Tuesday, January 29, 2013

Large Giants Seek More Controls Over Suppliers

Walmart announced new policies for its massive suppliers last week in order to improve safety at supplier factories. The new policies are connected to a fire in Bangladesh last November, which killed more than 100 workers at a shoe factory.

The new policies aimed to ensure the safety and working conditions of Walmart’s major suppliers. Walmart explicitly mentioned in its new policies that Walmart doesn’t allow any supplier sub-contracting work to other vendors without its knowledge.1

Large US and European retailers used to focus more on producing cost and qualities when choosing their major suppliers, but care less about safety and working conditions. They viewed that it’s more of the local government’s responsibility to ensure the factory’s safety and working condition. However, with more and more media exposure in recent years, some “bloody factories” in China and Southeast Asia have gotten worldwide attention in recent years. After Tim Cook’s visit to Foxconn last year, Apple promised to improve salaries and working conditions in their suppliers, and so do other retailer giants such as Walmart and Sears.

Some argue that more concerns about supplier may drive up production costs and have negative economic impacts, while others maintain that more control over their suppliers leads to more efficient supply chain system for companies like Walmart and Apple, and thus actually drive the product price down. It seems that supplier policies are way beyond just moral issues.

[1]. http://www.scdigest.com/ONTARGET/13-01-24-2.PHP?cid=6648&ctype=content

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