Corporate Supply Chains -- Moving Beyond Monitoring

Corporate Supply Chains -- Moving Beyond Monitoring

Factory monitoring should be part of a multi-step remediation process that includes identifying root causes of violations, say workers rights advocates. By Lisa Roner

The third annual audit of global clothing factories by the industry-sponsored Fair Labor Association shows that, despite widespread efforts to improve working conditions, documented labor standards violations rose from 15.1 per factory in 2003 to 18.2 in 2004.

The audit found no instances of forced or child labor violations beyond documentation inconsistencies -- an improvement over previous surveys. However, many factories still force employees to work excessive overtime, fail to follow safety regulations and procedures and thwart workers' attempts to organize.

Nike, a member of the FLA and a widely recognized industry leader in addressing labor standards and monitoring, says the audit's findings are consistent with its own observations among its supplier factories. And many industry experts agree the audit offers few surprises in an industry where changes in the global supply chain are difficult and slow to effect.

Most observers agree with the FLA’s assessment that the slight increase in reported violations is probably the result of revised monitoring methods rather than a true rise in misconduct.

However, they also say the data is indicative of the limitations of traditional auditing approaches.

Missing Data

Dara O’Rourke, assistant professor of environmental and labor policy at the University of California at Berkeley, says what is more interesting than the upswing in health and safety and other common violations is what the FLA is not finding -- namely more violations of freedom of association, non-discrimination and hours of work standards.

Although O’Rourke applauds the FLA’s efforts to make its audit data public and to publish factory tracking charts, he is skeptical over the group’s findings of only single-digit percentages of factories not in compliance with these major categories of labor rights issues.

O’Rourke says his practical experience shows that few factories, particularly in Asian countries, are truly meeting the bar on these issues.

"They still can’t identify what, even they admit, are huge issues on the ground in many producer countries and are significantly under-reporting the level of non-compliance in many factories they audit," he says. "Their tools are simply not effective in identifying, through third-party audits, the true conditions under which workers operate."

O’Rourke says traditional audits easily identify more readily apparent violations, such as unmarked fire exits or other health and safety issues, but fail to pick up less concrete violations, like freedom of association and discrimination issues, that are difficult to identify and evaluate in one-day audits.

Factory owners and managers, he says, are increasingly skilled at coaching workers to cover up problems. Some firms, like Disney after recent accusations of violations in China, have turned to non-profit auditors, such as Verite, that offer a much more comprehensive, though costly, auditing service.

Scott Nova, executive director of the anti-sweatshop group Workers’ Rights Consortium, says worker interviews are the weakest part of traditional audits.

A recent study by the Clean Clothes Campaign, an international network of trade unions and non-governmental organizations monitoring the clothing industry, concurs. The study found that social auditing “marginalizes” workers and is not followed up with sufficient remediation.

Auret van Heerden, president of the FLA, is the first to admit the “real work starts after the audit”, but says that improving conditions long-term is tough. “It’s proved to be very, very hard to get sustainable change at the factory level,” he says.

Root of the Problem

To overcome these challenges, O’Rourke believes groups should shift from “checklist audits of symptoms” to identifying root causes in the supply chain and brands that drive the problems on the factory floor.

Marcela Manubens, vice-president of global human rights and social responsibility at clothes maker Phillips-Van Heusen, agrees. Traditional monitoring, she says, has allowed the industry to identify labor issues of concern and has led to awareness and acceptance of responsibility for conditions in supplier factories by brands. However, simple monitoring and policing, she believes, will not achieve sustainable compliance.

For that reason, she says, the FLA is now not focused primarily on increasing monitoring, but rather on capacity building and the development of pilot programs and new, sustainable practices. Manubens points to projects focused on hours of work in China, eradication of discriminatory practices in Central America and workers community training in China as examples of how the FLA is shifting its focus to finding solutions to labor standards issues.

Manubens also suggests that future efforts should do more to engage factory owners. She believes brands could be more successful at achieving remediation if factory owners were helped to try to implement their own solutions to the problems.

Linking Sourcing to Labor Principles

Another important part of the equation, many critics say, is encouraging brands and suppliers to set realistic production timelines and practices.

“It’s easy to say you have a code of conduct and a monitoring program,” Manubens says. “But it’s tougher to make sourcing decisions that line up with your code and principles.”
O’Rourke agrees and says pressure to cut prices and to produce more, faster is having a negative effect on working conditions on the factory floor.

All of a company’s compliance efforts, Manubens stresses, will be worthless if they are not coordinated with its sourcing strategy. And she is quick to point out that if a company “walks the talk”, but its competitors do not, it will be put at a critical disadvantage.

Effecting real change, she says, will take cross-industry co-ordination and “buy-in” from investors. “Wall Street has not come to the table yet,” Manubens says. “They’re still pressing for growth that isn’t lined up with the ethical component.

But O’Rourke believes that, despite the larger economic challenges, there is “a lot of room to do better analysis and find what is causing specific problems on the factory floor”. To do so, however, will take moving to the next level -- beyond traditional monitoring -- to determine root causes of labor standards issues and to establish benchmarking and best practices that will move the whole industry forward.

Moving the industry beyond simply monitoring, toward real change, Manubens stresses, will take collaboration at even the simplest of levels. The FLA’s shared audits, she says, effectively force collaboration between brands and other stakeholders to fix shared problems. And that, she says, gives much to be hopeful for.

Society must “evolve a level of complex networks commensurate with the complexity of the challenges we face,” says Peter Senge, a senior lecturer at the Massachusetts Institute of Technology and founding chair of the Society for Organizational Learning. It is a concept, he says, that is particularly applicable to the clothing industry.

Those complex networks are beginning to be employed and to “raise the bar” in manifestations such as the Multi-Fiber Arrangement Forum, which is working to preserve the viability of the clothing and textile industry in countries like Bangladesh with the phase-out of the MFA. And they are beginning to have positive impacts in the workplace as brands and other stakeholders join forces to establish “continuous monitoring” to detect, prevent and remedy common problems at shared supplier factories.

Moving beyond traditional monitoring toward addressing root causes and remediation may be the long-awaited light at the end of the tunnel for the world’s clothing workers.

This article has been reprinted courtesy of Ethical Corporation. It first appeared in the January 2006 issue of that publication.