Chris has been working in Asia for about 10 years, and also spent about 10 years in the US primarily consulting to the electronics and high technology sector. He has done work throughout the supply chain, all the way down to some well known brands to mom and pop electro plating shops in the back corners of China. He is currently based in Hong Kong and works for a global consulting engineering firm called WSP.
1. Working in manufacturing can be dirty and dangerous. What's the link between that reality and brand value today?
The link is intimacy. We’ve come full circle in a way. A hundred years ago, we used to know the families who made the stuff and see where it was being made. Then for a long time nobody knew and, frankly, not many of us cared. Today, we may not know the families in China who send their daughters to the coastal manufacturing zones to work in manufacturing, but we can feel that we do. Labor rights groups, labor unions, news reporters, even governments, all have interests in “reconnecting” us with the world of manufacturing in a way that drives standards of care throughout the supply chain.
How far will this intimacy go? Maybe not that far. But we’re in a period of change in the equation. Labor around the world wants better treatment, labor in the developed world wants to keep the manufacturing jobs that are still there, and brands…well brands want you to trust them. And trust comes from a sense of intimacy. So brands actually want their consumers to feel like they know what’s going on in the manufacturing plant—up to point, of course—because it creates a stronger bond to the product.
2. So if the link is more important, what should companies that value their brands be doing differently?
Training their suppliers. Most suppliers, particularly 2nd and 3rd tier suppliers, are ill-prepared to deal with an intimate relationship with the American or British consumer. This will take time and in some ways will never be complete. But if brands want to outsource more and more of the management of brand risk to their supply chain, they need to accurately recognize the gap in awareness in the supply chain of what constitutes a risk to a brand. I meet factory owners who may get this but not usually beyond that.
3. And what about suppliers to those brands?
The opportunity, or the risk, depending on how you want to focus on it as a supplier to a leading global brand these days figuring out how to stay one step ahead of their competition with real change in manufacturing conditions, not just certifications. What is the change going on in your particular subsector of manufacturing in your country? Who is doing what? Who is able to implement best practices when it comes to health and safety risk? Who is able to attract and retain the best workers and have the workers saying good things about the manufacturing environment, outside of the factory, speaking to the media, labor groups and NGOs? Who is doing is doing this and still able to meet the price and delivery requirements of their brand customers?
No matter your type of business, those are companies you need to know who they are and what they are doing differently from what you are doing, and trying to stay one step ahead of them. It has always been a competitive environment in the supply chain with people watching each other, but this is a whole new area. Few companies, typically in each subsector, have figured out a formula that works to meet the health and safety and social responsibility of brands and still deliver on-time and at the low prices their customers expect. However, they are out there and Chris’s company increasingly runs across those types of companies that are setting the standard for their country in that subsector.
4. How is this risk factor different from or similar to other kinds of supplier risk factors?
What Chris is finding himself saying to a lot of suppliers and brands these days is that health and safety risks in the supply chain properly managed has a lot to do with quality management. Quality management has been around for a long time. It is a continual improvement process. It is not necessarily about getting to perfection, although everyone agrees it would be nice and a worthwhile goal to strive for. Some companies do get there. You do find manufacturers out there that experience zero injuries to their workers year in and year out. They do exist in almost every industry.
There is no such thing as an inherently dangerous workplace. Workplaces can be competitive and safe. However, that is no different than saying “if you want good quality you will have to pay for it”. But the consumer says “No I want good quality and I want low prices too”. The companies that win the manufacturing race are the ones that figure out how to do both.
How is worker health and safety different from other type of risk factors, such as defective products, product recalls or product contamination? Fundamentally, it is not any different and needs to be managed like a project. It needs to be managed with systems, processes, accountability, long term goals, management systems and information technologies to support it all, just like people do with other types of quality issues today.
This is also a paradigm shift for most businesses. Most businesses have looked at worker health and safety risk in the supply chain as something that is really not their problem. It is not something that the brands necessarily need to worry much about. They see it as something down there in the supply chain, out of view of the brands and consumers.
However, this has changed and continues to change and effect almost every business and every aspect of the manufacturing supply chain these days.
About Chris Hazen
Chris Hazen has been in the environmental consulting field since the early 1990s. He spent about half of his career in Asia, primarily in China – Hong Kong and Shanghai. The other half of his career was spent in Silicon Valley, working very closely with some of the leading electronics companies in the world to define environmental risks and opportunities for their companies and help them to manage them.
Christopher Hazen, Director (Asia)
WSP Environment & Energy