The tragic factory collapse in Bangladesh has highlighted the need for greater transparency and understanding of the problems that exist within today’s supply chains.

The tragic factory collapse in Bangladesh has highlighted the need for greater transparency and understanding of the problems that exist within today’s supply chains.

But what can companies do to tackle risks in complex, multi-tiered global supply chains? And how can they engage with suppliers at scale to improve standards?  

Monday marks three months since the collapse of the Rana Plaza complex in Dhaka, Bangladesh. Since then over 60 clothing and retail brands have signed the Accord on Fire and Building Safety. US brands have signed the Alliance for Bangladesh Worker Safety; and a coalition of investors from 200 financial institutions representing $3 trillion in assets under management have called for systemic reforms to worker safety and welfare and the adoption of zero tolerance policies on global supply chain abuses.

Research from Sedex highlights fire safety as a clear risk priority in Bangladesh but also in China, Pakistan and India. Nearly a quarter (22%) of audits on the Sedex system show problems with fire safety in Bangladesh, 18% in China, 15% in Pakistan and 15% in both India and Sri Lanka. In these clothing producing countries fire safety sits alongside other major risks including labour rights, working hours, building safety and as well as other health and safety issues.

It’s clear that fire and building safety are not ‘Bangladesh issues’ – they are critical risks which are repeated in the supply chains of other garment producing countries. But for many companies, knowing where to start in responding to these risks can be a problem. Modern supply chains are highly complex, multi-tiered networks that consist of continuously evolving relationships involving many thousands of individual suppliers around the world. Globalisation and shifting patterns of trade can quickly create new risk hot spots. All of this makes any kind of commitment to improving standards at scale more challenging.

Understanding where these risk hot spots are is the first step along the path to delivering real improvements. Driving transparency across the entire supply chain not only helps companies to understand where risk lie, but enables them to spot potential issues. By increasing visibility within supply chains, companies can engage with their suppliers in a much more focused manner, allowing critical issues such as Fire and Building Safety to be dealt with more effectively. 

When it comes to tackling issues at scale, collaboration is king. The Accord / Alliances on Fire and Building Safety will hopefully help in Bangladesh. But this must be coupled with collaboration that sees companies working with their suppliers around the world to investigate problems and deliver solutions.

It is easier for suppliers if companies adopt collaborative approaches to monitoring and improving ESG standards in the supply chain. This reduces the need for multiple audits, allowing both parties to concentrate on making improvements. Supplier engagement increases understanding of sustainability issues, providing an opportunity to demonstrate the business benefits of responding to ESG risks and securing supplier buy-in on the need to improve standards. Building capability amongst suppliers should form part of this collaborative approach, helping to share responsibility for driving improvements throughout the supply chain with everyone working towards the same goals.

A growing number of leading companies such as M&S, Unilever and B&Q are recognising the opportunity to implement responsible sourcing programmes that raise standards down the entire supply chain by working collaboratively, encouraging greater transparency, using audits to identify key risks and engaging with their suppliers to build capability around ESG issues.

From recent fires and factory collapses in Bangladesh, to worker suicides at tech companies in China, it’s clear that huge challenges remain. There’s an urgent need to move away from reactive approaches to supply chain management to proactive, targeted, risk-informed approaches which use collaboration and supplier engagement to maximise impacts and bring scale to responsible sourcing.       

Mark Robertson is head of communications at certification body Sedex