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Walmart Quits Simco in Bangladesh; Garment Maker Threatens Law Suit

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.

After the collapse of the Rana Plaza factory in Bangladesh which killed 1,131 people in April, Walmart placed Simco Dresses Ltd., and its four factories on what has been characterized as a “black list,” which included 245 Bangladeshi factories.

Walmart said that these factories are now “unauthorized” and will not contract with them to manufacture their products.

Simco, which claimed never to have failed a safety audit in the 22 years it has made products for Walmart threatened to sue the world’s biggest retailer.

Walmart said Simco was banned for an unauthorized sub-contract order placed with the Tarzeen Fashions factory at which a fire killed 112 workers last year.

Simco counter-claims that the order in question was first given to an authorized firm, Tuba Garments, which in turn passed on the order — unbeknownst to either Tuba or Walmart — to Tarzeen.

Tuba’s managing director provided documented proof that the order was given to Tarzeen without Simco’s knowledge.

Nevertheless, Walmart’s so-called black list remains in effect as of mid-June.

Reaz Mahmood, a vice president of the Bangladesh Manufacturers and Exports Association (BGMEA) said, “For so long they [Walmart] made huge profits.  Now the time has come to join friendly hands with us.”

That friendly collaboration does not seem possible, at least from Walmart’s perspective.  The retailer has published the names and addresses of the unauthorized factories on its website and said they did not meet criteria for authorized suppliers.

Simco Group’s deputy managing director, Khurrum Siddique, sent a letter to Andy Barron, an executive vice president of Walmart, threatening legal action if Simco’s name was not removed from the list.

“You do not give any specific information but are tarring and feathering the good repute of our company which has been built over 29 years,” the letter said in part.

But, the letter went on, “We do not want to work with Walmart in the future.”

 

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