Reliable Brokers
Online Investing
Alerts & Analysis
Easy Trading

Taking stock: Responsibility for the supply chain

Update : 03 May 2013, 07:57 AM

After the building collapse tragedy at Savar, it has been reported widely that many of the garment factories were exporting globally to consumers across the world including the UK, Spain and Italy. With more than 300 people lying dead, this is a tragedy that has shocked the world.

Primark, one of the retailers whose suppliers were based in the building, sells low-price clothing to their customers in the UK. People in Primark’s store in London can buy a shirt for the same price as a cup of coffee.

However Primark has been criticised for low standards several times before.

As a result, stores in the UK actually displayed a notice on the walls, alerting customers that they are working with suppliers to improve working standards. We now know they have not done enough - with fatal consequences.

Consumers who buy these clothes in the UK have no idea where their clothes come from, so ultimately it is the responsibility of companies to ensure good practices.

Can we really believe companies when they say they have ethical practices? Who is monitoring them? Human Rights Watch has reported that the Ministry of Labour is chronically under-resourced, with only 18 inspectors to monitor around 100,000 factories in Dhaka.

It has been argued that globalisation leads to downward pressure on costs, and can lead to a “race to the bottom” towards lower social and environmental standards. However, we also must remember the garment sector provides jobs and livelihoods for millions of people. Working in the garments sector can lift people out of poverty when standards are kept to.

After the fire in the Tazreen factory in November 2012, Walmart threatened to pull out of Bangladesh and may still do so.

However, this would cause many low-paid workers to lose their jobs, who are already struggling to feed their families. It also emerged that back in 2011, Walmart and other large companies rejected a plan to improve safety conditions, saying it was too costly.

Global companies that withdraw orders from Bangladesh after the tragedy will be taking an ineffective route - not addressing the problem.

With more than 3m people in Bangladesh relying on the garment sector for their livelihoods, mostly women, it is critical that companies work to improve standards rather than shift their production from Bangladesh.

Companies that move their production elsewhere after a tragedy are punishing workers twice: firstly with inadequate standards and monitoring, and secondly by leaving these people jobless when a problem gets attention.

With the sector contributing about 80% of Bangladesh’s exports and worth over $19bn, it could be disastrous for the economy if companies just pull out.

In globalised supply chains, transparency can be lost in a maze of suppliers and sub-contractors. There is now an urgent need for companies to sign up to the safety plans called for by workers’ groups. This would include independent audits and inspections. Companies must disclose their list of factories. Trade unions must also be allowed to form, so as to prevent such atrocities happening in future.

There were tragic reports that workers did not want to enter the factory when they arrived that morning, fearing for their safety in the face of the cracked building. Brac Bank, in the same building, withdrew their staff after the safety warning, but factory bosses made their workers stay.

The supply of cheap labour leaves such workers helpless. Oxfam estimates around 35,000 people move to the cities each week, leaving them vulnerable to exploitation.

The incident might cause a backlash - but we must make sure that garment businesses learn lessons from this tragedy. As with other disasters, it is better to prevent the disaster occurring than have to handle the post-disaster trauma.

The garment sector is not alone in suffering from this problem. Other supply chain managers and buyers must look to ensure the standards of their workers across the globe - otherwise they bear responsibility when tragedies occur.

We must push companies to have a sustainable response - not to withdraw their orders, but to work to improve standards.

Helena Wright is a researcher on disasters, currently based in Dhaka.  

Top Brokers