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Guest Editorial: Ensuring Better Supply Chain Transparency: The Time is Now

Bangladesh has become ground zero in the rapidly growing movement to ensure worker safety. If the Tazreen factory fire last November was a wakeup call, April’s tragic collapse of the Rana Plaza building has become the defining event in a worldwide push for safer factories and better working conditions.

Worker safety in supplier factories has become a critical issue for the apparel industry — and fashion supply chains are under intense scrutiny to provide better supply chain transparency and assurances that workers are treated humanely.

Ensuring safe working conditions, however, is notoriously difficult.As an Associated Press article pointed out, “Big retailers buy clothes directly from scores of factories, searching for the production capacity to meet the demands of the coming season’s fast fashions. Others work through supply chain managers, independent suppliers or in-country agents.” 1 To make it worse, factories often resort to unauthorized subcontracting to meet stringent deadlines; after all, if they miss a deadline, they can lose the business.

That’s not an excuse, though. While brands and retailers have historically based their sourcing decisions on a combination of price, quality and on-time delivery, companies must now consider a host of additional issues as they evaluate vendors — and at the top of the list must be the ability to ensure worker safety and deliver the highest standards of compliance and transparency. As a result, companies must now evaluate vendors on a complex matrix that includes:

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  • The traditional decision points of price, quality and track record of on-time delivery
  • Factory safety and the ability to guarantee safe working conditions
  • Full transparency on the use of subcontractors
  • The ability to satisfy compliance issues, such as CPSIA, the California Transparency in Supply Chain Acts, and child labor and environmental laws
  • As well as the traditional metrics of price, quality, delivery record and suitability for the work.

In order to do this, we believe that companies can tap the resources of supply chain management systems to help ensure worker safety and comply with regulatory and social mandates. Many of these systems include workflow calendars, exception management and global collaboration features that make it easier to schedule audits and tests, efficiently manage production schedules, and maintain all the necessary documentation to ensure safe, humane sourcing. These systems can be a valuable ally in ensuring better compliance and transparency:

  • Critical information such as factory safety records and vendor scorecards are typically available in these systems through a Vendor Compliance portal.
  • Vendor profiles can include each supplier’s current compliance audits, performance and quality history, and other information, which can be easily accessed through a web-based portal.
  • A company’s Standards of Vendor Engagement can be housed and managed within vendor profiles in the supply chain system, helping to ensure that factories comply with your company’s sourcing standards and policies.
  • Proactive calendars will alert you to audit and re-certification dates and exceptions, and the system will typically document and store all related communications. If factories don’t pass the audit, the system assigns a corrective action plan. The vendor profiles can be accessed throughout the global supply chain, for easy access at any time.

These type of systems can also go a long way in helping to ensure that POs are issued only to certified suppliers; exceptions can be created to alert management when POs are written to vendors that have not been certified in various areas, or whose certification has expired. This may not eliminate the issue of unauthorized subcontracting, but it’s a big step in the right direction — and retailers can take further action by following Walmart’s example of immediately discontinuing business with any supplier that resorts to unapproved subcontracting.

The technology exists today to help ensure better supply chain transparency. While systems by themselves won’t bring about better accountability and improve working conditions, they can be invaluable in helping retailers ensure stricter standards of compliance, safety and accountability — which is exactly what apparel industry workers in Bangladesh and other countries deserve.

Mark Burstein, president of sales, marketing and R&D, NGC