Thursday, June 4, 2009

Women in the supply chain squeeze

A report launched in February this year - cashing in - from (which i recently picked up from Eldis ) is quite a sight - or should i say quite a fright.(Ok, so Emily Dickinson i am not!) It's about the way 5 major global retailers such as Walmart, Tesco, Carrefour, Lidl, and Aldi drive prices down by pressuring suppliers ,using their mighty purchasing power. Who pays the price ? The women caught up in this supply chain squeeze.

One thing we perhaps don't realise is that these major global retailers are not just about groceries (and ice cream) A large portion of their revenue is from clothes and their contribution to the global apparel industry has transformed availability, pricing, sourcing , quality and supply chain squeezes. In a previous post i talked about the Intel ripple (meaning the indirect impacts of their business activities). Well, these retailer guys have some big ripple. They account for $54 billion clothes and footwear sales - 6% of global market total. In the UK, 25% of clothing is bought from retailer groceries.

The report shows that the higher the share of the retail market a retailer has, the lower the price paid to suppliers. Is that what's called economy of scale ? It also refers to how these retailer "giants" have confirmed (in their impressive CR reports) commitments to uhpolding human rights in their suppy chains and to ethical business. The report goes on to discuss actual working conditions in Bangladesh, Sri Lanka, Thailand and India. In each of these countries, the garment industry represents a significant proportion of their GDP and economic welfare. There is a significant discussion about wages, as you might expect, and the difference between a legal minum wage and a living wage - disheartening figures are reported relating not only to avoidance of paying legal minimum wage (including adding unpaid or low paid overtime hours,, fake payslips etc) to complete lack of attention to the fact that even the mimimum wage is not enough to provide basic needs. Other aspects of worker exploitation such as opposition to freedom of association or employment of contract workers on long term temporary contracts are discussed at length.
Finally we get to the real squeeze: 80% of garment workers are women.
"Far from lifting women out of poverty, the Giants are cashing in on it. " the report concludes.

The report's recommendations to address these issues are pretty straighforward: enhance, expand and enforce auditing, legislate, take responsibility. But isnt that something we already understood ? Will this create change ? One area the report fails to address is the power of consumerism. As long as we want fast fashion, retailers will continue to compete using fast fashion rules which dictate low prices, fast response times, poor quality, low wages, abuse of human rights.

Is this what consumers want ? What made Nike turn its operations around over 10 years ago? Was it an activist response to little 12-year old Tariq who was employed in inhumane conditions appearing on the cover of Life Magazine ? Did consumers drive the change ? Why don't consumers demand change ? Why don't consumers force a retailers to reassess of the relative elements in supply chain costs for greater equitability ? Does anyone care if women are in the supply chain squeeze ? Do other women care ?

We should all care - the plight of women such as these costs the world economy trillions of $$. Exploitation and depression of women is not a women's issue - its a citizenship issue affecting men, children and all of us, whatever gender. Because women, responsibly employed, are the world's wealth generators. As you can probably tell, this is a subject i am passionate about, and could write hundreds more blog pages about this. But instead, in order to avoid the risk of boring my avid readership (thank you both!) , i took a look at Tesco's recently issued CR report, published in May 2009. 6 pages on supply chain and ethical trading (of a total 59). Not surpisingly, there is nothing about repeated concerns expressed to Tesco about supply chain abuses and the Tesco response to these. Overall non-food represents 8.8% of Tesco revenue, worth 12.5 billion sterling and is an area of strategic growth. Of this, clothing is probably a small fraction, so it is probably not material to Tesco, right ? Especially when there are over a million women directly involved in subsidizing this growth. And many more on an indirect basis.

Wow, what a long post this turned out to be. if you got this far, you win the csr-reporting blog stamina award. What's the prize ? You guessed it. A week's supply of Chunky Monkey.
(But you have to buy it yourself....)

elaine cohen is the joint CEO of BeyondBusiness, a leading reporting and social-environmental consulting firm based in Israel. Visit our website at:


Lucia said...


I couldn't resist anymore. I went out and got Chunky Monkey :)

Good point on this subject, though!

elaine said...

heya lucia, sorry for corrupting you ... but hope you enjoyed it ....:)) elaine

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