Intel finds serious non-compliance at third-party suppliers

13 June 2012

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13 June 2012 | Adam Leach

Intel audited almost five times as many of its suppliers in 2011 as it had in the previous year.

The company set itself a target to carry out 50 on-site, third-party audits of its suppliers during the last year. Its 2011 Corporate Responsibility Report revealed it narrowly missed the target, carrying out 49 audits in 2011 and the fiftieth in early January after an audit had to be rescheduled. This compares to just eight carried out in 2010. The company also conducted 249 in-depth assessments and 289 self-assessments by suppliers.

As a result of the audits, the company found a total of 426 priority and major findings, the highest class of non-compliance as defined by the company. The most common area of non-compliance related to management systems. It found 126 instances, such as a lack of documentation and systems for CSR, inadequate communication with workers or suppliers and a lack of audits.

The audits also uncovered 112 instances of labour abuse, which included working hours of more than 60 hours per week, and workers not being given at least one day off a week. There were also 28 issues relating to ethics, such as not having an anonymous reporting line for employees to raise issues or concerns through. Intel works with suppliers to close priority findings within 30 days, though certain issues, such as locked exits, require immediate corrective action.

Like Apple, Intel purchases supplies from the electronics manufacturer Foxconn, which has been the subject of criticism over its treatment of workers. During 2011, Intel carried out audits at three Foxconn facilities in order to identify issues and ways to improve. “The areas identified mirror the types of issues found during audits of other companies in the region and generally into areas of labour conditions, safety systems, and management systems,” the report said.

The company also carried out an audit on a potential supplier. Due to the results of the audit, it decided to delay using it as a supplier and is now working with the company to address the issues before beginning sourcing.

Brian Krzanich, chief operating officer at Intel, was quoted in the report: “If you want to do business with Intel, if you want to be part of our global supply chain, you’re going to have a clear understanding of these corporate responsibility issues and a roadmap for where you’re heading as a corporation.”

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