Wal-Marts ethical sourcing director Stella Bray

Wal-Mart's ethical sourcing director Stella Bray

Wal-Mart's Supplier Development Programme, which helps to improve working conditions and develop socially and environmentally friendly practices in factories the US retail giant sources from, was launched in November 2011. The retailer's director of ethical sourcing, Stella Bray, spoke with Petah Marian about the initiative.

The Supplier Development Programme was created after the world's largest retailer saw an opportunity to "get in front" of common issues faced by its suppliers. These issues, such as under-age labour and health and safety, were repeatedly shown up by audits. 

Working with certification and inspection firm Bureau Veritas, a systems management approach has been developed that sees it go into factories, discover their particular weaknesses, and help put systems in place to cover the gaps.

Stella Bray emphasises, however, that the programme looks at each supplier on an individual basis. 

"We go in and take this systems management approach, and the philosophy of it, and help to apply it to the supplier's business, so it's not a cookie-cutter type programme, it's something they can sustain for their own business," says Bray.

The scheme covers hiring and employment practices, compensation, effective factory worker communication, health and safety, as well as the environment.

Bray says that hiring and employment practices is one area where the retailer has already been able to help put better systems in place.

"What happens a lot of the time with under-age labour, not child labour, where you have young people who are perhaps a couple of months away from their legal age to work, they might get a fake ID and then start working. That can happen if there's not a process in place to prevent that. So we go through and study gaps like that."

Supplier engagement
Another area where the retailer has been able to offer significant gains is around health and safety, and the implications this can have on productivity.

"What the suppliers are reporting back that they have liked about the programme, is that by getting engaged in their own businesses, they have been finding they have been leaving money on the table through inefficiencies," Bray explains.

"A lot of them have found increases in productivity," she says. Through this, suppliers are experienging better worker retention, and then better quality output as employees become increasingly engaged with what they are doing in the factory.

Suppliers are chosen for the voluntary programme by the group's merchandising and sourcing team. Since the launch, Wal-Mart has seen 106 suppliers graduate the programme, with plans to have 225 complete the scheme this year.

For Wal-Mart, accountability and transparency from factory to supplier and agent is key to its success.

"We wanted to get the suppliers involved so they could get some skin in the game too; this is supplier facing but happens in the factories. So what we're doing is we're engaging everyone in the products that get produced.

"Once you are aware of something you're accountable, and you will do something."

Significant savings
While there are significant savings to be found through a more stable workforce, fewer inefficiencies and better systems, suppliers that have been through the programme also get a "green" rating which means they don't have to pay for a third-party audit on that factory for two years.

However, this doesn't mean that standards can slip. Instead, Bray says that part of the programme means suppliers have to go out and do a self-audit.

"Because we want them to be engaged and to show this is sustained learning as well, the supplier is responsible for going to the factory we've worked on with them, and auditing that factory themselves." The results are turned "over to our team, who then help wherever they may still be struggling." 

Bray emphasises that Wal-Mart wants its suppliers to be open and admit to areas where they may have problems, and accept help on any ongoing issues they face.

Wal-Mart's supplier development programme is voluntary, and the retailer doesn't penalise suppliers that won't participate. However, few suppliers would deny there are benefits to becoming closer to the world's largest retailer.

"What it does is make them a better resource, it gives peace of mind, so what we do is make sure we communicate back to merchandising, and back to sourcing, how well the suppliers are doing. Which ones are struggling, which ones are doing well and which ones don't want to participate."