(May 31, 2004) — A high-profile U.S. corporation earned kudos recently in an uncommon way — by issuing a public report candidly acknowledging shortcomings in the work practices of its suppliers. Its candor is refreshing and the effort is to be commended.
Gap Inc., a $15 billion retailer of trendy apparel, used the 44-page report — dubbed its “2003 Social Responsibility Report” — to attack head-on the issue of working conditions and workforce violations at the approximately 3,000 factories in about 50 countries that make its clothing. The company has posted the report on its Web site, www.gapinc.com for all to see.
Critics in the past have targeted Gap and other retailers — most notably shoe giant Nike Inc. and Wal-Mart Stores Inc. and its celebrity endorser, Kathie Lee Gifford — for alleged sweatshop working conditions at plants that make their products. In the report, Gap invites input from some of those critics, or “stakeholders,” as it describes them.
The firm, which employs 90 full-time vendor compliance officers, gathers data by intensively visiting and documenting conditions at all its supplier facilities, mostly in developing countries. It then logs that information into a rating system it developed, and shares the findings with its vendors, with whom it works to try to improve workplace conditions. In the report, Gap states: “We will stay with a manufacturer as long as we believe it is committed to making ongoing improvements.”
Gap says it revoked contracts with 136 factories last year due to severe or persistent workforce violations, including two that used underage workers. The company noted that it initially rejects 90 percent of the hundreds of factories vying to win Gap contracts. The suppliers usually work to correct stated problems, and Gap said it ultimately rejects about 16 percent of all new factories it evaluates. (Wal-Mart, incidentally, also monitors its Tier 1 suppliers from an office in Shanghai and also will disqualify vendors for violations.)
Other companies can learn from Gap's initiative — whether they are retailers or manufacturers that source tooling or plastic part production from suppliers in developing markets such as China, India or Eastern Europe. It's true that plastics firms are less likely to face the same sort of public scrutiny or customer pressure in these matters as mass retailers. And few firms have the financial wherewithal to create and maintain a factory grading system and send inspectors around the world constantly to gather data from suppliers' plants.
But the basic concept still is worth emulating. Increased transparency in financial, environmental and workforce matters is more vital than ever these days. Openly confronting such issues can only build trust and credibility up and down the supply chain — starting within the ranks of one's own employees.
Just as importantly, it is morally the right thing to do. Download the Gap report and read it. Ask tough questions of your suppliers. Make clear to them what you expect and demand as regards workers' rights, if they are to get and keep your business. Inspect and observe their facilities with a keen eye.
Raise the bar, and insist on dealing only with reputable vendors that treat their workers humanely and with respect. To do anything less is unacceptable.