Ensuring Safety in Supply Chains: A Review of Literature and Strategies for Ethical Procurement in the Garment Sector
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E N S U R I N G S A F E T Y I N S U P P L Y
C H A I N S
Introduction:
The global garment sector is a billion dollar industry which spreads across the globe. As per the Myanmar Times, the garment sector involves countries of
Asia, North America and Europe. The main markets producing garments are in Asia while the main markets demanding garments are Europe and North
America. Moreover, Asian markets like China are also experiencing rise in demand for finished garment products (Mmtimes.com 2018). Africa is also
developing into a important garment market (Worldbank.org. 2018). The companies having their headquarters and manufacturing units in developed
markets like Australia and Europe source their raw materials from manufacturing units situated in Asian markets like Bangladesh and Cambodia. Thus,
overseas supply chains today play significant roles in the garment sector. The garment companies are thus ethically and obliged to ensure safety of the
employees employed in their supply chains.
Review of relevant literature
Stakeholder theory:
Stakeholders’ theory mentions that the business organisation must function in the market so as to protect the interests of the stakeholders. Mitchell et al.
(2015) mention that business organisations should be accountable to their stakeholders while forming business strategies and operating in the market.
Tantalo and Priem (2016) support this view and go on to point out that the stakeholders of business can be both internal and external. The internal
stakeholders consist of management of the organisations and employees. The external stakeholders consist of governments,international organisations
like the UN, suppliers,financial institutions, legal bodies like courts,investors and customers. Harrison, Freeman and Abreu (2015) points out a new aspect
of stakeholder accounting. They opine that business organisationsshould be ethically responsible to their takeholders and should not commit any action
that hampers the interests of stakeholders. Alexander et al. (2016) adds to the discussion that engagement of stakeholders are not only important as far
as ethics are concerned but also in order to achieve sustainability in the market
The three domain model of corporate social:
responsibility
The three domain model of corporate social responsibility proposed by Schwartz and Carroll (2003) mention three areas in which corporate social
responsibility of business organisation need to consider namely legal, economic and ethical. The Venn diagram of the model shows that business
organisations should ensure that their business operations are legal and do not breach the laws of either their home countries or their host countries. For
example, the garment industry companies should ensure that their operations like acquisition of finished goods and raw materials are acquired in legal
ways. Huq, Chowdhury and Klassen (2016) adds to this opinion that business organisations operating in the garment industry should ensure their sources
of finished goods does not tantamount to exploitation of workers. Wilhelm eta l.(2016) contradicts this opinion of Huq,Chowdhury and Klassen (2016) and
point out that in reality there is rampant exploitation of workers in the supply chain of garment companies. This analysis shows that the though according
to the three domain model, business organisations are expected to operate legally but in reality they resort to exploitation of supply chain workers to get
more supplies of finished goods. Yawar and Seuring (2017) that business organisations in the every industry including the garment industry operate in the
market operate to earn more profits which is their economic goal. The need to more profits to higher returns to shareholders and boost their operations
often lead firms to indulge in illegal activities like exploitation of workers. Sewwandi and Perera (2016) contradicts this statement and point that
exploitation of workers leads to burnout and ill health among workers. This leads to high worker turnover which hits the productivity and hence the
revenue generation of the business organisations. This fact reinstates the opinion of Huq, Chowdhury and Klassen (2016) which mentions that companies
should abstain from implementing exploitative measures on employees to earn more profits. This third aspect covered by the three domain model is
ethics. Tai and Chuang (2014) mentions Business organisations besides operating in legal should also operate in ethical ways.
Transformational strategy of sustainability:
The business organisations should use transformational strategy to obtain sustainability. Kazmi (2017) mentions that transformational strategy of
sustainability has four phases namely, engaging, accelerating, leading and transforming. The first stage of implementing of transformational strategy of
sustainability is engaging stakeholders in the process. Shen (2014) point out that business organisations like garment companies should involve their
stakeholders to gain sustainability. It can be pointed out that employees engaged in the firms forming parts of their supply chains contribute towards
ensuring timely supply of orders. Freise and Seuring (2015) point that gaining sustainability in the industries like garment industry would require
involvement of the supply chain workers as well. This involvement of stakeholders like supply chain workers would accelerate transformational
sustainability in the garment industries. The companies sourcing garments should ensure that the supplier firms maintain safe and secure working
environment to ensure safety of workers. The major garment factories should lead sustainability in the garment sector by forcing their suppliers to ensure
sustainable human resource management. Hammer et al.(2015) in this respect mention that adoption of sustainability through the supply chains would
boost the overall sustainability of the industries like garment industry.``
Development and implementation of ethical supply chain procurement in garment sector:
The garment sector companies are taking stringent steps to develop and implement ethical procurement in their supply chains. It can be pointed out that this
implementation of ethical standards in the supply chain are largely takingplace in the garment sector due to imposition of policies by international
organisations like the European Commission. The international body has laid down policies in order to mandate garment sector companies to abide by ethical
and legal frameworks while sourcing materials from their global supply chains (Ec.europa.eu. 2018). The Parliament of Australia ( Aph.gov.au. 2018). The
international garment sector companies in order to exhibit their compliance with the laws formed by governments and international organisations, are taking
serious steps to ensure that their supply chains are sustainable and free from exploitation of workers. This fact is evident from the governance structure of the
leading British designer retailer Marks and Spenser. The internationally reputed fashion company buys products from around 2100 suppliers and from 20000
farms. This means that its supply chain spanning across 70 countries employs thousands of labours. The firm in order to ensure strict corporate governance and
prevent modern slavery has formed a four layered strategy under the M&S Group Baord. The strategy encompasses all the departments right from food,
logistics, marketing, international, retail, HR and IT (Corporate.marksandspencer.com. 2018). This means that Marks & Spenser is determined to take actions
against slavery and exploitation of workers. It can also be pointed out that M&S follows the three dimensional CSR model proposed by Schwartz and Carroll
(2003)
Ethical procurement strategy:
Australian textile company mentioned in the case study should adopt ways to ethically procure raw materials and finished goods. The firm
should ensure that its suppliers are not involved in any sort of exploitation of workers. It must put ethical pressure on the supply firms toe
nsure safety of their employees. It must train the employees of the suppliers with safety training which would enable them to avoid
accidents. The textile firm sources raw materials from Asian markets which clearly indicates that it is financially strong (Hammer et al.2015).
The firm can also provide financial help to its suppliers to improve their working conditions and infrastructure.re.
Media strategy:
Promoting CSR of the company Holding evnets to spread awareness about slavery in supply chains of garment industry. Releasing anti-
slavery videos on social media sites like Facebook and Instagram handle of the company
References:
• Alexander, K.A., Angel, D., Freeman, S., Israel, D., Johansen, J., Kletou, D., Meland, M., Pecorino, D.,Rebours, C., Rousou, M. and
Shorten, M., 2016. Improving sustainability of aquaculture in Europe: stakeholder dialogues on Integrated Multi-trophic Aquaculture
(IMTA). Environmental Science & Policy, 55, pp.96-106.
• Freeman, R., Harrison, J., Wicks, A., Parmar, B. and Colle, S. 2007. Stakeholdertheory.org. [online] Stakeholdertheory.org. Available at:
http://stakeholdertheory.org/team/r-ed-freeman/ [Accessed 10 Oct. 2018].
C H A I N S
Introduction:
The global garment sector is a billion dollar industry which spreads across the globe. As per the Myanmar Times, the garment sector involves countries of
Asia, North America and Europe. The main markets producing garments are in Asia while the main markets demanding garments are Europe and North
America. Moreover, Asian markets like China are also experiencing rise in demand for finished garment products (Mmtimes.com 2018). Africa is also
developing into a important garment market (Worldbank.org. 2018). The companies having their headquarters and manufacturing units in developed
markets like Australia and Europe source their raw materials from manufacturing units situated in Asian markets like Bangladesh and Cambodia. Thus,
overseas supply chains today play significant roles in the garment sector. The garment companies are thus ethically and obliged to ensure safety of the
employees employed in their supply chains.
Review of relevant literature
Stakeholder theory:
Stakeholders’ theory mentions that the business organisation must function in the market so as to protect the interests of the stakeholders. Mitchell et al.
(2015) mention that business organisations should be accountable to their stakeholders while forming business strategies and operating in the market.
Tantalo and Priem (2016) support this view and go on to point out that the stakeholders of business can be both internal and external. The internal
stakeholders consist of management of the organisations and employees. The external stakeholders consist of governments,international organisations
like the UN, suppliers,financial institutions, legal bodies like courts,investors and customers. Harrison, Freeman and Abreu (2015) points out a new aspect
of stakeholder accounting. They opine that business organisationsshould be ethically responsible to their takeholders and should not commit any action
that hampers the interests of stakeholders. Alexander et al. (2016) adds to the discussion that engagement of stakeholders are not only important as far
as ethics are concerned but also in order to achieve sustainability in the market
The three domain model of corporate social:
responsibility
The three domain model of corporate social responsibility proposed by Schwartz and Carroll (2003) mention three areas in which corporate social
responsibility of business organisation need to consider namely legal, economic and ethical. The Venn diagram of the model shows that business
organisations should ensure that their business operations are legal and do not breach the laws of either their home countries or their host countries. For
example, the garment industry companies should ensure that their operations like acquisition of finished goods and raw materials are acquired in legal
ways. Huq, Chowdhury and Klassen (2016) adds to this opinion that business organisations operating in the garment industry should ensure their sources
of finished goods does not tantamount to exploitation of workers. Wilhelm eta l.(2016) contradicts this opinion of Huq,Chowdhury and Klassen (2016) and
point out that in reality there is rampant exploitation of workers in the supply chain of garment companies. This analysis shows that the though according
to the three domain model, business organisations are expected to operate legally but in reality they resort to exploitation of supply chain workers to get
more supplies of finished goods. Yawar and Seuring (2017) that business organisations in the every industry including the garment industry operate in the
market operate to earn more profits which is their economic goal. The need to more profits to higher returns to shareholders and boost their operations
often lead firms to indulge in illegal activities like exploitation of workers. Sewwandi and Perera (2016) contradicts this statement and point that
exploitation of workers leads to burnout and ill health among workers. This leads to high worker turnover which hits the productivity and hence the
revenue generation of the business organisations. This fact reinstates the opinion of Huq, Chowdhury and Klassen (2016) which mentions that companies
should abstain from implementing exploitative measures on employees to earn more profits. This third aspect covered by the three domain model is
ethics. Tai and Chuang (2014) mentions Business organisations besides operating in legal should also operate in ethical ways.
Transformational strategy of sustainability:
The business organisations should use transformational strategy to obtain sustainability. Kazmi (2017) mentions that transformational strategy of
sustainability has four phases namely, engaging, accelerating, leading and transforming. The first stage of implementing of transformational strategy of
sustainability is engaging stakeholders in the process. Shen (2014) point out that business organisations like garment companies should involve their
stakeholders to gain sustainability. It can be pointed out that employees engaged in the firms forming parts of their supply chains contribute towards
ensuring timely supply of orders. Freise and Seuring (2015) point that gaining sustainability in the industries like garment industry would require
involvement of the supply chain workers as well. This involvement of stakeholders like supply chain workers would accelerate transformational
sustainability in the garment industries. The companies sourcing garments should ensure that the supplier firms maintain safe and secure working
environment to ensure safety of workers. The major garment factories should lead sustainability in the garment sector by forcing their suppliers to ensure
sustainable human resource management. Hammer et al.(2015) in this respect mention that adoption of sustainability through the supply chains would
boost the overall sustainability of the industries like garment industry.``
Development and implementation of ethical supply chain procurement in garment sector:
The garment sector companies are taking stringent steps to develop and implement ethical procurement in their supply chains. It can be pointed out that this
implementation of ethical standards in the supply chain are largely takingplace in the garment sector due to imposition of policies by international
organisations like the European Commission. The international body has laid down policies in order to mandate garment sector companies to abide by ethical
and legal frameworks while sourcing materials from their global supply chains (Ec.europa.eu. 2018). The Parliament of Australia ( Aph.gov.au. 2018). The
international garment sector companies in order to exhibit their compliance with the laws formed by governments and international organisations, are taking
serious steps to ensure that their supply chains are sustainable and free from exploitation of workers. This fact is evident from the governance structure of the
leading British designer retailer Marks and Spenser. The internationally reputed fashion company buys products from around 2100 suppliers and from 20000
farms. This means that its supply chain spanning across 70 countries employs thousands of labours. The firm in order to ensure strict corporate governance and
prevent modern slavery has formed a four layered strategy under the M&S Group Baord. The strategy encompasses all the departments right from food,
logistics, marketing, international, retail, HR and IT (Corporate.marksandspencer.com. 2018). This means that Marks & Spenser is determined to take actions
against slavery and exploitation of workers. It can also be pointed out that M&S follows the three dimensional CSR model proposed by Schwartz and Carroll
(2003)
Ethical procurement strategy:
Australian textile company mentioned in the case study should adopt ways to ethically procure raw materials and finished goods. The firm
should ensure that its suppliers are not involved in any sort of exploitation of workers. It must put ethical pressure on the supply firms toe
nsure safety of their employees. It must train the employees of the suppliers with safety training which would enable them to avoid
accidents. The textile firm sources raw materials from Asian markets which clearly indicates that it is financially strong (Hammer et al.2015).
The firm can also provide financial help to its suppliers to improve their working conditions and infrastructure.re.
Media strategy:
Promoting CSR of the company Holding evnets to spread awareness about slavery in supply chains of garment industry. Releasing anti-
slavery videos on social media sites like Facebook and Instagram handle of the company
References:
• Alexander, K.A., Angel, D., Freeman, S., Israel, D., Johansen, J., Kletou, D., Meland, M., Pecorino, D.,Rebours, C., Rousou, M. and
Shorten, M., 2016. Improving sustainability of aquaculture in Europe: stakeholder dialogues on Integrated Multi-trophic Aquaculture
(IMTA). Environmental Science & Policy, 55, pp.96-106.
• Freeman, R., Harrison, J., Wicks, A., Parmar, B. and Colle, S. 2007. Stakeholdertheory.org. [online] Stakeholdertheory.org. Available at:
http://stakeholdertheory.org/team/r-ed-freeman/ [Accessed 10 Oct. 2018].
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