Monday, September 1, 2014

Have supply chains changed since Rana Plaza Incident?

Textile industry being one of the risky and unsafe industries for workers, had developed codes of conduct and various compliance methods which remain unfollowed and unpracticed till now.

The collapse of the Rana Plaza, a sweater factory in Dhaka left over 1000 workers dead, throws light upon the unchanging conditions of the workers in global supply chain and the lack of a proper supplier code of conduct. As per Ceres, 42% of the 613 largest publicly traded companies don't have a well defined supplier code of conduct. Hence for a firm to achieve sustainability and a loyal market, it must enforce similar laws and regulations for the supplier as for its internal purpose before a similar incident repeats.

Major international brands can enforce the suppliers to meet International human right standards and provide incentives and technical assistance to shift towards sustainability. This action can shift the demand towards such international brands forcing other suppliers to follow the similar standards, hence bringing a change in the supply chain management for the good. The question that arises here is if this theory will turn out to be true, considering the low cost of manufacturing and labor in countries like Bangladesh?

The good news though is that there has been a substantial growth in the companies enforcing environmental and social performance improvement in suppliers from 27% to 30% in a year, hence having providing hope for improvement.


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