Platt Perspective on Business and Technology

Moving past early stage and the challenge of scalability 33: reconsidering and rethinking the supply chain 2

Posted in in the News, startups by Timothy Platt on June 16, 2013

This is my thirty third installment in a series on building a business for scalability and long-term success (see Startups and Early Stage Businesses, postings 96 and scattered following for Parts 1-32.) This is also a direct continuation of Part 9, where I first began explicitly exploring the issues and challenges of supply chains in business expansion and scalability, and Part 32 where I began a discussion of how supply chain systems need to be rethought as they develop and function in a globally interconnected context.

I wrote Part 32 around a still, as of this writing, unfolding news story: the collapse of a sweat shop garments industry factory building in Dhaka, Bangladesh called the Rana Plaza. The rubble of this building has mostly been removed now and the more than 1,100 bodies of the dead removed too. But this is all but certain to become a turning point news story like the Triangle Shirtwaist Factory fire of 1911,

• And both for the pressures it will engender to force change in public perception and opinion as to worker safety and worker rights,
• And in forcing through change in the law and in its enforcement.

The national government of Bangladesh sees their garment industry as one of their most important sources of foreign currency coming into their economy and Bangladesh has in fact risen to be the second largest manufacturer of clothing by nation in the world, after China.

• And average wages per month for garment factory employers have been as low as the equivalent of thirty seven US dollars.
• Regardless of laws on the books, there have been no enforced or even effectively enforceable building or worker safety codes in place.
• Up to now, and as of this writing still now, legal barriers effectively block any possible effort to legally organize or unionize these workers for collective bargaining in search of higher pay or safer working conditions. By law, before any organizers can call for a worker vote on union organizing, they are required to turn over a list of every employee who might become involved in this to their employer – who can take preemptive action against any or all of them and without legal consequences, including dismissal.
• There are no real child labor laws in place.

When you consider the direct employers of these workers at the Rana Plaza, some simply sought to flee the country when hearing of the building collapse. None of them offered to pay these workers or their families what little they were legally due and none were willing to in any way contribute to or even acknowledge the need for medical care coverage or aid of any sort for injured workers or for the families of those who did not survive. And clothing labels were found in the rubble, indicating the many and varied internationally known brand names that the clothing produced there was being manufactured for.

Since this building collapse, the government of Bangladesh has promised change, and both through imposition of new higher minimum wage standards, and through development and enforcement of new worker safety law. And they have promised to change their laws so as to make it easier for laborers to organize and unionize. And some of the big name brand manufacturers and retail outlet chains that have their own brand names attached to garments produced in Bangladesh have also begun to call for change and for real action too; literally millions of people have gone online on social media sites to post and sign petitions excoriating them and demanding action and real change.

I write this as an update for Part 32, and as a continuation of what I see on many levels as a cautionary tale. As noted in Part 32 and now repeated here, simply taking a short-term cash flow perspective on supply chain sourcing and collaborative participation can lead to disaster. Cut enough corners often enough and long enough and that disaster is sure to arise eventually – and an example of that just did. So doing the right thing becomes doing the only fiscally safe and prudent thing too, and certainly long-term. And nothing that led up to this tragedy will change unless the consumer market that would purchase these garments forces change, and through the pressures of the purse and by pressuring their governments to demand and to make change too.

The Triangle Shirtwaist Factory fire cost 146 garment worker lives with some victims as young as 14 years old. The resulting outcry forced change in worker safety law and in building code and fire safety law and in their enforcement and both in New York City where this happened, and through example more widely throughout the country. I expect (I hope) to see similar, wide-ranging change come out of this disaster too. Time will tell.

My initial plan for this posting was to discuss rethinking the supply chain with an effective and cost-effective reconsideration of risk and responsibility in mind, but I chose to provide more details as to the still current case study behind these installments here first, instead. I will at least start delving into operational and strategic alternatives to current supply chain approaches in my next series installment. Meanwhile, you can find this and related postings at Startups and Early Stage Businesses. You can also find related material at Business Strategy and Operations and at its continuation page: Business Strategy and Operations – 2.

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