THE NEWS OUT OF BANGLADESH WAS BAD ENOUGH TO BEGIN
with. A fire in a factory that was a supplier to many of the world’s largest retailers killed 110 workers. Sometime later, a shoddy building that
housed several factories—once again suppliers to Western retailers—
collapsed. The death toll was more than 1,100. The tragedies—both prevent-able—raised anew a vital question for managers of global supply chains:
What responsibility do businesses have for the practices of their suppliers—suppliers selected in large part because they are low-cost operations,
with all that implies for wages, benefits, and working conditions?
It is not a new question. Three years ago, Apple found its reputa-
tion sullied by reports of abysmal working conditions at Foxconn, the
It might seem unfair to hold companies account-
able for the practices of their suppliers, but I would
disagree. The company you keep matters. Yet holding
suppliers in diverse cultures to Western social and
ethical standards is not simple in practice. In many
places, concepts like workplace safety, fair pay, and
sustainable operations are at best in their infancy,
and keeping tabs on far-flung operations not directly
under the company’s control is not easy.
I was reminded of that again while reading an excellent article by Ernst & Young’s Craig Coulter and Niul
Burton that will appear in the Quarter 1 edition of our
sister publication, CSCMP’s Supply Chain Quarterly. The consultants
address what it will take for public companies to implement the conflict
minerals reporting requirements included in the Dodd-Frank Wall Street
Reform and Consumer Protection Act. The goal is to ensure U.S. companies do not use metals produced from minerals mined in areas controlled by armed groups in the Democratic Republic of the Congo and
surrounding states. Here’s the rub: While the reporting rules will apply
to some 6,000 public companies in the U.S., the Securities and Exchange
Commission estimates the rules could affect as many as 100,000 companies worldwide when supply chains are taken into account.
But complexity is no excuse. While building a global supply chain can
have enormous financial benefits, it also brings with it enormous ethical
responsibility. We’ve seen some steps in response to the Bangladesh tragedies—the Accord on Fire and Building Safety and the weaker Bangladesh
Worker Safety Initiative. Those are a start. But businesses must step up
and make supplier ethics, along with costs and competitiveness, a core
element of their supply chains rather than be driven there by bad news.
bigpicture
Editorial Director
Building an ethical supply chain
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