The success of a factory depends on rigorous inspection at every stage of the process and ability to meet stringent working conditions required by customers.
This is core because there is greater transparency in flat world. For example, in 2000, activists with the Hong Kong Christian Industrial Committee(HKCIC) reported that toys for Mc Donald’s Happy Meals were being produced by a supplier that employed children as young as 14 years old. The story had roots like follows.
Mc Donald’s had outsourced the production of its Happy Meal toys to Sinon Marketing Hong Kong Ltd. This company in turn hired a factory in Hong Kong-City Toys, Ltd- to make the toys. However, when the above story broke out, both the factory and Mc Donalds stated that they did not know it. But, the damage had been done and all what the consumers and critics saw were Mc Donald’s toys being made by underage workers. For instance, The Child Labor News service ran the headlines as “Little slaves pack (Un)happy meals”
Furthermore, in the U.S., Germany, Australia and Canada, one fifth of the customers claim to read company CSR reports when making investment decisions.
Thereby, the best thing to do is to have a code of conduct and business processes. This will help to ensure compliance even when manufacturing is dispersed. This is because, where a rigid control of day to day operations is not possible, a set of laws and policy manuals will be a powerful way to ensure that all players understand what is expected of the entire network.
However, creating a code is not enough, rigorous monitoring and certification is also needed. For instance, an annual recertification process ensures that companies are actively tested for their ability to meet expectations, rather than waiting for problems to emerge. In this case, keeping the monitoring division independent from the business is important.
Also, the compliance division should be able to act autonomously and swiftly to address problems even at the expense of short term earnings.
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