Alternative approaches to supply chain compliance monitoring

Abstract

Manufacturers of labour‐intensive, branded consumer goods – particularly apparel and footwear – are facing increasing pressure from consumer groups, non‐government organisations (NGOs), and other stakeholders, to provide assurances that contracted suppliers in developing countries are complying with global labour and environmental standards. Companies have adopted a variety of strategies to strengthen and monitor compliance by their suppliers, including codes of conduct, direct monitoring by their own personnel, more stringent contract conditions, and reduction in the number of contractors. Increasingly, companies are turning to what are termed here “monitoring coalitions”, membership organisations that undertake to organise the monitoring of labour or other standards in overseas factories. To be effective, these emerging systems must address a range of issues, including how to manage the monitoring process, what standard to set, how to finance monitoring, how to disseminate the information collected, and, most difficult, how to accomplish costeffective monitoring in tens of thousands of production facilities in Latin America, Eastern Europe, Asia, and Africa.