How supply chain visibility can protect your business and your workers

  • Written by Peter Needle
  • Published on 3 June 2015
  • Blogs

Retailers can face many supply chain visibility challenges, particularly those with manufacturing facilities and suppliers based around the world. Many companies struggle to monitor these complex sourcing arrangements, but the results of letting transparency slip can be disastrous.

The latest supply chain tragedy

Last month, at least 72 people died in in a footwear factory fire in the Philippines, after sparks from welding work ignited chemicals used in production.

The Kentex Manufacturing Corporation building was based among many other factories in a rundown inner-city district of Manila. Kentex manufactured cheap ‘Havanas’ flip-flops for the local market, a cheap local imitation of premium branded Havaianas.

The rubber and chemicals used to manufacture the flip-flops were highly flammable and caused the blaze to spread quickly. Workers overwhelmed by the smoke were unable to escape from the second floor windows due to iron grilles reinforced with fencing wire. The two-storey building had few exits, and staff had received no fire safety education or emergency evacuation drills.

Angry relatives and workers described sweatshop conditions, where factory workers were recruited by subcontractors, paid below the minimum wage while surrounded by foul-smelling chemicals and worked under lax safety standards.

The problem with supply chain visibility

Many emerging nations benefit from significant economic growth thanks to a boom in their manufacturing industry. By utilising a young population as cheap and plentiful labour, and offering the infrastructure to support huge production capacity, a country’s long-term future can be transformed.

Bangladesh is just one country which has improved its outlook significantly through developing its manufacturing powers. The garment industry has had a major impact on the country’s development, employing over 4 million people, proving financial support to another 25 million individuals, and playing a big role in social change and female empowerment.

However, without supply chain visibility, these developments can come at a very high price. In Bangladesh, Rana Plaza was constructed with inferior materials and disregard for building codes, and in 2013 the multi-storey factory collapsed with thousands of garment workers inside.

On a similar note, Rosalinda Baldoz, Labor Secretary for the Philippines, recently admitted to Reuters that only 60% of businesses in the country were found to comply with government labour standards last year. This means the deadly conditions found in the Kentex building are likely to exist elsewhere.

How this affects supply chains closer to home

Alan Tanjusay, spokesman for the Associated Labor Unions-TUCP, predicted to Reuters that almost 90% of local factories are currently problematic, with the exception of most multinational firms which adhere to strict labour and safety regulations.

Kentex Manufacturing and the shoe company it supplied were locally owned. However, Tanjusay also urged the government to limit labour subcontracting to three layers, in contrast to the eight or nine layers commonly seen today. With this level of complexity, it must be very difficult for any company to trace all sourcing and achieve supply chain visibility.

Segura’s supply chain visibility solution can help companies to gain this transparency, keeping all sourcing and subcontracting within a network of pre-approved suppliers. An online audit trail is created, showing where every element of a product has come from, and this data can then be used by companies to demonstrate complete transparency, even to their consumers.

Real time alerts will also let you know if products have been sourced from outside your list of trusted and audited suppliers, allowing you to address the problem immediately and reduce your supply chain risk.

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