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The world’s largest sports shoe and clothing brand has claimed that a decision to publicly disclose the names of all its supplier factories has led to greater co-operation with competitor companies on shared social and environmental problems in their supply chains.
Nike made the decision to disclose the names and whereabouts of the 700 suppliers making Nike-brand product two years ago (EP7, issue 1), going against perceived wisdom that to do so would hand sensitive commercial information to competitors.
At the time it admitted it had little idea what the consequences would be, and was doing so mainly as an act of transparency. But now the company says the decision has been beneficial to its ethical supply chain management programme because other multinationals in the apparel sector have been prompted to privately divulge information to Nike about shared suppliers, which has improved working conditions.
Nike says progress has been so encouraging that by 2010/11 it expects to have such ‘multi-brand collaboration’ on ethical matters at 30 per cent of its contract factories. The company does not claim that disclosure alone has been responsible for closer working with rivals, but says that secrecy surrounding contract factory locations had led to a lack of co-operation between buyers ‘and was responsible for massive wasted resources across the industry’.
By contrast, it reports that ‘we are now seeing successes as a result of collaboration – shared information, shared best practices, leveraged resources and more effective coverage of supply chains in our industry’.
Its latest corporate responsibility report states: ‘We have realized no competitive disadvantage from bringing greater transparency to our supply chain. In fact, many of our suppliers have welcomed it for leading to streamlining and harmonization of monitoring approaches, reducing the burden on them, and allowing partners to collectively focus resources and energy on more than just policing.’ The company recently updated its factory disclosure list and now plans to do so at least once a year. It is also urging other apparel companies to reveal more details of their supply chains. Puma and Gap are among those to have made more data public on supplier audits in the past year.
Nike hopes the greater co-operation will advance work on the ‘root causes’ of non-compliance with its code of conduct rather than simply identifying infringements and making suppliers put them right.
In a further sign that large companies are gradually moving away from an audit-dominated approach, Nike is also asking its auditors to identify weaknesses in supplier management systems that lead to non-compliance, rather than actual breaches.
‘We believe that changing our ratings criteria from focusing on incidents to systems will reflect the pace of sustained change at a factory more accurately,’ said Hannah Jones, vice-president for corporate responsibility.
Nike made the decision to disclose the names and whereabouts of the 700 suppliers making Nike-brand product two years ago (EP7, issue 1), going against perceived wisdom that to do so would hand sensitive commercial information to competitors.
At the time it admitted it had little idea what the consequences would be, and was doing so mainly as an act of transparency. But now the company says the decision has been beneficial to its ethical supply chain management programme because other multinationals in the apparel sector have been prompted to privately divulge information to Nike about shared suppliers, which has improved working conditions.
Nike says progress has been so encouraging that by 2010/11 it expects to have such ‘multi-brand collaboration’ on ethical matters at 30 per cent of its contract factories. The company does not claim that disclosure alone has been responsible for closer working with rivals, but says that secrecy surrounding contract factory locations had led to a lack of co-operation between buyers ‘and was responsible for massive wasted resources across the industry’.
By contrast, it reports that ‘we are now seeing successes as a result of collaboration – shared information, shared best practices, leveraged resources and more effective coverage of supply chains in our industry’.
Its latest corporate responsibility report states: ‘We have realized no competitive disadvantage from bringing greater transparency to our supply chain. In fact, many of our suppliers have welcomed it for leading to streamlining and harmonization of monitoring approaches, reducing the burden on them, and allowing partners to collectively focus resources and energy on more than just policing.’ The company recently updated its factory disclosure list and now plans to do so at least once a year. It is also urging other apparel companies to reveal more details of their supply chains. Puma and Gap are among those to have made more data public on supplier audits in the past year.
Nike hopes the greater co-operation will advance work on the ‘root causes’ of non-compliance with its code of conduct rather than simply identifying infringements and making suppliers put them right.
In a further sign that large companies are gradually moving away from an audit-dominated approach, Nike is also asking its auditors to identify weaknesses in supplier management systems that lead to non-compliance, rather than actual breaches.
‘We believe that changing our ratings criteria from focusing on incidents to systems will reflect the pace of sustained change at a factory more accurately,’ said Hannah Jones, vice-president for corporate responsibility.
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