Recent fire prompts many to question safety in supply chains

on Monday, December 10, 2012

Recent fire prompts many to question safety in supply chainsA November fire killed 112 factory workers in Bangladesh, due to inefficient safety procedures that made it impossible for many employees to safely exit the building during the incident. Soon after news of the fire at the Tazreen Fashions factory broke, it was discovered that the facility produced garments for large corporations such as Wal-Mart, Sears and Disney. However, many of the companies have claimed their vast supply chains prevented them from knowing their products were being produced in factories that were not up to safety standards.

Massive supply chains can be difficult to manage
The New York Times reported that despite the company's history of various violations, Tazreen Fashions still received orders from multiple businesses, partially due to the low manufacturing costs it offered its purchasers. Cheaper production results in less expensive goods for merchants to sell in stores, which can boost their products and reputation with consumers.

Many companies want to commit to corporate social responsibility in their supply chains, but at the same time are sometimes hesitant to invest in suppliers or manufacturers that will provide promises of higher wages and safer working environments because of the additional costs.

Subcontracting may be to blame
Despite the violations it received, Tazreen Fashions may have gotten away with producing merchandise for some corporations due to their use of subcontractors. Wal-Mart and Sears, for example, claimed they had no idea the facility was manufacturing their products until after the fire had occurred. This is thought to be the result of the corporations' suppliers that subcontracted work to the noncompliant facility. According to The Times, the factory owners claimed to be unaware of the buyers and said they obtain orders from local subcontractors.

New standards may follow
This factory fire sparked outrage among American consumers, labor activists and those with loved ones working in the facility. The event follows multiple other factory fires in the country, which have killed hundreds of workers in recent years, which may pave the way for reforms, higher safety standards and increased worker protection.

The Times reported that Bangladesh is now the second-largest apparel exporter in the world, and with its low manufacturing costs, it is an attractive place for many companies considering offshore manufacturing. However, in light of recent events, many companies may be taking more precautions to ensure their suppliers are not contracting work to factories that fail to take safety precautions and endanger employee health.

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