Apple seems to be having supplier problems.
Last week Wintek, one of Apple’s suppliers, was reported to have been using a chemical, n-hexane, which had poisoned 49 workers. This week there is an issue with suppliers who use child labor to make Apple products. Either of these problems could affect any company that uses suppliers in areas with lax regulation, doing potential substantial damage to that company’s brand and products.
Child labor is particularly problematic because the fix is to fire the underage employees, who may be the only wage earners in their families. The whole problem may be artificial. This doesn't help our own Don Tennant, who was already regretting buying an iPhone (and getting lots of feedback).
Steve Jobs has argued this isn’t Apple’s problem, but a world problem with regard to priorities and a general lack of enforcement by local agencies. I agree that this has resulted from policies that seem to focus more on appearance than reality. Apple, in effect, got nailed for trying to police the problem itself. However, while his statements are accurate, they don’t absolve Apple or any other company focused tightly on costs for being part of the problem.
The Problem of 'Don’t Ask, Don’t Tell'
Companies are under heavy pressure to find the lowest-cost providers and typically are free to look globally to find them. While they often have guidelines for things such as green practices, bribery and child labor, there tend to be few in regard to enforcement. Companies tend to know who violates these guidelines, but often adopt a "don’t ask, don’t tell" stance with these suppliers to optimize margins and assure profits.
The problem isn’t that these practices go on, but that their existence and the related risks aren’t properly assessed against the savings that these low cost suppliers provide. In short,...