15 shows the traditional increase in line with seasonal averages during Q1 (celebrating CNY). However, the peak average program turnover rate in 2015stops at 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 Mar. 2015

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 Mar. 2015

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

Submitted by Mar. 2015

TUV

On Track

Completed

Oct. 2013

On track

Submitted by Mar. 2015

TUV

On Track

Completed

Jan. 2014

On track

Submitted by Mar. 2015

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 Mar. 2015

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 Mar. 2015

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 Mar. 2015

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).

Microsof t

Apple

Dell

HP

Philips

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 N1 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

0.75

0.00

# of days lost due to work-related injuries

8.98

0.00

Average weekly working hours in the calendar month

50.90

29.00

Average # of rest days

6.41

11.97

550,750.33

N/A

17.36

0.00

Average monthly net wage (RMB)

2,975.07

4,290.25

Average monthly gross wage (RMB)

3,253.16

4,616.25

Ratio of OT Premium to Gross Wages

32.03

N/A

1st quartile of monthly net wage (RMB)

2,308.43

3,256.00

2nd quartile of monthly net wage (RMB)

2,923.50

4,046.75

1st quartile of monthly gross wage (RMB)

2,541.66

3,564.33

2nd quartile of monthly gross wage (RMB)

3,167.06

4,230.13

246.38

0.000059

Unit Produced Per Hour (UPPH)

43.55

532.85

Rework Rate (%)

2.09

0.24

Turnover (%)

14.25

8.01

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 A4 A5 A6 A7 A8 A9 A10 A11

3 4 5 6 7 8 9 10 11

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