As retailers are only too aware, their buyers’ decisions can inadvertently contribute to poor labour conditions in the supply chain. Being sure that a factory’s working conditions are up to scratch is notoriously difficult and even a delayed sample arriving at the factory can result in unnecessary overtime for workers.
Retailers are now taking real steps to overhaul their purchasing practices, but with blurred lines between buying and compliance, what has happened to the traditional role of the deal-making, price-focused buyer? And how much responsibility should be placed on their shoulders in terms of making ethically sound decisions?
New Look corporate social responsibility director Janet Biggs says the landscape is changing. “Our job is to make ethical decisions an integral part of the buying criteria. Buyers are much more engaged and both our ethical-training programme and the board are strengthening strategy. We’ve got realistic plans – we acknowledge where we are now and are working to make a difference,” she says.
That picture is typical across the retail sector. Retailers are increasingly aware of the often complex relationship between the everyday decisions they make and how those decisions have an impact further along the supply chain. According to the Ethical Trade Initiative (ETI), research carried out by organisations such as Oxfam, as well as companies’ internal evaluations, has found that many buying practices directly undermine the efforts of compliance teams to enforce international labour standards. Many leading multinational retailers’ reviews of buying practices should therefore result in buyers playing a greater role in ensuring that conditions improve.
ETI spokeswoman Julia Hawkins believes responsibility has shifted from the ethical trade manager or compliance department to being shared across the business. “It needs to be shared because the buyer has relationships with suppliers, that the ethical trade manager doesn’t,” says Hawkins.
A pressing issue
Michael Page buying and merchandising manager Alex Foxell agrees that the issue is coming to the fore. “It’s yet to be fully defined, but is becoming more prominent. We increasingly see clients looking for buyers who can build supplier relationships – who can be more collaborative and not just focused on the best price,” he says.
Biggs describes New Look’s view of its buyers’ responsibilities as “freedom within a framework”. She explains: “Buyers can make a huge amount of difference when they are out in the field. They have to be alert to the issues and asking the questions, so the supplier sees that it’s part of everyday business and not just something you address every six months.”
But is the additional responsibility, on top of the already pressurised job of overseeing costs, manufacturing, price and value, just too much to ask?
Foxell says buyers are used to making judgment calls all the time, but agrees that particular aspects of ethical-trading compliance could prove tricky. “Ethics aren’t fixed and global supply chains and global businesses mean there will be a significant amount of cultural and ethical diversity and, unlike profit and loss, it is difficult to quantify and measure,” he says.
Increasingly, companies are moving away from the idea that supplier compliance simply involves ticking a few boxes every six months. Buyers are often expected to work with suppliers to continually improve ethical performance.
At Tesco, responsibility lies with buyers to ensure their behaviour does not prompt suppliers to cut ethical corners. The supermarket’s Buying with Your Eyes Open course – designed to raise awareness of the effects that purchasing practices can have on labour standards – is now compulsory for Tesco buyers around the world.
Biggs says New Look has always had some kind of ethical-trading initiative in place since 1998, but the training and awareness-raising programme undertaken in the past year is the most sophisticated so far. The retailer has changed its emphasis from audits to project work. “We are finding project work challenging, but feel it’s the right way to deal with the issues,” says Biggs. “We’re finding the best approach is to work with a supplier with a very specific aim – for example, working hours. If we can illustrate success to other people, it’s much quicker to pass it on.”
Otto Group, one of the largest global mail-order companies, is demanding more transparency from suppliers and buyers alike. It insists each buyer reports on how many of their suppliers are compliant with ethical trading standards. It has a database that catalogues each supplier’s position and if a supplier fails a third audit, they are blacklisted. And because this system applies to all suppliers in all countries, neither buyers nor suppliers can opt out. Otto says the requirement has increased internal competition between buyers on ethical performance issues.
Biggs also acknowledges that much of the responsibility should lie with senior management. “The responsibilities – such as deciding which countries we source from – still sit quite strongly with buying management, as well as the buying director and supply-chain director and people like myself – they decide on the guiding principles,” says Biggs.
Sharing responsibility
Foxell says that the big concerns, such as wages in a developing country, are too weighty for a single buyer and company to take on. Trying to tackle them, he says, could put them at a commercial disadvantage and threaten everyone’s jobs. “It’s very difficult for buyers to maintain and enforce standards all the way across the supply chain. A certain amount should perhaps lie with manufacturers and governments,” he says.
But, despite the perceived extra pressure in an already stressful job, the additional responsibility can be welcome and can even assist in achieving other targets.
In Gap’s experience, inefficient purchasing practices cause problems not only for workers, but for product quality as well. Meeting tight deadlines leads to long hours, subcontracting and, ultimately, a lapse in quality. Gap vice-president of global compliance Dan Henkle says: “In examining our overall supply-chain strategy, we realised that some of our decisions were not only impacting on working conditions, but on quality, on-time delivery and cost.”
Foxell adds: “Buyers have a commercial duty to provide customers with the products they want, but as ethical considerations are affecting consumers more and more, the two are becoming increasingly aligned.”
The wheels of change are already in motion across the retail industry and compliance is set to become central to a buyer’s role. It will undoubtedly mean more work and extra pressure, but that is not to say it’s unwelcome. And with ethical trading at the top of many consumers’ agenda, any company that wants to look credible will take responsibility right up to board level too. RW
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