Manage the Suppliers That Could Harm Your Brand

I would call this the topic of the year, since almost all of our clients have had to address some challenges—many of them critical—regarding supply chains. There’s no doubt that the pandemic has placed a spotlight on working conditions in factories that supply global companies. To avert problems, firms often impose codes of conduct on their suppliers and perform audits to assess compliance. Do these measures actually lead to improvements? After an unsatisfactory audit, what are the chances the supplier will remedy matters? The authors studied thousands of factories around the world and found that suppliers are more likely to improve conditions if they: certify compliance with management system standards, adopt lean management, use union workers, avoid piece-rate pay, and serve once-tarnished buyers. The research also identified monitoring methods that can boost the odds of improvement and uncovered several factors that result in more-accurate audit reports. A worthwhile read for all.