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After Deadly Fires, Will Wal-Mart Pull Sourcing From Bangladesh?

When it’s deliver-or-die, supply chains become the lifeblood of a company. To that end, the fashion industry has embraced technology to navigate today’s hyper-complicated supply chain, with myriad solutions shaping the first, middle and last mile. Call it Sourcing 2.0.

Early in March, Wal-Mart implemented its “zero tolerance” policy for violations of its global sourcing standards–a policy created largely in response to a tragic factory fire at Tazreen Fashion, which produced clothing for Wal-Mart, and which claimed the lives of over 100 workers last November. According to Women’s Wear Daily, there is now “widespread talk” of Wal-Mart winding down (or perhaps withdrawing) its sourcing from Bangladesh by early 2014.

An executive at a “major innerwear company” (the exec asked to remain anonymous) told WWD that “Wal-Mart has a strategy to manufacture less in Bangladesh, and they are tightening the noose.”

The exec said that in a recent meeting, Wal-Mart had “suggested” suppliers look elsewhere. “Bangladesh has the lowest labor costs,” the exec said “but that’s only relative….There are other alternatives out there, and some people are looking at the possibility of going back to China or other low-cost countries.”

But Megan Murphy, senior manager of international corporate affairs at Wal-Mart, sent the following email to WWD: “Bangladesh continues to be an important sourcing market for Wal-Mart. We welcome the opportunity to work with the respective governments, suppliers and factories to improve worker safety conditions and standards.”

If the rumors are true, Wal-Mart is expected to seek low-cost alternatives in Vietnam, Cambodia, and possibly Burma. Sourcing in China is another viable option–though labor in China is more expensive, its safety standards are better enforced, and its workforce is highly skilled.

 

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