We work with companies that value their brands and understand the importance of transparency in their supply chain. Working closely with our suppliers in China has enabled us to help our supply partners understand the environmental impact of their material and process selections.
By working with our vendors in this capacity, PCH maintains a strong position to deliver improved sustainability within the electronics supply chain.
For PCH, this means going beyond Tier 1 suppliers to follow the supply chain upstream and ensure we have access to all manufacturing facilities that make up a product’s complete lifecycle.
PCH consistently highlights the connection between economic, environmental, and social performance in the supply chain. We work with our vendors to share the potential for cost savings associated with energy, process, and material efficiencies. We have innovative finance programs in place that allow for our suppliers to upgrade equipment, buildings, and overall factory infrastructure. The cost savings in improved efficiencies is partially used to repay the cost of the upgrade.
Currently, 95% of buildings in China are classified by the government as “high-consuming”, meaning they use 2-3 times more energy per square foot than buildings in the US and Europe. The China State Development Council Research Centre estimates that, if done properly, energy efficiency could provide a quarter of China’s new power needs by 2020.
Energy efficiency projects in manufacturing facilities are, at their core, process upgrades. Even when an equipment supplier does not focus explicitly on reduced energy intensity, most new and upgraded equipment is inherently more efficient. That dynamic is often similar for worker health and safety as well. Therefore, new and upgraded equipment is safer equipment.
In the case of toxic and hazardous materials use, the consideration of energy and process efficiency when updating and upgrading equipment means being able to use safer materials, or use existing materials more safely. PCH has used these equipment upgrades to overcome challenging production yield issues and ultimately reduce waste and unit cost.
PCH has committed to an agreement with a Hong Kong-based ESCO (Energy Service Co.) that will provide financing for energy and process efficiency projects. The project format assesses the energy reduction opportunities at an aggregate number of factories (provided by PCH), implements upgrades, and activates the pay-from-savings model which gives an agreed percentage of the reduced utility bill savings back to the factory to repay the new equipment costs, plus an agreed return on investment. This allows PCH to provide our suppliers with a cost-free option from the outset. We have found this financing component of the project to be key to its success.
Understanding the complexities of the electronics supply chain is a core competency of PCH. We are well-positioned in South China to have access to all suppliers involved in the product supply chain. In order to visualize and share this information with our client, PCH developed ChinaFlo, an online database of all our suppliers, and SourceFlo, an online supply chain mapping tool that includes product-specific supplier information. Our clients have secure, 24/7 access to both of these resources. The goal is to provide total supply chain accessibility and transparency, allowing our clients to understand what their unique supply chain looks like and what we are doing to improve performance and sustainability.
In today’s world, the pace of global commerce has accelerated and transaction times are much shorter than in the past. The visibility of these transactions is available online, in real time, to PCH clients via our SourceFlo software. This makes it possible to manage and reduce the amount of inventory needed to meet demand for the product. Managed correctly, it is possible to greatly reduce the amount of excess material and minimize the carbon footprint of a product, providing a long-term emissions-reduction solution.
At PCH, we realize that our business operations impact the lives of many people, including the most vulnerable within our supply chain; migrant workers. We are going beyond mere social compliance, and in association with Shenzhen Little Bird, we are working on the ground with migrant workers in our supply chain, offering them access to a Migrant Workers Hotline.
Little Bird is a non-profit organization that was founded in Beijing in 1996, by a former migrant worker, Mr. Wei Wei. The organization was set up to offer legal services, urban integration and labor dispute advice to migrant workers in Beijing. Little Bird has grown with time and now has offices in Shenzhen, Shenyang and Shanghai.
In 2012, PCH and Little Bird began to work together to create an initiative that would benefit migrant workers. We decided that implementing a hotline in the factories in our supply chain would give migrant workers an independent, trustworthy and anonymous avenue to air their grievances and raise any issues and concerns. Having an independent body like Little Bird involved in this project is crucial to the success and legitimacy of the hotline. With the help of the Little Bird team, PCH can engage with migrant workers in our supply chain and help understand their contemporary concerns and needs.
As a pilot program, PCH and Little Bird are implementing the hotline in three factories impacting approximately six thousand workers. Once this has been successfully implemented, we will extend the scope of the project and go beyond basic compliance as it will eventually encompass not only tier one factories but also tier two and three factories; these lower tiers do not often get identified in supply chain mapping.
Little Bird communicates the hotline program to workers through posters that are advertised around the factory floor and in the dormitories; the posters provide information on how to use the hotline and the number to call. All calls remain anonymous. Little Bird phone operators have received the appropriate training, including training from psychologists, to ensure they can deal with all queries raised.
For the purpose of ensuring the highest human rights and labor standards, Little Bird will report back to PCH quarterly. From these quarterly reports PCH and Little Bird along with factory management will discuss the issues raised and come up with timely and appropriate long lasting resolutions.
• Improved employee-employer communication in factories
• Workers receive sound legal and labor advice – mediation encouraged
• Psychological and emotional pressures of workers relieved – advice given on urban integration as well as labor disputes
• Concerns of migrant workers brought to the fore
• PCH engaging actively and transparently with our stakeholders
• Better work environment – employee retention – lower turnover rate – improved efficiency
• Collective action solutions – Little Bird, PCH, Workers and Factory Management all working together to ensure improved conditions and long lasting benefits
• Improved transparency and accountability in the PCH supply base