|Commitments without action are simply promises and hopes. At Dell, we understand that. Every day we work toward creating a socially and environmentally responsible supply chain. From direct engagement to industry-wide partnerships, Dell takes an active role in guiding our suppliers to a better, more ethical supply chain.|
Supplier Engagement, Capability Building and Assessment Programs
Even before a company can be qualified as a Dell supplier, we require them to complete a Social and Environmental Responsibility Risk Assessment. This helps Dell determine what kind of risk they may pose as part of our supply chain. If a supplier is identified as a medium- or high-risk, they must also complete an Electronics Industry Citizenship Coalition (EICC) third-party validated audit before being qualified.
Assessments do not end with onboarding. Dell works with suppliers to conduct ongoing risk assessments on various topics. We have developed an environmental health and safety (EHS) assessment system to help identify risks that could lead to production suspensions, factory shut-downs or accidents.
We also require our top-tier suppliers to develop water risk mitigation plans – helping us (and them) understand what risks they face from global and local water-related threats and identifying how they plan to reduce these risks. We first rolled this out in 2015 to our top 50 suppliers based on suppliers from parts of the industry with high water consumption, as identified by disclosures to CDP’s Water Disclosure Program. By 2020, we will have water mitigation plans from all of our production suppliers and select service suppliers.
Dell’s global supply chain is a highly complex, diverse network of interconnected companies that serve as an extension of our operations and our values. We expect our suppliers to uphold the same social and environmental (SER) standards we set for ourselves, which include criteria for carbon, water and waste; worker health and safety; and fundamental human rights and dignity.
While Dell works proactively with suppliers to identify risks and plan engagements, we also employ ongoing audits as a means of monitoring efforts and measuring how accountable our suppliers are to meeting their social and environmental obligations.
Audits fall into one of two general categories: those conducted by Dell team members and those conducted by third-party auditors – often to verify the results of Dell audits or investigate allegations.
When an audit reveals something out of compliance, it is categorized as either a minor nonconformance (such as a procedure that has not been revised or an out-of-date record) or a priority issue (a more systemic failure, such as excessive working hours or the use of child labor). Suppliers are expected to deal with all issues in a timely manner and must put together corrective action plans.
Priority Issue Taskforce
With certain priority issues, like excessive overtime, we work to get ahead of audit findings. Made up of Dell’s procurement, supplier quality and SER teams, the priority issues task force reviews progress with suppliers to address challenges, set goals and strategize solutions. The team also proactively collects data on common indicators of overtime hours (like forecast accuracy, material shortages, worker turnover, etc.) and helps calculate which factors are causing issues for each supplier. The task force has seen success in driving down the number and severity of working hours-related priority issues.
Of course, if issues continue to remain open for too long, the SER Executive Review Board will step in to address the problem. Made up of senior Dell leadership, suppliers that have a large number of open audit findings past their due dates will face reduced or terminated business if they do not demonstrate progress in closing out their corrective action plans.
Building Supplier Capabilities
Accountability is a two-way street. Dell has an obligation to help our suppliers grow their capabilities and meet the social and environmental expectations we have. We hold quarterly business reviews and regular trainings to encourage suppliers to learn from industry peers how to manage workplace issues and build harmonious labor relations.
Dell focuses on capability building and hosts multiple supplier workshops each year that address relevant areas affecting our suppliers. Our Social and Environmental Responsibility (SER) workshops offer those in our supply chain the opportunity to learn and share best practices. Key topics include the Carbon Disclosure Project, management of working hours and corporate responsibility performance evaluation tools.
To embed socially responsible behavior into business activities, key suppliers must undergo a Dell review of requirements and principles in quarterly business reviews. Dell suppliers are evaluated quarterly and our purchasing decisions consider their scores. The reviews include specific implementation plans for suppliers’ own social and environmental responsibility programs for compliance and environmental stewardship. We also participate in various projects to help grow our suppliers’ capabilities. For example, we partnered with ELEVATE, a supply chain SER consulting firm, to launch a metric management project for 20 of our suppliers whose audits identified priority issues. The project was designed to provide deeper insights into underlying social performance issues by analyzing the correlation between metrics like overtime, turnover rates, rework rates, wages and productivity. The 20 suppliers in 2014 who received the training and educational tools related to corrective action plans were able to close 53 percent of related non-compliant issues.
|Collaborating within the industry |
We recognize there are systemic issues in the collective electronics supply chain – like excessive working hours, insufficient transparency and violations of freely chosen employment standards – that stubbornly remain a challenge.
While Dell continually works to eradicate these and other issues, we cannot do it alone.
We look to external experts like the Electronic Industry Citizenship Coalition (EICC), Verite and ELEVATE to help us frame these challenges and partner with like-minded companies to drive meaningful change.
Working together to improve working conditions
As part of our efforts, we also partner with others in our industry to find solutions to issues common to our disparate supply chains. For example, we are part of the EICC’s Vulnerable Worker working group and use the EICC’s student worker toolkit to educate suppliers on hiring student workers. The toolkit ensures all EICC members’ suppliers receive the same directions.
We are also a part of the Dutch Sustainable Trade Initiative (IDH), a program designed to improve working conditions at the supplier level by finding innovative ways to address concerns that affect both management and workers. The program affects more than 500,000 workers worldwide. Eleven Dell suppliers participate in IDH, and we continued to drive them to establish worker committees that can build effective dialogue mechanisms in the workplace. Suppliers set up continuous improvement teams, consisting of worker representatives and management, which help solve issues related to working conditions, productivity and labor. They also conducted employee opinion surveys, and the resulting data improved interviews and meetings and ultimately sensitized suppliers to the merits of listening to employees.
REAP / Student Worker program
Finding a reliable, quality labor force is critical to our supply chain partners. Student workers in vocational programs can be an important part of the solution – either through internships or even by hiring graduates for full-time work. Unfortunately, our industry has seen that not all vocational training is the same and Chinese student workers can get inappropriately placed. In a study we did with EICC, Apple and Stanford University’s Rural Education Action Program in 2014, we found that:
This initial program delivered impressive results:
Dell and Apple are continuing to support this important initiative on behalf of the EICC and its ongoing success is a testament to our collaborative approach. View our partners’ video.
|Working to cultivate a conflict-free supply chain |
There is an ongoing humanitarian crisis in the Democratic Republic of the Congo where the mining, processing and trade of “conflict minerals” – tin, tantalum, tungsten and gold – continues to finance violence. Additionally, tin mining on the islands of Bangka and Bilitung in Indonesia has been criticized for lack of regulations and monitoring, environmental damage, and poor labor conditions.
Dell is committed to working toward a conflict-free supply chain and has been involved with this issue since before the passage of the Dodd-Frank Consumer Protection Act in the U.S. and other related regulations.
Because this issue affects our whole industry, we work with the EICC, our peers and our suppliers to develop solutions. We helped stand up the EICC’s Conflict-Free Sourcing Initiative and contributed to tools like the Conflict-Free Smelter Program. We regularly conduct training with our commodity managers and maintain this list of smelters involved in our production cycle.
Since 2010, Dell also has been part of the Public-Private Alliance for Responsible Minerals Trade (PPA), a multi-sector and multi-stakeholder initiative to support supply chain solutions to conflict minerals challenges in the Democratic Republic of Congo (DRC) and the Great Lakes Region (GLR) of Central Africa. The PPA helps fund and coordinate support of organizations working within the region to develop verifiable conflict-free supply chains, develop industry best practices, encourage responsible sourcing, and promote transparency.
Dell also joined the Tin Working Group (TWG), which was convened by the Sustainable Trade Initiative (IDH) and brings together members of the EICC, Friends of the Earth and the International Tin Industry Association to address the ongoing mining issues in Indonesia. TWG works with local stakeholders in the country’s biggest mining area, the Bangka-Belitung Islands, to better understand their goals and challenges and improve their business sustainability.
Mitigating water and climate risk with CDP
Risks such as drought, flooding, disasters or a lack of clean water can disrupt suppliers’ abilities to deliver goods and services and to care for their employees. We work with Dell suppliers to mitigate these risks with the ultimate goal of requiring all production and select service suppliers to have a mitigation plan in place by 2020.
Before they can plan for the future, companies must understand their current water consumption trends, the level of water stress in regions in which they operate, and issues that could compromise their access to clean, potable water. In FY15, we invited 86 suppliers to report their water usage to the CDP’s water disclosure program as a first step toward characterizing our supply chain water footprint. In FY16, we will roll out the first round of water mitigation plans for our top 50 suppliers based on this CDP disclosure data. These suppliers will come from parts of the industry with high water consumption, such as printed circuit board makers and display manufacturers. Even beyond water mitigation, we are increasingly looking at climate-related emissions among our suppliers and encourage their participation in CDP’s Action Exchange – a platform for helping suppliers uncover energy efficiency opportunities within their operations. Of Dell’s 27 participating suppliers, 12 separate facilities have used the tools to identify 753 energy efficiency opportunities and $39.7 million in potential savings.