Idh q4 2014 summary report

SUMMARY REPORT Q4/2014

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 (Q4 ’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

3

Supplier Uptake Overview of Supplier On-boarding Status by Brands Total 30/6/2014

Dell

HP

Philips

Apple

Microsoft

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

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

4

Total Factories on board (by Sept. 30)

Geographic location, total factories (by Sept. 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 Q4 ’14 IDH conducted the mid-term assessments (MTA) with the sample of 13 factories. This involved on site surveys, interviews and analysis. The purpose of the MTA was to identify successful strategies and impact from the program so far, identify improvement opportunities and prepare for the finalization of the program implementation and final reporting. The sample group of factories was selected from a mixture of different types of factories (typologies), based on their profile in terms of engagement in the program and results observed so far. The data collected was reviewed and analysed

by Elevate, ERI and Ergon associates (an independent consultancy based in the UK). ERI and Ergon both produced interim and final analysis reports on their findings, which will be published separately. This was a major effort for the program facilitators, service providers and the factories themselves.

IDH brand & supplier conference In December 2014 the IDH program team held a major supplier and brand conference in Shenzhen. 34 factories and 47 factory representatives joined the event, along with representatives of all 5 brands.

During the event IDH shared the interim feedback from the MTA and held discussion groups, with feedback, on the lessons learned and factory experiences so far.

Implementation focus During Q4 the program team continued to focus on implementation for both non-dialogue (capacity building) and worker-management dialogue 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 5 (out of 7) soon.

KPI trend analysis (1) Worker turnover trend in Dec ’14 shows a change with a slight increase due to seasonality of worker turnover, which we have also seen in previous years. It is anticipated that worker turnover will increase further in Q1, over the Chinese New Year holidays.

(2) Rework rates showed a corresponding increase in Dec, which is possibly related to the increased worker turnover, noted above.

(3) Average salaries and working hours were basically flat on average in Q4

5

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.

3) IDH received feedback from consultants, brands and factories during the MTA and conference, the program team is now working to incorporate this feedback in the action plans for 2015.

6

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 Dec. 2014

TUV, TIMELINE

On Track

Completed

Jan. 2013

On Track

Submitted by Dec. 2014

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 Sept. 2014

TIMELINE

On Track

Completed

Oct. 2013

On Track

NOT SUBMITTED

TIMELINE

Move to new location On Track

Re-doing EPA on new location Completed

May 2014

On Track

-

TBD

Jan. 2014

On Track

NOT SUBMITTED

Taos

On Track

Completed

Jan. 2014

On Track

Submitted by Dec. 2014

Taos

On Track

Completed

Jan 2014

On Track

Submitted by Dec. 2014

TUV

On Track

Completed

Jan. 2013

On Track

Submitted by Nov. 2014

TUV

On Track

Completed

Jan. 2013

On Track

Submitted by Dec. 2014

Timeline

On Track

Completed

Sep. 2013

On tract

Submitted by Nov. 2014

Timeline

On Track

Completed

Jun. 2012

On track

NOT SUBMITTED

TUV

On Track

Completed

Oct. 2013

On track

Submitted by Nov. 2014

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 Nov. 2014

TAOS

7

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 Nov. 2014

LESN

On Track

Completed

Sep. 2013

On Track

Submitted by Aug. 2014

TUV

On Track

Completed

Oct. 2013

On Track

Submitted by Nov. 2014

TUV

On Track

Completed

Oct. 2012

On Track

Submitted by Nov. 2014

SUSA

On Track

Completed

Oct. 2013

On Track

Submitted by Nov. 2014

TUV

On Track

Completed

Oct-. 2013

On Track

Submitted by Oct. 2014

E&T

On Track

Completed

Nov. 2013

On Track

Not Submitted

BLC

On Track

Completed

Oct. 2013

On Track

Submitted by Dec. 2014

BLC

On Track

Completed

Oct. 2013

On Track

Not Submitted

TAOS

On Track

Completed

Mar. 2014

On Track

Submitted by Nov. 2014

E&T

On Track

Completed

May 2014

On Track

Submitted by Dec. 2014

Timeline

On Track

Completed

May 2014

On Track

Submitted by Nov. 2014

Timeline

On Track

Completed

May 2014

On Track

Submitted by Nov. 2014

Timeline

On Track

Completed

Jun. 2014

On Track

Submitted by Dec. 2014

Taos

On Track

Completed

Jun. 2014

On Track

Submitted by Dec. 2014

TUV

On Track

Completed

Jun. 2014

On Track

Not Submitted

Hengyi

On Track

Completed

Jun. 2014

On Track

Submitted by Dec. 2014

Hengyi

On Track

Completed

Mar. 2013

On Track

Submitted by Dec. 2014

LESN

On Track

Completed

Mar. 2013

On Track

Submitted by Nov. 2014

LESN

8

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 Nov. 2014

CLSN

On Track

Completed

Mar. 2013

On Track

Submitted by Nov. 2014

LESN

On Track

Completed

Aug. 2013

On Track

Submitted by Mar. 2014

TAOS

On Track

Completed

Oct. 2013

On Track

Submitted by Dec. 2014

Timeline

On Track

Completed

Oct. 2013

On Track

Submitted by Nov 2014

Timeline

On track

Completed

Oct. 2013

On Track

Submitted by Dec. 2014

Taos

On Track

Completed

Jan. 2014

On Track

Submitted by Nov. 2014

E&T

On Track

Completed

Jan. 2014

On Track

Submitted by Nov. 2014

BLC

On Track

Completed

Jan. 2014

On Track

Not submitted

Timeline

On Track

Completed

Mar. 2014

On Track

Submitted by Nov. 2014

BLC

On Track

Completed

Completed

On Track

Not submitted

TBD

On Track

Completed

Completed

On Track

Submitted by Dec. 2014

Taos

On Track

Completed

Completed

On Track

Submitted by Nov. 2014

Timeline

9

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 P6 P8

Philips

P10 P12 P14 P16 PFT19 PFT21 PFT23 PFT25

HP

H2 H5

WP Timeline

H9

WMD Completeness

D1

Non-D Completeness

Dell

D3 D5 D7 D10 D12 A2

Apple

A4 A6 A9 A11

Micro soft

A13 N2

10

Trend Analysis - KPI’s measuring worker and productivity data to indirectly link social factors with business performance.

Worker Turnover (%)

The worker turnover shows some increase in Dec, which is in line with seasonality increases in previous years. However, the overall rate has decreased YoY.

Worker Turnover 35 30 25 20

15 10 5

Rework Rate (%)

Dec-14

Oct-14

Nov-14

Sep-14

Jul-14

Aug-14

Jun-14

Apr-14

May-14

Mar-14

Jan-14

Feb-14

Dec-13

Oct-13

Program Leader

Nov-13

Sep-13

Jul-13

Aug-13

Jun-13

Apr-13

Program Average

May-13

Mar-13

Jan-13

Feb-13

Dec-12

Oct-12

Nov-12

Sep-12

Jul-12

Aug-12

Jun-12

May-12

Apr-12

Mar-12

Jan-12

Feb-12

0

Linear (Program Average)

Rework rates stabilised in Q4, likely related to product lifecycle and lower worker turnover.

Rework Rate (%)

Program Average

Program Leader

Linear (Program Average)

11

Dec-14

Oct-14

Nov-14

Sep-14

Aug-14

Jul-14

Jun-14

May-14

Apr-14

Feb-14

Mar-14

Jan-14

Dec-13

Nov-13

Oct-13

Sep-13

Jul-13

Aug-13

Jun-13

May-13

Apr-13

Feb-13

Mar-13

Jan-13

Dec-12

Nov-12

Oct-12

Sep-12

Aug-12

Jul-12

Jun-12

May-12

Apr-12

Feb-12

Mar-12

Jan-12

4.00 3.50 3.00 2.50 2.00 1.50 1.00 0.50 0.00

Average Monthly Net Wages (RMB)

Program trend has increased slowly, which reflects the adjustments of legal minimum wage and seasonality, tracking the China rates.

Average program net wages are now at RMB3,000 per month.

Average Monthly Net Wages

Program Average

Average Weekly Working Hour (Hours)

Working hours were flat in Q4 ’15, just over 50h per week.

Average Weekly Working Hours 80 70 60 50 40 30 20 10 0

Seasonal Adjusted Average

Program Average

China Average

线性 (Program Average)

Program Leader

12

Dec-14

Oct-14

Linear (Program Average)

Nov-14

Sep-14

Jul-14

Aug-14

Jun-14

Apr-14

May-14

Mar-14

Jan-14

China Average

Feb-14

Dec-13

Oct-13

Nov-13

Sep-13

Jul-13

Aug-13

Jun-13

Apr-13

Program Leader

May-13

Mar-13

Jan-13

Feb-13

Dec-12

Oct-12

Nov-12

Sep-12

Jul-12

Aug-12

Jun-12

Apr-12

May-12

Mar-12

Jan-12

Feb-12

5,300 4,800 4,300 3,800 3,300 2,800 2,300 1,800 1,300

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

0.84

0.00

# of days lost due to work-related injuries

10.85

0.00

Average weekly working hours in the calendar month

53.22

31.50

Average # of rest days

5.82

12.44

510,619.50

N/A

16.59

0.00

Average monthly net wage (RMB)

3,140.96

4,243.70

Average monthly gross wage (RMB)

3,377.69

4,467.00

37.05

N/A

1st quartile of monthly net wage (RMB)

2,677.19

3,702.50

2nd quartile of monthly net wage (RMB)

3,166.88

4,286.50

1st quartile of monthly gross wage (RMB)

2,894.08

3,968.50

2nd quartile of monthly gross wage (RMB)

3,410.17

4,565.50

10.25

0.000054

Unit Produced Per Hour (UPPH)

21.28

87.80

Rework Rate (%)

1.97

0.00

Turnover (%)

11.49

4.43

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

Ratio of OT Premium to Gross Wages

Environmental Condition Kilowatts used per product unit Business Impact

13

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

14

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

15

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

16

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

17