On April 24th, one of the most profound industrial disasters of the recent decade occurred: a garment factory in Bangladesh suddenly collapsed with thousands of its employees inside. At this point, the death toll has risen to over 1,100 people and sentences of life-in-prison have been recommended for the building's owners. There is no excuse for this disaster and our hearts go out to the victim of this tragedy.
Following a tragedy of this magnitude, I believe we have two responsibilities: to assist the victims as best we can and to learn from the mistakes that led to the incident. This article deals with the latter. The following thoughts are three applicable takeaways we should all be considering for our own companies following the disaster in Bangladesh.
As a preface, it’s important to note that the factory mentioned was many layers back in the value stream for companies like JCPenny's, yet it still had a profound impact on their supply. Scrutinous visibility is a prerequisite to the following points.
Deal with Ethical Companies
Short-changing ethics might appear to be a means of cost cutting at first glance, but the real cost and increased risk of working with suppliers who do not consistently take the high road is overwhelmingly destructive in the long run.
Aristotle once said that, "Educating the mind without educating the heart is no education at all." In the same vein, if you attempt to run a business intelligently without respect for the heart behind the business, you'll end up with no business at all.
Ethical choices are rarely made out of propriety; ethics are respected out of value for the long-term. Respecting employees develops loyalty and fosters productivity. Conversely, creating destructive environments, especially those so abominable that they result in tragedies like what happened in Bangladesh, can only result in interruptions, distractions, penalties, and problems.
Make no mistake, choosing suppliers that will work ethically is paramount to keeping a well-run supply chain.
Pervasive Disaster Recovery Plans
Disaster recovery plans should be thorough and available at every level of your supply chain. At Global Supply Chain Solutions, we always stress to our clients that it's not a matter of when you face a supply chain interruption, as much as when. As the disaster in Bangladesh shows, disruptions can come in ways that are completely unpredictable.
A good disaster plan will address all potential risks, no matter how improbable. Define a timeframe for recovery. And provide clear, quickly implementable solutions depending on each contingency.
Before developing these plans, determine which assets and suppliers could be the greatest risk to your supply chain and ensure that disaster recovery plans are rigorously worked out in these areas first. A sole-source supplier that gets interrupted could have a very long timeframe for recovery.
Creating a disaster recovery plan also comes with the benefit that it forces you to think through every possibility and facet of your operations. Increased understanding is always of value and any process that could bring another perspective is worthwhile.
Supplier audits are a tool that can be implemented preemptively and can dramatically improve your disaster recovery plans. Only once you understand the true position of a supplier can you effectively plan to recover from their disruption.
Auditing a supplier requires that you address the BOM, financial operations, manufacturing processes, schedules, freight processes, and design change processes of your suppliers. In short, every element of operations that involves a particular supplier should be assessed.
When running through the process, look for elements of non-compliance. While the auditing process's primary value is helping you address these problems, it also gives you a clear picture of how the supplier views your relationship. Strong compliance is a good sign of respect. How do your suppliers view their relationship with you?
For more information on supplier audits and how beneficial they can be to your supply chain visibility, check out our other post.
The April collapse of the garment factory in Bangladesh is an incomprehensible tragedy. However, if we fail to learn from the disaster and change our own operations accordingly, we take up some amount of negligence for ourselves.
Don't let your supply chain collapse in a disaster! Source your components from ethical companies and take the time to produce rigorous disaster recovery plans informed by supplier audits.