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Wal-Mart is claiming to have conducted more ethical audits of its supplier factories last year than any other company – but has signalled that it intends to take a different approach to monitoring from now on.
Figures in the retailer’s latest Ethical sourcing report, published last month, show 16,700 audits, 23 per cent more than in 2005. However Wal-Mart claims that it has had success with ‘educational outreach’ to factory managers and sees this type of work as the way forward.
In common with many other retailers, Wal-Mart now says it wants to rely more on ‘positive reinforcement and incentives’ for suppliers rather than ‘policing and punitive measures’.
It is considering ‘enhanced training’ for merchandisers, buyers and sourcing managers to keep production lead times and last-minute design changes to a minimum. It will also introduce a ‘pre-qualifying’ regime for new suppliers with only those reaching certain standards winning orders.
Last year Wal-Mart met factory managers at eight suppliers judged to be high risk to advise what they could do to meet the company’s standards. All eight showed ‘substantial improvement’ and six subsequently achieved Wal-Mart’s highest audit rating. About 5000 factory managers also attended ethical training sessions during 2006.
High-risk violations such as failure to pay legally required overtime premiums, fell 12 per cent compared with 2005.
However, overall the number of medium- and high-risk infractions requiring a follow-up audit, such as excessive overtime or inadequate workers’ contracts, has increased in the last three years (see graph below). Last year, only a tiny minority (0.2 per cent) were permanently barred from producing goods for Wal-Mart because they had consistently failed to improve, while 2.1 per cent were barred for 12 months.
The Wal-Mart Standards for Suppliers code, established in 1992, details the company’s expectations on workplace practices and all suppliers must sign. The inspections are carried out by both in-house and third-party auditors.
Wal-Mart published its first ethical standards annual report last year, and had intended to begin producing an annual sustainability report from spring 2007. However, publication of the latter has been substantially delayed, because, insiders say, the company greatly underestimated the work involved. No official release date has yet been given, although the company told EP it would appear ‘soon’. Producing a sustainability report was one of a series of pledges made last year by Wal-Mart chief executive Lee Scott (EP8, issue 4, p8).
Figures in the retailer’s latest Ethical sourcing report, published last month, show 16,700 audits, 23 per cent more than in 2005. However Wal-Mart claims that it has had success with ‘educational outreach’ to factory managers and sees this type of work as the way forward.
In common with many other retailers, Wal-Mart now says it wants to rely more on ‘positive reinforcement and incentives’ for suppliers rather than ‘policing and punitive measures’.
It is considering ‘enhanced training’ for merchandisers, buyers and sourcing managers to keep production lead times and last-minute design changes to a minimum. It will also introduce a ‘pre-qualifying’ regime for new suppliers with only those reaching certain standards winning orders.
Last year Wal-Mart met factory managers at eight suppliers judged to be high risk to advise what they could do to meet the company’s standards. All eight showed ‘substantial improvement’ and six subsequently achieved Wal-Mart’s highest audit rating. About 5000 factory managers also attended ethical training sessions during 2006.
High-risk violations such as failure to pay legally required overtime premiums, fell 12 per cent compared with 2005.
However, overall the number of medium- and high-risk infractions requiring a follow-up audit, such as excessive overtime or inadequate workers’ contracts, has increased in the last three years (see graph below). Last year, only a tiny minority (0.2 per cent) were permanently barred from producing goods for Wal-Mart because they had consistently failed to improve, while 2.1 per cent were barred for 12 months.
The Wal-Mart Standards for Suppliers code, established in 1992, details the company’s expectations on workplace practices and all suppliers must sign. The inspections are carried out by both in-house and third-party auditors.
Wal-Mart published its first ethical standards annual report last year, and had intended to begin producing an annual sustainability report from spring 2007. However, publication of the latter has been substantially delayed, because, insiders say, the company greatly underestimated the work involved. No official release date has yet been given, although the company told EP it would appear ‘soon’. Producing a sustainability report was one of a series of pledges made last year by Wal-Mart chief executive Lee Scott (EP8, issue 4, p8).
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