Supplier Compliance

on March 20, 2015
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1. What is Samsung Electronics Supplier Code of Conduct?

 

To improve suppliers’ work environment, Samsung Electronics (Samsung) established a Supplier Code of Conduct based the Electronic Industry Citizenship Coalition (EICC) Code of Conduct and has gone on to share it with its suppliers.

 

In 2015, the company updated the Supplier Code of Conduct to cover provisions regarding the protection of migrant workers’ rights in accordance with revisions to the EICC Code of Conduct.

 

In addition, Samsung created a Supplier Code of Conduct Guide to provide all suppliers in a bid to help them comply with the Supplier Code of Conduct as they carry out law-abiding management practices. The guide allows suppliers to check on details concerning action plans for work environment management by themselves.

 

Moreover, Samsung also visited suppliers in person to offer on-site training on the Supplier Code of Conduct and detailed action plans. To prevent Environment, Health and Safety (EHS) accidents at supplier worksites, Samsung separately produced a Supplier EHS Code of Conduct Guide which it then distributed to suppliers. The company also distributed a Supplier EHS Manual and conducted training to encourage suppliers to single out EHS risks and ensure improvement activities on their own.

 

 

2. How does Samsung Electronics ensure that its suppliers meet labor standards?

 

Samsung monitors all risks associated with work environments at all suppliers that are participating in production processes of its products on a real-time basis. Suppliers must meet worksite standards with regard to labor & human rights and EHS as stipulated in the Supplier Code of Conduct, and based on industry-wide standards such as the EICC. This is supervised through on-site audits by Samsung and a third party’s strict verification process. In addition, Samsung reflects the outcome of the evaluation on work environment risks annually in a comprehensive supplier evaluation. The company uses this as a key factor when deciding whether to continue our relationship with suppliers.

 

[Step 1] Self-assessment

 

Suppliers identify areas of improvement through self-assessments by going over a total of 104 checklist items based on EICC standards at least once a year.   After Samsung suppliers identify any self-assessment weaknesses, they immediately devise improvement tasks that are implemented voluntarily by suppliers. Samsung normally conducts on-site verifications on 10 percent of all suppliers and the company plans to extend our on-site verifications to 20 percent of our suppliers in this year.

 

[Step 2] On-site Audit

 

Samsung verifies the self-assessment of its suppliers and support the effective corrective measures for ongoing improvements.

 

In 2015, Samsung conducted on-site audits at 455 suppliers that were selected as ‘priority suppliers’ in consideration of their location, trade size, past identified issues, and self-assessment results. Together with regular on-site audits, Samsung also conducted an average of 4.8 surprise and special inspections per supplier in 2015, including audits concerning child employment, the recruitment process, and employment of interns and student workers during vacation periods. Samsung supports the suppliers with policy development and provides consulting for corrective actions. In 2015, 95 percent of improvement tasks raised throughout the year have been implemented.

 

[Step 3] Third-party Audit

 

To ensure quality and accountability of our supply chain management process, targeted high-risk suppliers undergo independent on-site audits using qualified third-party auditors that follow the Electronic Industry Citizenship Coalition (EICC) validated audit process. In 2015, audit was conducted in a “semi-announced” type, with specific audit schedules not provided in advance to prevent any kind of preliminary preparation prior to the inspection and to ensure more accurate verification. For six suppliers, auditors conducted separate interviews with their employees outside the company premises so that the interviewees could be more candid when describing their work environment and without interruption.

 

Samsung requires all suppliers to address every improvement task identified through third-party audit within three months. Suppliers then need to come up with corrective measures, such as complementary policies, employee education and/or site improvements, before fully carrying them out. Results are verified by a panel of experts through a closure audit three months later.

 

 

3. Could you provide the portion of Samsung’s in-house manufacturing by the company’s own manufacturing facilities in global?

 

A large majority of Samsung’s products are manufactured at Samsung-owned facilities. As ninety percent of Samsung’s parts are supplied in-house by Samsung’s own manufacturing facilities, we can directly provide world-class working conditions throughout our global manufacturing network and comply with international labor standards in all regions in which we operate.

 

 

4. Do you provide any education program for supplier companies? How many workers have got trainings so far?

 

Samsung Electronics offers its suppliers several educational programs including management and leadership training. Specifically, Samsung Electronics provides training which covers 13 categories in six sectors, from labor and human rights to diversity and anti-discrimination. Additionally, Samsung has created training programs specific to four regions: China, Southeast & Southwest Asia, the Americas, and Europe. In 2015, a total of 854 employees (including those taking more than one program) completed training. In 2016, we will be providing training to all employees at every production site with the goal of training 100 percent of our employees in at least one program.

 

Also, for the convenience of production employees, we have developed online training programs and video content in numerous languages, including English, Chinese, and Vietnamese. Through this initiative, Samsung and its suppliers have solidified a joint desire to take responsibility in ensuring safe work environments.

 

 

5. How do you monitor excessive working hours and employee welfare in supplier companies?

 

Samsung Electronics demands that the suppliers must follow all applicable standards and regulations concerning working hours and day offs at all times. Also, any overtime at supplier companies must be on a voluntary basis.

 

In 2015, Samsung sampled three different months from suppliers’ a peak, a valley and an average month, and found that the number of work hours in an average week stood at 48 hours over those three months. Even during the peak season, total work hours were less than 52 hours, below the maximum limit of 60 hours per week, while suppliers’ compliance rates reached 89 percent on average, a bit lower than the previous year. This drop was due to a temporary surge in production during the peak season at some suppliers and the introduction of a new technology-based process for new products despite an increased supply in manpower and facility expansion.

 

To improve compliance rates at supplier companies, Samsung analyzes data regarding their production capability and output, and makes forecasts of estimated overtime work hours. The company then helps suppliers manage work hours in a preemptive manner by providing them with relevant data. Together with the monitoring of weekly extra work hours at supplier worksites, Samsung have continued to carry out customized support activities, such as assisting workers in charge of equipment maintenance and repair work, which frequently requires overtime hours, to ensure that every supplier conforms to stringent work hour regulations. Samsung is aware of the risk of suppliers forging working hour data and we take such cases very seriously.

 

 

6. Is it true that Samsung Electronics hires under aged employees at its production sites and suppliers in China?

 

Samsung Electronics has a zero tolerance policy on child labor and there were no evidence of child labor cases at suppliers in 2016.

 

For more information, please visit:

 

Samsung is urgently looking into the recent child labor allegations and will adhere to its zero-tolerance policy

 

 

7. What is Samsung Electronics doing in China to ensure child labor is not presented at local supplier facilities? What is Samsung’s policy on the presence of child labor in its supply chain?

 

Samsung Electronics set up and shared a new hiring process with suppliers to strengthen identity verification. These measures included the use of an electronic scanner to detect and prevent use of fake IDs or documents. Since December 2014, a facial recognition system was also introduced to suppliers in China, reinforcing Samsung’s commitment to preventing child labor. By co-developing our policies with CCR CSR (The Centre for Child Rights and Corporate Social Responsibility), an international group with extensive experience and knowledge of child rights protection and relevant labor standards in China, Samsung Electronics and its suppliers have enhanced knowledge and expertise in preventative measures against child labor.

 

Additionally, Samsung educates its suppliers on the child labor prohibition policy on a regular basis. Particularly in China, Samsung conducts field inspections during vacation periods, the season with the highest risk of child labor because it is a period when more under-aged people looking for jobs. As such, we continue to monitor whether our suppliers comply with the employment process and this preventive inspection is referred to as child labor ‘patrol’. In the first half of 2016, we conducted the 358 times of patrols at our 178 suppliers.

 

For more information, please visit:

 

[Update] Regarding Samsung’s Action Plans to Review Working Conditions at Chinese Factories

Samsung Electronics Statement on Recent Allegation of Child Labor at a Supplier

 

 

8. What do you mean ‘Zero tolerance’?

 

In Samsung’s Child Labor Prohibition Policy, a zero tolerance policy means that child labor at any stage of the Samsung’s business will be considered as unacceptable and intolerable.

 

Samsung Electronics mandates compliance of employment standards such as those designed to prevent child labor. If child labor is found in supplier companies, Samsung Electronics adopts a zero-tolerance policy and suspends transactions with them.

 

 

9. What happens when a child worker is found at a supplier company?

 

When a supplier is found to have workers under the legal minimum working age, the supplier is required to take the following actions:

 

1) Remove any and all child labor from the workplace immediately to ensure the safety of the children. The supplier shall not expose children anything hazardous or unsafe to their physical and mental health.

 

2) Inform Samsung’s trained local experts immediately. Samsung Electronics will verify the child is under the legal age by checking all documents and investigate the circumstances surrounding the child’s employment. The supplier shall ensure that Samsung Electronics can confirm the child’s physical safety and working conditions including labor contract, wage, working hours, etc.

 

3) The costs and expense of sending child labor back to the family or original place of abode shall be fully paid by the supplier. This decision must be documented.

 

4) When the child reaches the legal minimum working age, he or she must be given the opportunity to be re-employed in written document. Samsung Electronics is committed to provide with continuous improvement in other necessary policies with regard to our supplier facilities.

 

 

10. It has been reported that children who are found to be working at one corporation will move to another corporation when the contract is terminated due to violation of child labor policies. Did Samsung Electronics consider this problem?

 

Samsung Electronics focuses on preventative measures to ensure there are no instances of child’s labor at any of its suppliers and requires its suppliers to provide with the support that is in the best interest of the child.

 

Our company policy addresses the impact on children who are found to be working in violation of our policies through a program that supports their livelihood to fundamentally avoid continued work elsewhere. These measures are aimed to ensure children will not have to become child laborers at another facility in another region.

 

 

* Initially posted on March 20th, 2015

* November 28th, 2016: Updated to reflect Samsung Sustainability Report 2016

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