Purchasing Social Responsibility Activities in Malaysia: A focus in Labour, Health, and Safety

Abstract

Globalisation of companies has led to international purchasing trend with multiple suppliers worldwide. However there were many issues pertaining to labour and health & safety of Asian suppliers. The purchasing function or professionals (purchasing managers) have the most interfaces and influences to suppliers and they are capable to play the most important role in suppliers' labour issues. This qualitative, transcendental phenomenological study describes the experience of purchasing managers with regard to purchasing social responsibility (PSR) activities in labour, health and safety. In depth interviews were conducted with 16 purchasing managers working in electrical and electronics multinational corporations located in northern region of Malaysia. There are eight core themes described the nature of PSR activities experienced by purchasing managers. First, EICC code enhances PSR activities but labour standards are new and less priority than health and safety. Second, purchasing managers working in American based electrical and electronics multinational corporations are more experience in PSR activities compared with purchasing managers working in corporations with headquarters in other countries. Third, supplier audit is the most common PSR activity but it was only conducted for critical suppliers. Fourth, supplier selfassessment triggers supplier audit or improvement plan. Fifth, supplier selection only requires basic compliance in labour, health and safety standards. Sixth, short training of labour, health and safety standards is commonly arranged for all suppliers. Seventh, corrective actions are used to manage suppliers' labour violations in occupational safety, wages, working hours, dormitories and holding of migrant passports. Eighth, issues encountered with suppliers on PSR activities included labour standards increase material pricing, suppliers reluctant to adhere to labour standards and workers preferred longer work hours in order to gain higher wages.

Framework of Stakeholder Reactions on Sustainability Risk Mitigation Practices and Sustainability Performance in Supply Chains

“…External stakeholders, for example non-governmental organizations (NGOs) and consumers consider focal companies responsible for actions of upstream suppliers (Hofmann et al, 2014;Grimm et al, 2016). In particular, sourcing from developing countries set purchasing function in key role in terms of social sustainability, for example, working conditions of suppliers' labor (Magnan et al, 2011;Loo and Nasruddin, 2015) Accordingly, it is important to assure that suppliers comply with sustainability standards and CoC in their processes. However, it seems that the supplier compliance with sustainability standards in global SCs is not obvious, as 14 out of 24 papers of this literature review mentioned supplier noncompliance with social or environmental standards or CoC as a source of sustainability risk.…”