Executive Briefings

Building More Socially-Responsible Supply Chains

After the tragic collapse of a Bangladeshi factory building, the Rana Plaza, which caused the death of about 1,200 low-paid workers, retailers were left reeling from the PR backlash.

Consumers in the west recoiled at the thought of well-known high street brands trading with suppliers that had allegedly shown such scant regard for the health and safety of their employees.

The retailers affected responded by forging an accord and raising money to help pay for fire safety and building improvements at the factories they use in Bangladesh.

But should these businesses have known better?

Back in 1997, Nike came under criticism when workers at a supplier's factory in Vietnam were exposed to toxic fumes well above permissible limits. The sports brand came under fire again three years later when further examples of worker exploitation came to light. To date, many consumers believe that Nike's corporate image has been tainted by these events.

To prevent ethical issues arising within a company's global supply chain and potentially causing lasting damage to their brand, some basic principles should be followed.

Keep it simple: Cost pressures mean there is often a tendency for supply chains to become more complex as companies try to trim overheads by switching suppliers. But this extra complexity, which sometimes results in the use of tiers of sub-contractors and impacts on supply chain visibility, inevitably exposes the buyer to increased risk.

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Consumers in the west recoiled at the thought of well-known high street brands trading with suppliers that had allegedly shown such scant regard for the health and safety of their employees.

The retailers affected responded by forging an accord and raising money to help pay for fire safety and building improvements at the factories they use in Bangladesh.

But should these businesses have known better?

Back in 1997, Nike came under criticism when workers at a supplier's factory in Vietnam were exposed to toxic fumes well above permissible limits. The sports brand came under fire again three years later when further examples of worker exploitation came to light. To date, many consumers believe that Nike's corporate image has been tainted by these events.

To prevent ethical issues arising within a company's global supply chain and potentially causing lasting damage to their brand, some basic principles should be followed.

Keep it simple: Cost pressures mean there is often a tendency for supply chains to become more complex as companies try to trim overheads by switching suppliers. But this extra complexity, which sometimes results in the use of tiers of sub-contractors and impacts on supply chain visibility, inevitably exposes the buyer to increased risk.

Read Full Article