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Shedding Light on Opposite Ends of the Retail Supply Chain

Guest Blog by Bryan Nella

On May 1, 2013, the Wall Street Journal published an article titled “Retailers Seek Plan to Prevent Disasters,” following the collapse of the Rana Plaza building in Bangladesh that killed more than 400 inside. The article described a meeting in Eschborn, Germany that drew representatives from Wal-Mart, Gap, H&M and 30 other retailers and government agencies to develop a plan to prevent a repeat of the Bangladesh disaster. Separately, the European Union is also discussing bringing forth a trade action against Bangladesh and installing new measures to pressure local authorities to enforce stricter labor standards.

Another article in the Wall Street Journal showed protesters marching in the Bangladesh streets to demand the death sentence of the owner of the collapsed garment factory. Two very different worlds – the West and East – are reacting to the same challenge and although their perspectives may be diametrically different, the culprit in both instances may be the same.

In the West, brands and retailers race to meet consumer demand for fashionable yet inexpensive clothing. They turn to countries like Bangladesh that can provide them with low cost labor and a fast- growing garment workforce to fulfill orders rapidly. The goods are sufficient quality, the cost is low, and the speed of delivery works. The downside to sourcing here is the sometimes questionable workplace conditions and factory standards. Thousands of miles and the inability to walk the factory floor clouds the view of production.

In the East, in Bangladesh specifically, the garment industry has blossomed in recent years to become the number two worldwide exporter only trailing China. Because of the availability of jobs and the growing economy, Bangladesh has become a global supply chain hot spot. But with Bangladesh’s high ranking comes intense pressure to meet tight deadlines and keep cost levels down. In turn, safety and other standards can sometimes become secondary concerns. The view from the West is clouded: a brand places an order and after a number of weeks, the goods are shipped and arrive on store shelves, giving brands little insight into the reality of how the goods passed through in the production lifecycle.

However, factory workers expect more — they expect safe working conditions and standards to be upheld. At the same time, retailers share these expectations. The problem is the lack of visibility or accountability in the production lifecycle. Without visibility, no one can be held accountable to the sub-par safety and standards and enforcement cannot take place. Years ago, a retail executive could walk the floors of its factories to ensure practices were up to par, but this is no longer practical as factories are typically thousands of miles away, separating the retail executive by an ocean. With no eyes or ears on the ground, both ends of the supply chain suffer.

The culprit here is the lack of visibility and perhaps that’s where the solution begins. In today’s connected world where we can view satellite images or live streams of local highway traffic by logging onto the web, we should be able to turn the lights on in the global supply chain. Picture a retailer placing an order in an electronic portal that requires the supplier to include images of the fire escapes in all factories. Or a consumer goods company that uses an online platform to electronically monitor every party in the supply chain against denied party lists or unsafe factory databases to prevent unethical production. While today’s complex supply chains create challenges for ensuring safe and responsible production, technology can be the equalizer.

Cloud technology can put every factory anywhere on the planet on the grid. This means the retail executive can gain real-time visibility into the cutting, dying, sewing, packing and shipping processes happening at their factory across the ocean. This knowledge can prevent disasters like the Rana Plaza building collapse from happening. For trading partners in Bangladesh, this exposes their workplaces and holds them to higher standards. Cloud can allow everyone visibility into the working conditions taking place across the supply chain and nobody is kept in the dark.

Bryan Nella is Director of Corporate Communications at GT Nexus

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