“Riots, Suicides and More,” blares an internet headline about a FoxConn factory where iPhones and other Apple products are assembled, Apple is not alone in facing supplier scandals. So have Nike, Coca-Cola, and Gap, among many others. Do companies have an obligation to the employees of their suppliers? If so, how can they, or anyone, be sure what is really going on in a factory on the other side of the world? Professor Richard Locke of MIT has studied supply chain issues. His conclusions:

• The first step that many companies took to improve working conditions overseas was to establish a code of conduct and then conduct audits. These coercive practices do not work, and compliance is at best sporadic.
• A more collaborative approach worked better – when the auditors sent by multinationals saw their role as less of a police officer and more as a partner, committed to problem-solving and sharing of best practices.

What would you do if you were a manager in the following circumstances:

• In clothing factories, workers often remove the protective3 guards from their sewing machines because the guards slow the flow of work. As a result, many workers suffer needle punctures. Factories resist the cost of buying new guards because the workers just take them off again. Is there a solution?
• Timberland and Hewlett-Packard have recognized that selling large numbers of new products creates great variation in demand and therefore pressure factory workers to work overtime. What can a company do to reduce this pressure?