Closing the Gap: Quality and Standards in Ethical Supply Chains

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Gap Inc. is one of the world's largest clothing retailers. It is also an industry leader in ethical sourcing and supply chain management through a social responsibility programme that advocates human rights as an essential component of quality and standards management.

Under its brands Gap, Banana Republic, Old Navy, Piperlime and Athleta, Gap Inc. is one the world's largest specialty retailers with more than 3,000 stores and 130,000 employees around the world. Gap outsources to more than 1,500 production sites in 50 countries, of which more than 90% are located in developing countries.

Gap's reputation for ethical supply chain management is largely the result of the company's commitment to standards enforced through its Code of Vendor Conduct (COVC) and Vendor Compliance Agreement.

Gap's COVC establishes the legal, social and environmental requirements that all manufacturers and factories must meet in order to do business with the company. The code is based on conventions established by the International Labour Organization (ILO) and aligned with the policies of Social Accountability International (SAI) and the Ethical Trading Initiative (ETI).

Once vendors are approved, they are required to be compliant with Gap's COVC and also to ensure that they implement the code and agreement throughout their own supply chains. To enforce these standards, Gap monitors 99% of its garment factories through both announced and unannounced visits conducted by vendor compliance officers, who are part of the 120 employees in Gap's global responsibility team.

Improvements through capacity-building programmes

In recognizing that monitoring alone won't achieve lasting, large-scale improvements in working conditions, Gap introduced capacity-building programmes that focus on working with factories to develop management skills and systems that increase factory accountability for meeting standards.

Key elements of the capacity-building programme include:

* Evolving the monitoring process;

* Working with factories to embed social accountability into their own operations;

* Increasing the use of certification prgrammes (e.g. SA8000--see box);

* Training factories to engage with stakeholders; and

* Collaborating with other brands in the apparel industry to make better use of resources, avoid duplication of efforts and collectively create and share best practices.

Q&A

TRADE FORUM EDITORIAL INTERVIEW

with Dan Henkle, Senior Vice President, Global Responsibility, Gap Inc.

TF: Gap Inc, has rigorous standards and quality systems in place through its COVC and Vendor Compliance Agreement, but what are the challenges you face in enforcing them--particularly in developing countries?

DH: While we have made a lot of progress in the past 15 years in terms of alignment around the codes that are being used and what has been asked of the vendors, there are still some challenges with the level of enforcement of those codes. Many factories work with more than one buyer, for some that may be as many as 20 brands, So if a factory has five buyers and each buyer has different enforcement rigour, then that sends mixed messages to the supplier. I liken it to an employee of a company having five different bosses and each boss asks the employee to do five different things, then it becomes challenging and confusing, So there can be one set of rules (which are the codes), but it is the level of expectation that is the same across different buyers which is important, If you take that five-buyer example, if Gap gives 40% of the capacity of the factory, then we have fairly significant amount of leverage and influence in that factory, but it's not the same in a scenario where we are one of the buyers but use only 5% of the factory's capacity, As an example, take a situation where one buyer does not enforce the amount of overtime that is worked and another that has very clear, non-negotiable expectation of the amount of overtime worked, What does the factory manager do at that time? …