Misconceptions on the Role of Supply Chain Monitoring - Part 1

A misconception has surfaced recently among some managers newer to Code of Conduct programs. The collective sentiment can be summed up as such:

“I hear that suppliers are suffering from audit fatigue, and that supplier audits don’t work, so I’m not going to audit.”

There is truth behind the issue of audit fatigue, but the interpretation above tosses the baby out with the bathwater.

First, despite multiple audits, some factories STILL continue to perform poorly. The knee-jerk proposition of simply reducing audit volume would result in these poorly performing factories being audited once per year, as opposed to multiple times per year. Neither scenario alone seems to solve anything. Sharing audits, in and of itself, doesn’t rectify workplace issues - collaboration and capacity building at multiple levels (not just the factory) is absolutely essential. This isn’t an endorsement for unnecessary redundancy, or for programs that set a factory audit as the end goal. I’ll offer suggestions in my next blog on effective program structure (I have to give you something to look forward to, don’t I?).

Regarding impact, the current system, as imperfect as it may be, has made changes. In reality, many of the more severe issues – child labor in formal factory settings, for example – have decreased with this increased scrutiny and awareness since monitoring programs have been established en masse. Yes, suppliers have learned to hide issues better, but the issues that are generally obscured by falsified records consist of hours/wages issues. The overall decrease in many of the critical issues is less attributable to a lack of transparency, and more to do with the attention placed by brands on Code of Conduct issues. (And yes, forced labor issues, in more cases than not, are not overt – the person chained to the sewing machine – but are more subtle forms of workplace coercion or intimidation. In order to uncover that, we need to incorporate deeper assessment approaches into Code of Conduct programs, but again, I’ll wait until my next blog before sharing too much …)

Finally, it is impossible to determine the effectiveness of any system if it does not include some form of measurement. Assessments should be utilized as a form of measurement, within a larger system of governance, skills building, integration within the businesses, and continuous improvement. The audit alone should not be expected to stand in for all of these functions. At the same time, it is very dangerous to develop a system without it.

Again, my critique isn’t an endorsement of the status quo. We can clearly do better in identifying issues and driving improvements. In my next blog entry, I’ll offer a few suggestions on what those improvements might look like.

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Ryan Lynch is the US East Coast Regional Manager for CSCC. Ryan has worked with various Fortune 1000 retailers, licensors, and manufacturers to develop responsible sourcing programs in order to assess and improve labor conditions throughout the supply chain.