Human capital is playing an important role in a company. It is due to human, in this case are including the abilities and qualities of the labor, and it influences the productivity and thus profitability of the company especially a manufacture company.
Human capital is a company asset, which is not listed on company’s balance sheet. The assets in this case is including employee’s education, training, intelligence, skills, health, and other things employers value such as loyalty and punctuality.
It is important for you to know exactly the working environment of your supplier. It is because it will influence the products they sell to you, in terms of quality, price and the production time.
Indonesia as a manufacturer country for textile, furniture, and craft, absorb a lot of Labor and automatically become livelihood for the community. This brings many benefits for them, they can learn new skills, and knowledge. However, there are a shocking truth about this. According to Statistics Indonesia, in 2019, 1.6 million Labor in Indonesia are a child, and this issue continues to be a great concern in many parts of the world.
What does it mean for you as a buyer?
As human capital is the key of a company, you should consider several things before buying from a supplier, to make sure that you are buying from a responsible company, such as:
- Working hours
- Wages and compensation
- Welfare
- Freedom of association and right to collective negotiations
- Environmental health and safety
- Discrimination
- Underage labor
- Forced labor
- Disciplinary practices
- Fire protection
Why Social Audit is necessary to find a “healthy” supplier in Indonesia?
The Social Audit (SA) in Indonesia verifies that you are doing business with factories respecting social rights. In today’s market place, it is essential to protect your image by ensuring that your supply chain is socially compliant and responsible. You will be able to qualify new suppliers and understand if it is suitable to work with them. By doing social audit, you will get some benefits, i.e.
- Avoid factories with precarious working conditions, child labor etc.
- Evaluate how far your vendor is from the SA 8000 certification
- Compare potential vendors and select viable sources
- Be proactive about sustainable development
- Demonstrate to your clients that you are a socially responsible company
- Save time and secure your business
Excellencial, with our professional team, will prepare this social audit with you and your supplier in Indonesia in order to check the factory according to international standards and you are allowed to have any specific requirements/standards to make sure that your supplier have a good working environment for both their employee and the community.