Parallell sesjon

Referat fra:

Parallell sesjon

Responsible Supply Chain Management Session

Referenter: Linlin Liu and Chenxing Zhu

Content

Background and Introduction 1

Presentation from KappAhl 3

Presentation from Vietnam Business for Sustainable Development

5

Discussion held by IEH 7

Responsible supply chain management:

How to improve human rights, labor rights and environmental aspects in the

supply chain.

Parallel session 24th Nov 2005 – 13.15 – 14.45

BI/Nydalen (Oslo) 

Content and Focus

There is substantial evidence that companies sourcing goods from low-income

countries are facing a great risk of human/labor rights abuses in their supply chain.

Thus, one very important aspect of Corporate Responsibility entails Responsible

Supply Chain Management. An increasing number of companies do this by adopting

so-called Codes of Conduct which puts requirements to the supplier on wages,

overtime, prohibition of child labor, workers’ rights to form and join trade unions,

health and safety conditions and alike.

Setting up a Code of Conduct is absolutely necessary, but only the first step towards

Responsible Supply Chain Management. This session will elaborate on what the next

steps should be. It will exemplify that Responsible Supply Chain Management is not

only applicable to large international companies, but also can and should be managed

by Scandinavian companies.

Because poor workplace conditions stems from many, and complex reasons,

successful Responsible Supply Chain Management goes far beyond brand and

reputation management. The session will also present how western companies can

work together with local partners in training factory management and workers to

achieve sustainable improvements in workplace conditions.

About the presenters and hostess

1) KappAhl is a Swedish fashion retailer with stores in Norway, Sweden, Finland

and Poland. KappAhl adopted a Code of Conduct in 1997. All KappAhl’s products

are manufactured by independent suppliers in Asia and Europe, for whom KappAhl

is merely one customer among many.  

2) Vietnam Business Links Initiative (VBLI) is a Vietnamese initiated partnership

working to ensure sustainable improvement in workplace conditions in Vietnamese

footwear and textile factories. They provide training and capacity building both for

management and workers.

3) IEH, Ethical Trading Initiative- Norway (ETI-N) is a multiparty initiative involving

companies, employers’ organizations, trade unions and NGOs.

Program

13.15 – 13.45  Ann-Marie Heinonen, CSR and Information Manager, KappAhl

13.45 – 15.15  Nguyen Quang Vihn, Director, Vietnam Business Links Initiative

15.15 – 15.45  Discussion hled by IEH :

“From Compliance Focus to Improvement Focus”

Background introduction: Supply chain and Supply chain management

A supply chain is a network of facilities and distribution options that performs the

functions of procurement of materials, transformation of these materials into

intermediate and finished products, and the distribution of these finished products to

customers. Supply chains exist in both service and manufacturing organizations,

although the complexity of the chain may vary greatly from industry to industry and

firm to firm.

Supply chain management is typically viewed to lie between fully vertically

integrated firms, where the entire material flow is owned by a single firm, and those

where each channel member operates independently. Therefore coordination between

the various players in the chain is key in its effective management. Cooper and Ellram

[1993] compare supply chain management to a well-balanced and well-practiced relay

team. Such a team is more competitive when each player knows how to be positioned

for the hand-off. The relationships are the strongest between players who directly pass

the baton, but the entire team needs to make a coordinated effort to win the race.

Two presentations

1. KappAhl

”Value-for-money fashion with a wide appeal”

----KappAhl Business idea

1. Introduction of KappAhl

1. 1997 KappAhl imported a code of conduct based on ILO’s convention and

UN’s declaration on human rights.

2. All products sold by KappAhl are manufactured by independent suppliers in

Asia and Europe.1997 KappAhl bought from more than 1 000 suppliers.

3. The buyers were free to choose suppliers and purchasing markets.

4. KappAhl recognizes that it has a responsibility for working conditions in

those factories where its products are manufactured. All workers who produce

goods manufactured for and sold by KappAhl must receive a reasonable wage

and enjoy decent working conditions.

5. Now KappAhl has 250 stores in Sweden, Norway, Finland and Poland.

2. Action on supply chain management according to CSR

1. Reduce the number of suppliers and markets:

Now KappAhl only purchases from 170 suppliers.

2. Include the code in purchasing terms and negotiate the terms with all

suppliers.

3. Train staff in social auditing

4. Set up a data base for evaluation

3. Business Advantage of CSR

1. Purchasing strategy must be applied

2. Good and long lasting relations with suppliers

3. Create a “win-win” solution

4. Knowledge of production capacity with each supplier

4. Achievement of past years

1. Health and safety in factories are improved

2. “Basic Standard” of CSR has been set up

3. Product quality is improved

4. Knowledge of labor laws and regulations have been enhanced

5. KappAhl’s employees are proud of their CSR and environmental work

5. Experience

1. A dialogue with the supplier is far more fruitful than forced action plans

2. It takes time to implement all the CSR ideas

3. Change of attitude is crucial

4. There must be a cooperation and coordination of standards and codes

6. 2004 KappAhl becomes member of BSCI

(Business Social Compliance Initiative)

1) Auditing only does not improve conditions

2) Part of a European association gives strength to change attitudes

3) One code, one standard and one audit better for all parties

7. Cornerstones of BSCI

1) Internationally applicable social standard suitable for practical use

2) Flexible vis-à-vis companies’ philosophies

3) Dialogue with stakeholders

4) Transparency and independency through outside audit companies (to be

accredited by SAI)

5) Synergy and acceleration effects for all actors involved

6) Development of social performance of suppliers

2. Vietnam Business Links Initiative:

Vietnam Business For Sustainable Development

1. The social dimension of successful globalization

1)

2) Why social standards?

- Workers seek decent workplaces and sustainable jobs to support their families

- Companies seek to gain a competitive advantage and financial benefits

through better social practices

- Governments seek to promote economic development which benefits all

members of society

- Consumers seek to make informed purchasing decisions

3) Multi-stakeholders’ engagement

2. Vietnamese experiences with CSR

1) Vietnam Business Links Initiative (VBLI)

To assist footwear and apparel industries in achieving sustainable development

through Common problems

- OHS improvement: Establishing a OHS forum led by Vietnamese partners

- Environmental management

- CSR achievements: Improved awareness of the importance of health, safety

and environment issues in businesses

a) More attention is being paid by factory leaders

b) Positive change in awareness among OHS official and workers

c) Priority given to working condition improvement

2) CSR Round Tables

- Aims:

a) Raising awareness on CSR

b) Encouraging to apply CSR terms and articles at the workplace

- Contents concentrated on:

c) Strengthening communication

d) Providing recommendations to create enabling working environment

- Follow-up activities:

e) Carrying out specific measures to implement CSR and improve the

situation

3) Business Office for Sustainable Development

Develop a Vietnam business community of sustainable development and

successful integration in 21st century, pioneering in:

a) Economic growth,

b) Social progress, hunger eradication and poverty elimination,

c) Environment protection

d) Make significant contribution to the success in sustainable development

of Vietnam business community

Discussion:

Notation:

K- KappAhl, V: Vietnam Business Links Initiative, I: IEH hostess

Q1(1) What kind of support will KappAhl provide to suppliers during “transition

period”?

K: We don’t have a 3-year transition period. Our experts will go to the factories to

teach them.

Q1(2) Then what happened after 3 year period?

K: We need a promise and showing a good will: we are improving. If there is no

interest of showing improvement, the supplier will be kicked out. As long as

improvement can be found, we will not give up. We have to cooperate with

suppliers all the way. When there are needs, we are there.

I: Therefore, there are continuous needs of help. We need supports from other

companies.

Q2(1) So far the discussion and the presentation have been leading us to labor

condition and ethical trading; but as to a responsible supply chain

management, which is also, where the focus are up to the environmental

aspects as to recycling and garbage sorting? Have you any focus on that on,

when you are making the product, discussions with the suppliers on what kind

of materials do we use, what is the effect for the Norwegian market afterwards

when those are being used here?

K: We have very much focus; we have joined ISO since 1991; we have assessment

for environmental questions for CSR; and we have assessment factory guide

which all the suppliers have to adhere to; and we have collaboration with

laboratories all over the world. Buyers, they pick what items to test, in what

order; random test for chemicals. All the garments are up to national laws over

Switzerland, Finland, and Poland. Apart from that, our own chemical

regulations are stronger than different countries;

Q2(2) So we can expect that produced clothes at KappAhl can be delivered pretest?

K: No problem. All the regulations follow the same standards, you can use baby

wear without washing it.

Q3 Nike published the list of all their suppliers. How strong do you think the

transparency will help in your influence?

K: We don’t want to do that. We have reduced our suppliers to170, and put money

on them. The list of suppliers is one of the best assets of the company. We don’t

want to show our treasure to our competitors. We disagree that audit will help.

It’s a transparency fashion.

I: The intention of showing the list is to say we are not shame of showing them,

instead of stimulating audit people to go there, which might be harmful to them.

Auditors just come and go away, without solving any problems; what really

help factories is the practical help, is improvement.

V: There are no perfect factories. Important thing is the company is committed to

improve the situation. While the audit just go away.

K: The worst factories were in London and Paris, not in Asia. Many people going to

visit the factories don’t know what to compare with.

Q4 Let’s look outside factories. What about Logistics, and Transportation.

K: We have been working on reducing the effect on climate, and try to transport

everything in most environmental friendly way. From Asia 90% of product are

transported by boats; 60% by train from Nordic countries (Finland and

Poland). We also demand all the transportation companies working for us have

to have environmental education for the drivers.

Q5 What are the 2 biggest challenges in improving labor conditions?

V: First is the awareness of the owners; second is Knowledge of how to improve.

K: Especially the awareness of the floor management, they are still shouting at the

workers; and, how to make it more efficient to reduce overtime working.

I: At least, ensure workers are paid for their overwork.