21 Apr Why you need to know your Supply Chain
On April 24, 2013, the Rana Plaza garment factory in Bangladesh collapsed, killing over 1,000 people and injuring hundreds. This disaster was the worst in the history of the garment industry.
The next day saw a lot of Garment Buyers checking their Supplier lists to ensure that they were not buying garments from that factory. I was one of those who at the same time as feeling relief that it was not our supplier, was also acutely aware that by constantly seeking lower prices for garments we can all share the blame when factory owners cut corners.
Just over a year later, in 2014, I visited a couple of garment factories in Dhaka. We were contracted to a Chinese supplier for a range of garments but they had recently moved the manufacturing of one of the products to Bangladesh to reduce costs. We had already received our copy of the audit report for the factory but to really understand your Suppliers nothing beats seeing for yourself and meeting in person those manufacturing your garments. One of the factories we visited was in the middle of a residential area. This made sense for them, as it meant their workers did not have to travel far to work and that the factory had become part of the local community. Based on my knowledge of factories in China and the UK, the Bangladesh factory facilities were basic but acceptable. As far as we could tell the workers seemed happy enough and were being paid just above the average textile worker’s wage. There were a couple of safety issues, which were actioned in a short space of time, after our visit, as confirmed by our agent.
The garment industry is crucial to Bangladesh’s economic survival. The sector employs some 4 million people, about 90 percent of them women. They work a minimum of 8 hours per day. They may have to work longer hours (especially if an order is required urgently) for a minimum wage of under £2.30 per day. The fact that the cost of living is about 55% below that of the UK does not make it any better for them.
There have been some improvements since Rana Plaza, with the majority of factories having had a fire and safety assessment. There has been an increase in the number of unions and the number of workers joining them. Also there was an increase in the Minimum Wage for textile workers but there are still improvements to be made.
The reason why Bangladesh has become so important for textiles is as Chinese factory overheads became more expensive, so Textile Buyers started looking for other manufacturing bases, with cheaper labour costs. In the rush to build new factories in Bangladesh to meet the demand for cheap textiles corners were cut. This could be repeated in other countries, when they start to establish their own textile markets.
In 2015 the Modern Slavery Act was introduced in the UK and this will put more pressure on Suppliers of all sizes to understand all the links in their Supply Chain and to know their suppliers and the condition that the workers operate under.
I am not suggesting that the Bangladesh factories that I visited were guilty of Modern Slavery. What I am suggesting is that your company needs to be fully aware of the Suppliers in your Supply Chain and that you have a duty of care to ensure that the workers who are manufacturing and supplying the goods that you sell, are treated fairly and work in a safe environment. You need to examine carefully the Independent Supplier Audits and ensure action points are followed up. You may even have to visit the factories yourself, periodically, so that you do not have to explain to your customers or shareholders, why one of your suppliers suffered a similar catastrophe to Rana Plaza.
First published on Medium