Wal-Mart to increase supplier oversight
BY ANNE D'INNOCENZIO Associated Press
Wednesday, January 23, 2013
1/23/13 at 3:39 AM
BENTONVILLE, Ark. - Wal-Mart Stores Inc. has alerted its global suppliers that it will immediately drop them if they subcontract their work to factories that haven't been authorized by the discounter.
Wal-Mart's stricter contracting rule, along with other changes to its policy, comes amid increasing calls for better safety oversight after a deadly fire at a Bangladesh factory that supplied clothing to Wal-Mart and other retailers. The fire in late November killed 112 workers at a factory owned by Tazreen Fashions Ltd. Wal-Mart has said the factory wasn't authorized to make its clothes.
In a letter sent Tuesday to suppliers of its Walmart stores as well as Sam's Clubs in the U.S., Canada and the United Kingdom, the company says it will adopt a "zero tolerance" policy on subcontracting without the company's knowledge, effective March. 1. Previously, suppliers had three chances to rectify mistakes.
"We want the right accountability and ownership to be in the hands of the suppliers," said Rajan Kamalanathan, Wal-Mart's vice president of ethical sourcing, said in an interview with The Associated Press. "We are placing our orders in good faith."
Wal-Mart will hold a meeting for clothing suppliers from the U.S. and Canada on Thursday to explain the new policy changes.
Kamalanathan said Wal-Mart is looking to create a fund that factories can tap to improve safety, but that is still in discussion. But he also said local governments and other suppliers and retailers have to do their part in boosting factory safety.
Critics quickly dismissed Wal-Mart's moves as inadequate and said that the retailer needs to do more.
Richard Locke, head of political science at MIT and an expert in global supply chains, said that Wal-Mart also needs to re-evaluate its purchasing practices so its demands are not putting excessive pressure on factories to cut corners on safety.
Wal-Mart ranks second behind Swedish fast fashion retailer H&M in the number of clothing orders it places in Bangladesh. Before the fatal fire there, Wal-Mart had taken steps to address safety, such as mandating fire safety training for all levels of factory management.
Building fires have led to more than 600 garment worker deaths in Bangladesh since 2005, according to the advocacy group International Labor Rights Forum.
Original Print Headline: Wal-Mart raises supplier oversight
A garment made in Bangladesh is displayed at a Wal-Mart store in Atlanta. Wal-Mart Stores Inc. said Tuesday it will drop any suppliers worldwide if they subcontract work to factories that haven't been authorized by the retailer. DAVID GOLDMAN / Associated Press