Holding suppliers accountable to ethical employment standards and working conditions has become an important touch point for many retailers and brands. The factory fire in Bangladesh, which killed over 100 people last year, was a glaring example of the safety negligence that takes place in many manufacturing facilities around the world. Child labor, unpaid workers and hazardous work conditions underscore the need for retailers to demand that suppliers meet and comply with a higher set of standards.
Of course, this is easier said than done. Policing manufacturing plants in a global marketplace requires audits and enforcement. Some foreign manufacturers use shadow factories to produce goods. These facilities operate outside of any regulation or oversight. Officials and auditors can be bribed to skew audit results. The harsh reality is this; it is nearly impossible to oversee the ethical compliance of all manufacturers and vendors. However, many retailers and brands are trying to improve the treatment of workers throughout the globe.
Walmart, a behemoth in the world of retailers, has raised the stakes of non-compliance for its vendors. New factories that want to work with Walmart must go through a pre-approval process. There are region specific rules now in place. Take Bangladesh for instance. Walmart now requires that companies in this area go through a fire and building safety inspection. The price for non-compliance is high. Contracts are automatically severed, and Walmart publishes a list of unapproved Bangladesh factories on its website.
U.S. companies have very high workplace standards, and meeting these standards takes time and money. What we learned through our own industrial revolution about employee safety and ethical treatment is now being applied to overseas suppliers. We have OSHA and other oversight organizations to help monitor U.S. facilities. Retailers and brand owners are becoming the regulators and enforcers for their foreign suppliers. American manufacturers embrace these renewed efforts to insure foreign companies meet these compliance standards.
Walmart recently committed to expanding the number of American-made products that they sell. In fact, they pledged to purchase $50 billion more U.S.-made goods over the next decade. The companies that manufacturer these products in the United States are held to the same ethical standards that apply to all of their suppliers through an Ethical Sourcing Audit Process.
As the manufacturer of K’NEX construction toys, we must demonstrate our commitment to the ethical treatment of our employees. An accredited third party compliance company recently administered the audit and The Rodon Group passed with flying colors.
The factory audit process, as stated on Walmart’s website “are the central pillar of Walmart’s ethical sourcing program. Because Walmart does not own any of the factories that produce merchandise for our stores, regular audits are conducted to verify that a supplier is complying with Walmart’s Standard for Suppliers.” These standards include the fair and ethical treatment of employees, well-defined hiring practices and a clean safe working environment. In addition to reviewing personnel documents and records, the audit company interviews employees at random to get their feedback on the working conditions, communication and overall treatment by the employer.
The compliance team also tours the factory. They look for any safety or environmental hazards and verify the factory is a clean and safe facility. Once the audit is complete, the factory is given a rating. To be approved as a manufacturing vendor, the facility must receive one of Walmart’s two highest assessment ratings.
The Rodon Group received the highest rating. No issues were found at the facility and our employees were found to be well treated and respected. Now that we have obtained this designation, we will continue to operate as an approved vendor for the next two years. The Walmart policy is clear “Walmart uses the audits to help make decisions about suppliers and factories – whether to develop them, make them a preferred supplier or to stop doing business with them due to the severity of violations.”
As Walmart continues to expand their American-made product selection, more U.S. companies, workers and communities will benefit. The rising tide of investment into American-made products will help secure a stable and prosperous manufacturing future.