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More and more companies are realizing they cannot tackle supply chain issues on their own and will have to work on them with their commercial rivals, a leading auditing firm has concluded.
PricewaterhouseCoopers says it has found many businesses are questioning ‘how much can be achieved by individual company action in isolation’, and that they are also balking at the cost of conducting ethical monitoring programmes on their own.
In a new study, Sourcing overseas for the retail sector, PwC says some companies are therefore ‘starting to work in a more collaborative manner to share best practice and findings from site visits to suppliers’. There is ‘anecdotal evidence’ this approach is favoured by suppliers, who feel it will minimize disruption.
PwC expects more companies and sectors to follow the example of the Ethical Tea Partnership, a UK venture set up by 17 packing companies that now share responsibility for checking the social and ethical conditions of the dealers whose tea they buy (EP6, issue 8, p3). The study concludes that isolated efforts have so far failed to make a real dent in non-compliance with local laws and codes of conduct in supply chains. ‘Collaborative working’ is now likely to be considered more productive, and the ‘most forward-looking companies’ are already taking this approach.
PwC says companies urgently need to work together, as many non-governmental organizations and trade unions are saying that factory visits, as conducted at present, often fail to bring significant improvements. The firm says its own monitoring suggests such ‘poor rectification’ of supplier performance is usually due to a combination of factors – companies following up instances of non-compliance have ‘weak internal processes and controls’, senior management does not show leadership, buying teams lack support, and businesses insufficiently influence suppliers.
It believes collaborative working may remedy some of these weaknesses and strengthen monitoring.
PwC’s conclusions follow a World Bank study that found evidence of widespread ‘fatigue’ among companies and suppliers on ethical supply chain monitoring and a sense that initial progress has slowed (EP6, issue 11, p1).
Auret Van Heerden, chief executive of the Fair Labour Association, which audits supplier factories for companies such as Nike, also recently warned that the corporate world has only limited scope to influence suppliers’ conduct.
‘In the past four years I’ve been at the FLA I’ve never, ever seen a factory that conforms to the law or to international labour standards, despite the best efforts of companies,’ he told the Federe 2005 conference in Paris.
Van Heerden told delegates that although companies could bring about improvements in many areas, it was simply unrealistic to expect dramatic change in large parts of the developing world where ‘Wild West’ conditions, poverty and poor governance prevail.
PricewaterhouseCoopers says it has found many businesses are questioning ‘how much can be achieved by individual company action in isolation’, and that they are also balking at the cost of conducting ethical monitoring programmes on their own.
In a new study, Sourcing overseas for the retail sector, PwC says some companies are therefore ‘starting to work in a more collaborative manner to share best practice and findings from site visits to suppliers’. There is ‘anecdotal evidence’ this approach is favoured by suppliers, who feel it will minimize disruption.
PwC expects more companies and sectors to follow the example of the Ethical Tea Partnership, a UK venture set up by 17 packing companies that now share responsibility for checking the social and ethical conditions of the dealers whose tea they buy (EP6, issue 8, p3). The study concludes that isolated efforts have so far failed to make a real dent in non-compliance with local laws and codes of conduct in supply chains. ‘Collaborative working’ is now likely to be considered more productive, and the ‘most forward-looking companies’ are already taking this approach.
PwC says companies urgently need to work together, as many non-governmental organizations and trade unions are saying that factory visits, as conducted at present, often fail to bring significant improvements. The firm says its own monitoring suggests such ‘poor rectification’ of supplier performance is usually due to a combination of factors – companies following up instances of non-compliance have ‘weak internal processes and controls’, senior management does not show leadership, buying teams lack support, and businesses insufficiently influence suppliers.
It believes collaborative working may remedy some of these weaknesses and strengthen monitoring.
PwC’s conclusions follow a World Bank study that found evidence of widespread ‘fatigue’ among companies and suppliers on ethical supply chain monitoring and a sense that initial progress has slowed (EP6, issue 11, p1).
Auret Van Heerden, chief executive of the Fair Labour Association, which audits supplier factories for companies such as Nike, also recently warned that the corporate world has only limited scope to influence suppliers’ conduct.
‘In the past four years I’ve been at the FLA I’ve never, ever seen a factory that conforms to the law or to international labour standards, despite the best efforts of companies,’ he told the Federe 2005 conference in Paris.
Van Heerden told delegates that although companies could bring about improvements in many areas, it was simply unrealistic to expect dramatic change in large parts of the developing world where ‘Wild West’ conditions, poverty and poor governance prevail.
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