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Good OM Reading: The Myth of the Ethical Supply Chain

September 1, 2015
Inside the Tazreen garment factory after the fire

Inside the Tazreen garment factory after the fire

The anti-sweatshop mania burst into the mainstream in the mid-90’s. Naked people chanted outside the opening of an Old Navy, Jennifer Love Hewitt led an anti-sweatshop protest, Kathie Lee Gifford cried in front of Congress. Nearly every major apparel brand was the target of a boycott campaign. In response, the companies adopted codes of conduct, banning workers under 16 and forced overtime—then expanding to health, safety, and environmental protection. Since 1998, Nike has followed U.S. clean air standards in all of its factories worldwide, while Levi’s gives financial literacy classes to some of its seamstresses. An entire ecosystem of independent inspectors sprung up.

However, it’s not the largest companies that are the issue. In the last 25 years, as the big brands were getting better at monitoring their supply chains, the entire global apparatus of manufacturing shifted. In the fast-fashion era, Western brands couldn’t afford the luxury of working with the same suppliers and ensuring that they meet the company’s standards. Most of them outsourced this coordination to megasuppliers: huge conglomerates that can take a design sketch, split the production between 1,000’s of factories, box up the goods and ship them to stores.

Recall that in 2012, as the fire alarm went off in a Tazreen garment factory in Bangladesh, over 1,200 workers were scrambling to complete orders for Western brands: Dickies, Wal-Mart, Disney. After 100 workers died, NGOs focused on how Wal-Mart was responsible for 60% of the clothing being produced there. But Wal-Mart never actually placed an order with Tazreen. A year before the fire, Wal-Mart inspected the factory and discovered that it was unsafe. By the time of the fire, it had banned its suppliers from using it. So how did its products end up at Tazreen anyway? Wal-Mart had hired a megasupplier called Success Apparel to fill an order. Success hired another company, Simco, to carry out the work. Simco—without telling Success, much less Wal-Mart—sub-contracted the order to Tazreen’s parent company, the Tuba Group, which then assigned it to Tazreen. Two other 4th and 5th tier contractors also placed Wal-Mart orders at Tazreen, again without telling the company.

This lengthy, but highly readable, article in The Huffington Post, is a perfect supplement to your discussion of SCM in Chapter 11.

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