As global supply chains become increasingly complex, more risks are introduced into operations. These potential hazards are often exceptionally difficult to identify, particularly in the high-tech industry. The Santa Clara, Calif.-based Intel Corporation has been an advocate of corporate risk assessments for years and is an active member of the Responsible Business Alliance (RBA), a coalition dedicated to corporate social responsibility in global supply chains. Intel regularly reviews and measures its performance through risk assessments and audits — some of which are conducted by third parties — and then publicly shares the results in order to support supply chain transparency.
Assessments of its own manufacturing sites usually show that risks are low overall, thanks to the company’s focus on mitigation. Nevertheless, rather than just avoiding potential problems, Intel leaders choose to be proactive by driving positive and lasting change.
“We need to be intentional in how we approach improving our supply chain,” explains Jocelyn Cascio, manager of supply chain responsibility at Intel. “While it would be easier to identify the sources of risk in our supply chain and simply eliminate them, we have learned this could cause de-facto embargoes on areas of high risk and hurt the people who depend on these supply chains. Instead, we work to identify areas of risk and develop mitigation strategies that improve the livelihoods of our supply chain actors.”
For more than a decade, Intel has been diligently leading change in major risk areas through its Supply Chain Sustainability program. Most recently, leaders have been focused on conflict minerals, modern-day slavery and human trafficking, while expanding their supply chain diversity in order to foster innovation.
RESPONSIBLE SOURCING
As a cofounder of the Responsible Minerals Initiative, Intel helped establish a smelter audit protocol, which serves as a cross-industry open standard for companies to validate that tin, tungsten, gold and tantalum sourced from the Democratic Republic of Congo come from mines free of armed conflict. “This protocol leverages radio-frequency identification technology and a bagging-and-tagging scheme to ensure that the sourcing of these minerals does not contribute to the egregious human rights violations,” Cascio says.
ASCM global standards and APICS learning and development programs have been critical to Intel’s success. “Our supply chain is one of our biggest competitive advantages,” says Andreina Hines, responsible minerals program manager. “Things can get extremely complex, so it is crucial that we understand how other supply chains that affect ours operate. APICS education provides us with this knowledge and helps us interact more effectively with internal and external supply chain partners.”
The APICS body of knowledge enabled Intel to map its entire supply chain, from mineral refineries to final product, in order to ensure responsible sourcing. “Intel has been working hard to achieve a responsible supply chain and manufacture products that improve the livelihoods of the people who participate in making it possible,” Cascio explains. “Understanding how our supply chain affects the world is crucial in making this possible.”
LABOR RIGHTS
According to the International Labour Organization, about 25 million people around the world are victims of forced labor. Of these, 16 million are exploited in the private sector, and about 4 million are forced into labor by state authorities. In addition, about one-quarter of modern slavery victims are children, and women are disproportionally affected, making up nearly 60% of the forced labor population. When this issue made the news back in 2014, Intel leaders realized this was an area where they could effect change. “We developed a plan for our own supply chain, influenced the industry coalition and persuaded other technology companies to join us,” Cascio explains.
Since then, Intel leaders have continually worked with suppliers to identify root causes of forced or bonded labor and ensure resolution. Some of the resulting solutions have included improved employment contracts, better living conditions, returned passports to victims of forced labor and repayment of more than $14 million in fees by suppliers to about 6,300 workers. More than 35,000 migrant workers have been positively affected.
Some of the interventions stem from Intel’s supply chain corporate social responsibility leadership program, known as SPARC. Initially, the program focused on driving suppliers, audits and risk assessments to meet an industry standard code of conduct, created in part by Intel. The program later expanded to include resources to help suppliers improve labor, health, safety, environmental, ethics and management systems competencies. These resources include no-cost supplier conferences; third-party consulting; industry training events; webinars; and an online Supplier Sustainability Resource Center, which offers information about 19 critical topics, such as working hours laws and regulations.
SPARC originally was intended to help Intel’s top 100 suppliers, but the program has expanded to include more than 350 of the company’s most critical technology, product and service suppliers, which account for more than 60% of Intel’s spending.
Intel also cofounded the multi-industry, multi- stakeholder Responsible Labor Initiative, which is focused on ensuring that the rights of vulnerable workers consistently are respected and promoted. Furthermore, the company is using its technology in partnership with the National Center for Missing & Exploited Children to battle human trafficking. “We bring together artificial intelligence, deep learning and enterprise data management to accelerate the identification and location of missing children to ensure their safe return,” Cascio says.
EMBRACING DIVERSITY
ASCM products and services and the APICS body of knowledge have been especially useful in setting up and supporting Intel’s Supplier Diversity and Inclusion program. In 2015, Intel’s CEO committed to spend $300 million to improve its diversity; launch a $125 million capital investment fund for diverse business; and, by the end of this year, spend $1 billion annually with diverse-owned companies throughout its supply chain.
As company leaders developed the program, they came to realize that it would be difficult to reach these ambitious goals without help from suppliers. “The foundational knowledge provided by APICS was essential for understanding the spectrum of suppliers’ motivations and influencing them to join the effort,” Cascio says. “We were truly astonished by the positive response of our supplier base and the ripple effect of this program expansion that is helping transform the entire industry.”
Intel requires its nondiverse tier-one suppliers to report any spending with diverse tier-two suppliers in relation to Intel work. This effort has resulted in 150 nondiverse suppliers reporting direct or indirect diverse supplier spending in 2018.
In addition, the company hosts workshops to connect its procurement team with diverse entrepreneurs, programs to help small companies expand and scale their businesses, and educational efforts with governments and nongovernmental organizations to establish supplier diversity in countries where it was not previously recognized.
The company also has embedded supplier diversity into its own processes so that it becomes a long-term business practice. Cascio notes that this is particularly challenging in the technology industry, but the company is seeing greater innovation as a result of inclusive sourcing. It currently has active supplier diversity programs in 18 countries, which puts the company on target to meet its $1 billion goal.
PLANNING AHEAD
Company leaders are continuing to develop and expand programs to stay ahead of risks in the supply chain. They regularly engage with external stakeholders to solicit input, expertise and perspectives about current and future challenges.
“We must accelerate the responsibility of our supply base and help our suppliers increase their understanding of the value of corporate responsibility,” Cascio says. “Our journey moves onward.”
