An article on comcast.net today reported that a weekend fire in a Bangladesh clothing factory of Tazreen Fashions Ltd. resulted in the deaths of 112 workers.\u00a0 Found in the factory were garments bearing the branding of Walmart, Sears, and Disney.<\/p>\n
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The scope of the tragedy was much greater because of basic safety measures that were absent, specifically that there wasn\u2019t even one emergency exit for the eight story factory where 1,400 people were working.\u00a0 The owner of the factory was quoted as saying \u201cnobody told me that there was no emergency exit, which could be made accessible from outside\u2026Nobody even advised me to install one like that.\u201d<\/p>\n
A real Einstein running that factory, huh?<\/p>\n
Of course, Walmart, Sears, and Disney tried to downplay their role and responsibility in having their merchandise made in unsafe conditions.<\/p>\n
The article reported that \u201cWal-Mart said it received a safety audit that showed the factory was \u2018high-risk\u2019 and had decided well before the blaze to stop doing business with Tazreen. But it said a supplier had continued to use Tazreen without authorization. The retailer said it stopped doing business with the supplier Monday.\u201d<\/p>\n
Similarly, the article reported that \u201cSears said it learned after the blaze that its merchandise was being produced there without its approval through a vendor that has since been fired\u201d and that \u201cWalt Disney Co., which licenses its characters to clothing makers, said its records indicate that none of its licensees have been permitted to make Disney-brand products at the factory for at least a year.\u201d<\/p>\n
So, the bottom line is that the suppliers and licensees with whom these US corporate giants have contracts violated their contractual obligations and subcontracted work to forbidden factories.<\/p>\n
Sorry, but I don\u2019t absolve Walmart, Sears, or Disney of blame.<\/p>\n
As I always stress, it is important to have \u201cboots on the ground\u201d in the countries where links in your supply chain are located.\u00a0 It is absolutely critical to have personal visibility of materials as they move throughout the supply chain.\u00a0 An annual visit isn\u2019t enough.\u00a0 You should be able to see where your items are in each stage of processing at any time.\u00a0 The numbers need to add up\u2026and not just on a computer screen, in person!<\/p>\n
The reason companies source in countries like Bangladesh is for the low labor cost structure.\u00a0 Obviously, they are trying to minimize cost.\u00a0 Then, things like this happen.\u00a0 I consider it a consequence of the effect of so aggressively chasing the last few pennies of cost savings.<\/p>\n
I\u2019m not saying that low cost country procurement shouldn\u2019t be done.\u00a0 I am saying that it should be done right.<\/p>\n
Companies need to allow some of their cost savings be justifiably offset by effective global supplier management practices.\u00a0 They need to put their procurement, quality, and other staff on airplanes more often to verify that contractual obligations are being adhered to, that environmental standards are being maintained, and that work is being done in safe and sanitary conditions.<\/p>\n
I have been criticized for advocating surprise supplier audits in countries where relationships and trust are important.\u00a0 Perhaps Walmart, Sears, and Disney wanted their supply base to feel trusted and didn\u2019t provide the oversight that, in hindsight, was so dearly needed in this case.<\/p>\n
Well, did their suppliers justify that trust at the end of the day?\u00a0 No, they spit in the faces of the corporate giants and did what they wanted when they weren\u2019t being watched.\u00a0 Don\u2019t misinterpret this as a statement against any country or culture.\u00a0 Most people and organizations in these \u201ctrust is #1\u201d cultures are indeed trustworthy.\u00a0 But there are some that aren\u2019t and there is the very real risk that you could be lured into overly trusting a supplier that violates not only your trust, but also laws and basic human rights.<\/p>\n
If you\u2019re not willing to have in-person oversight with \u201cboots on the ground\u201d in low cost countries, please, source domestically where it is less costly and more convenient to oversee your supply chain.\u00a0 How many more child labor violations, unauthorized uses of lead paint and other dangerous materials, and deaths from inadequate safety systems is it going to take before companies decide to do international procurement and supplier management the right way?<\/p>\n","protected":false},"excerpt":{"rendered":"
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