GUEST COMMENT How retailers can achieve true supply chain transparency 

Now more than ever, shoppers are demanding to know where and how their products are made. Many show a preference for buying from brands who can demonstrate that they are doing business responsibly, writes Carmel Giblin, CEO and president, Ethical Supply Chain Program.

At the same time, regulation such as the EU’s Corporate Sustainability Due Diligence Directive has created a legal requirement for companies to do their due diligence when it comes to the human and environmental impact of their operations.

Despite this greater scrutiny, stories continue to emerge in the media about factories who are not upholding ethical labour standards. In Leicester, for example, garment manufacturers recently faced criticism for underpaying their employees. Earlier this year an Italian court also ruled that Christian Dior had failed to take appropriate measures to check the working conditions of its subcontract manufacturers.

It is even more of a challenge for brands to understand whether suppliers are operating ethically when they’re sourcing products from locations such as Vietnam, China or Mexico.

Global challenges
Many retail brands are dealing with vast supplier networks which span different countries and continents. These global supply chains make achieving true transparency a challenge – it is difficult to gain oversight and control of the conditions and contracts of all workers who are involved in making a product, particularly among third-party suppliers who are thousands of miles away. Cultural differences may also cause complications, as what is viewed as a responsible approach in one country may be considered insensitive or intrusive in another.

If issues are found within suppliers’ facilities, remediating them is often made harder for retailers due to language barriers, a lack of local understanding and gaps in their supply chain capabilities.

Whilst responsibility ultimately rests with the supplier to address any known issues, retailers have an important role to play in supporting and encouraging them to take action. They need to find ways to engage with their suppliers more positively and ensure that employees in factories are being treated fairly. If issues are found, it’s also important that they help them put simple and effective systems to help act on those.

Building stronger, positive relationships with suppliers
Retail brands need to think about how they can go beyond audit, by establishing a culture of collaboration and accountability with their manufacturers and suppliers. Manufacturers need to feel as though they are being supported and in a place where they are comfortable to admit their failings. If suppliers are reluctant to disclose problems, this will also make it harder to develop a safe and ethical workplace. 

Setting up clear channels of communication means that suppliers can feedback issues as they happen, rather than waiting for an annual audit. These open and honest conversations should also extend to the suppliers’ workforces, so that brands can understand issues on the ground in their supply chain. Setting up a robust grievance procedure in a factory, such as a worker helpline, enables employees to report concerns about unsafe working conditions or harassment, or ask for confidential advice at any time.

Of course, when sourcing suppliers, the ideal partner is one who has a shared belief in upholding high ethical standards. However, in order to build their trust, it also helps to have a team on the ground who are impartial and can deal with issues efficiently. Investing in training is another part of this trust-building process, ensuring suppliers feel capable and have people that can manage compliance with labour, environmental and health and safety standards.

More can certainly be done to improve labour standards in the retail supply chain – and most brands will need a helping hand on their journey to becoming more transparent. The topic of ethical working practices needs to be handled sensitively, but with a considered approach to supplier relations and support from partners who have teams on the ground in suppliers’ locations, retail brands can reassure their customers that they are acting in a responsible way.

Carmel Giblin, CEO and president, Ethical Supply Chain Program

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