-
- News
- Books
Featured Books
- smt007 Magazine
Latest Issues
Current IssueBox Build
One trend is to add box build and final assembly to your product offering. In this issue, we explore the opportunities and risks of adding system assembly to your service portfolio.
IPC APEX EXPO 2024 Pre-show
This month’s issue devotes its pages to a comprehensive preview of the IPC APEX EXPO 2024 event. Whether your role is technical or business, if you're new-to-the-industry or seasoned veteran, you'll find value throughout this program.
Boost Your Sales
Every part of your business can be evaluated as a process, including your sales funnel. Optimizing your selling process requires a coordinated effort between marketing and sales. In this issue, industry experts in marketing and sales offer their best advice on how to boost your sales efforts.
- Articles
- Columns
Search Console
- Links
- Events
||| MENU - smt007 Magazine
Embracing Transparency: How Flextronics Addresses Social and Environmental Responsibility
April 5, 2013 |Estimated reading time: 8 minutes
Editor's Note: This article originally appeared in the March 2013 issue of SMT Magazine.
Conflict minerals, chemical substance management, and sustainability metrics are all inextricably linked to increased levels of transparency in the electronics industry, and success in all three disciplines will have a significant benefit on society and the environment. The proliferation of new social and environmental requirements serves as more evidence of an effort by governments, non-governmental organizations, and citizens alike to force the industry to take accountability for their actions. There has never been a better time to adopt a sustainability strategy. The challenge begins with adopting the habit of continually learning and growing from past experiences and constantly reaffirming a commitment to serve people and the environment and at the highest levels of good corporate citizenship. As companies better understand their social and environmental performance, sustainable business strategies will be more effective and their impact to create change will be more impactful. Flextronics continues to place a significant emphasis on embracing these new transparency requirements in our industry today, not only because increased levels of corporate transparency is a cost of doing business today, but because sustainability is the mega-trend that will shape the competitive business landscape over the next decade.
Innovation in today’s electronics industry continues to be the driving force behind most successful companies. By taking this concept and applying it to corporate social and environmental responsibility (CSER), Flextronics established the foundation for a more sustainable business model. As the cost of labor and natural resources continues to put pressure on profit margins, all companies must search for ways to make their business more efficient and achieve greater productivity. That is the basis of the management system concept of continuous improvement. But what does it mean to continually improve your company’s CSER performance, and how does one go about measuring its success in that regard? The answer lies in the ability to understand where the electronics industry is headed, while still appreciating its roots. Recognizing the global landscape and the critical industry drivers are vital, but understanding why those drivers exist enables any company to achieve true sustainability and stewardship. Company executives around the world have begun to recognize the importance of a robust CSER program and the direct impact proactive initiatives have on the bottom line. However, the future goal is to take these increasingly complex regulatory reporting requirements and turn them into value that increases customer competitiveness.
While the term corporate social responsibility (CSR) dates back to the late 1960s, the concept has experienced exponential growth in recent years resulting in a much more significant business driver. The definition of CSER is continually evolving to reflect the challenges and opportunities facing industry and society today. A strategic-thinking organization would have recognized the direction regulatory agencies were taking in driving chemical substance management a number of years ago, and devised solutions to address the core issues in a sustainable fashion. Since the introduction of the European Union’s groundbreaking Restriction of Hazardous Substances Directive (RoHS EC 2005), an onslaught of new legislation bans or restricts the use of chemical substances in nearly every jurisdiction worldwide. By taking a moment to think about the ultimate goal of these environmental directives (such as RoHS, REACH, etc.), a logical solution to the problem becomes quite clear. A primary objective is to continuously remove more and more chemical substances from use in products and manufacturing processes. Companies should view these new regulatory requirements as an opportunity to improve internal compliance processes and create value for customers. Providing full material and chemical content collection and analysis allows producers placing product on the market (customers) to recognize all chemical substances in the bill of materials (BOM) for products they design. This enables them to conduct an assessment and verify compliance against any regulation that limits or restricts the use of certain chemical substances. The assessment guarantees customers’ products are delivered to their markets in line with their overall business strategy, saving a significant amount of time, resources, energy, and manpower. This translates into significant cost savings and an undeniable competitive advantage. In addition, companies are able to fulfill what many deem as a moral obligation to provide transparent information to relevant stakeholders around the world.
Flextronics sees great value in constantly reinventing compliance processes that ultimately enable customers’ success. The company has been continually working to redefine materials environmental data management processes since instituting the RoHS declaration systems almost a decade ago. Last year, we deployed a new environmental data management solution to leverage a centralized data collection process for a much more streamlined compliance assessment and verification process for all direct and indirect materials used in the product and manufacturing processes. This new solution allows design centers and manufacturing sites around the world to determine if products and processes are compliant to all applicable chemical substance management regulations (and customers’ specifications) in an efficient and standardized manner. In 2013, Flextronics is enhancing the process through the integration of a compliance status mechanism that seamlessly links with enterprise resource planning systems to control all purchasing and materials processes companywide. To bolster the materials data management process, the company entered into a partnership with a globally-renowned laboratory testing agency to formulate a new component material testing capability for all global design and manufacturing sites. In addition, the company has joined with a regulatory database service provider that offers innovative online tools which deliver the most timely and accurate global regulatory intelligence to empower business compliance. By creating cross functional workgroups that span the entire value chain, we can identify synergies that allow us to meet or exceed all customer compliance requests in a sustainable and economically-sensible way.
Much like chemical substance management, the procurement of materials used in electronics manufacturing should be done in a way that fulfills all compliance and moral obligations. Controlling the extraction and production of tin, tantalum, tungsten, and gold (3TG) has enabled Congolese rebel military forces to use the proceeds to torment local citizen populations and commit catastrophic human rights abuses. The electronics industry has been under increased scrutiny, because 3TG minerals are used in almost all electronic applications, creating an opportunity for manufacturers to have a positive influence over the conditions of mineral and metal production and extraction. The challenge with the increase of transparency in the electronics industry will be the dichotomy between the need for transparency and confidentiality, as many manufacturers and suppliers refuse to disclose information for competitive reasons. However, companies that see beyond the confines of compliance view these transparency requirements, like the Conflict Minerals Dodd-Frank Act, as an opportunity to improve the conditions of life for people living in conflict regions. By partnering with all members of the value chain to create mutually-beneficial solutions to the conflict minerals issue, electronics manufacturers can ensure legal compliance and more importantly, have a significant impact in improving the quality of life for citizens living in conflict regions.
Industry associations like the Electronics Industry Citizenship Coalition (EICC) are developing programs that ensure the smelters and refiners at the end of the supply chain properly identify the origin of the materials used in the production of electronics equipment. Flextronics, a founding member of the EICC, has complied with the OECD Guidance regarding conflict minerals including publication of a conflict minerals policy, analysis of our material commodities to determine if 3TG are present in products we manufacture, and adoption of the EICC’s due diligence tool set including the Conflict Free Smelter (CFS) program as the company standard. We believe that the most effective approach is to create a system that allows us to identify existing and new suppliers that require due diligence, collect their information map the smelter data against the EICC CFS list, and provide to our customers upon request. Collaborating with all members of the value chain to achieve greater levels of transparency is highly beneficial. Conflict minerals reporting is just one of many new requirements driving the electronics industry to become much more transparent, creating an opportunity for companies to demonstrate their commitment to doing the right thing.
Although the importance of sourcing materials in an ethical manor is critical to the future success of all electronic companies, the most widespread transparency requirement in today’s electronics industry is the public disclosure of the manufacturing footprint, both operationally and throughout the supply chain. Greenhouse gas emissions, water consumption, and waste generation are just a handful of the ‘new era of manufacturing metrics’ that OEMs are requesting from their suppliers. An increased number of institutionalized investors are starting to invest in companies based on their environmental performance disclosed in the company’s annual SEC filling.
To fulfill these increasing reporting requirements, Flextronics developed a sustainability metrics work group to collect, analyze, validate, monitor, and report accurate and reliable data for our sustainability indicators. The overall strategy of the program is to baseline, define annual objectives and goals, establish targets, monitor performance, and fulfill these requirements in a continuous improvement manner to meet and/or exceed our corporate sustainability objectives. The sustainability metrics functional work group includes environmental metrics, social metrics, a CSER key operating indicator competition dashboard, and both carbon and water disclosure project participation, sustainability benefits and costs data collection calculation, monitoring sustainability performance, reporting sustainability metrics data to stakeholders, fulfilling of customer sustainability data requirements, and scope of the 3-CO2 emissions preparation.
Through this sustainability metrics tracking and reporting program, manufacturing locations around the world are able to share a comprehensive set of data pertaining to social and environmental performance to all relevant stakeholders in a transparent way that goes beyond compliance. SebNardecchia, senior director, corporate sustainability,has held executive level positions in Fortune 100 companies as well as several high-tech startup companies. He currently leads sustainability cross functional teams at Flextronics, ensuring global compliance in the areas of labor/human rights, health and safety, and environmental. He is responsible for building an industry-leading environmental sustainability strategy at the company, as well as a roadmap to environmental stewardship. Matt Perrone is a project specialist for the Corporate Sustainability group at Flextronics, a $30 billion, industry-leading, Fortune Global 500 EMS and end-to-end supply chain solutions provider. He drives environmental sustainability, occupational health and safety, and employee engagement best practices in the company’s manufacturing operations globally. Since joining the company in 2010, he has been focused on regulations and market intelligence, metrics and communications, and global operations functional workgroups.