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Last week an eight story garment factory in Bangladesh collapsed killing nearly 400 people with many still missing. The New York Times is calling it “one of the  worst manufacturing disasters in history.” This is not the first such incident, as there was a also a high profile fire at another clothing factory in November killing 112 people. According to a recent report by McKinsey & Co, American and European procurement heads considered Bangladesh the “next hot spot” for the manufacture of clothing due to its low costs. Over 80% of those respondents plan to cut sourcing in China, due to rising wages and declining profit margins.

How Sustainable is your Supply Chain?

This tragedy again raises the question: How can we have better visibility into supply chains to improve consumer confidence moving forward? To this end, the International Trade Center is introducing  a standards map to bring all these apparel companies together, to see what standards everyone is using, and where they stand against their peers.

In a recent blog I wrote on the horsemeat scandal in Europe (see Horses for Main Courses) and the importance of protecting the supply chain through improved traceability.  The reality is that we as consumers are always looking for low cost at high quality, and in this environment manufacturers are always looking for ways to reduce the manufacturing and logistics costs. The question is, “at what cost” from a sustainable supply chain perspective? 

Consumers are beginning to demand information on how and where the products we buy are made? And, what are the working conditions? Linkages to such tragedies are detrimental to revenue and brand perception. Transparency and traceability across the entire supply chain is a must in today’s connected environment — where any hint of scandal is visible to all consumers at the click of a button.

As a final note, the average pay for the nearly 4 million Bangladeshi garment workers is only $37 a month. This is less than the average price of a shirt in a local mall in the US!

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3 Comments

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  1. Ramesh Ramakrishnan

    Hi Richard

    When it comes to supply chain related to sensitive aspects ( garment/coffee/child labor/working standards) somehow it is working like public cloud, where one has no idea where the data resides. If companies can invest in search, geo-fencing etc to target customers, I’m not sure why the same is not looked into at the supply side particularly sensitive areas as mentioned above. Perhaps its the cost but now technology is not that expensive, so I guess its the ‘intent’ to avoid negative publicity/branding.

    Imagine having a simple code in the shirt and a customer scans the code using an app on his/her smartphone, and then get the details of the manufacturing place etc.using four square.

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    1. Richard Howells Post author

      Ramesh – I could not agree more. Having a “smart tag” could give you all that information assuming the background system is providing the traceability back to sourse.

      Also, solutions like SAP Supplier InfoNet can help in the validation and selection process of choosing the vendors in the 1st place.

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