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THINK
schedules) to remuneration, as
well as the physical conditions
and mental demands that
exist in the workplace.
For more than a century,
the Democratic Republic of
the Congo has been plagued
by regional conflict and a
deadly scramble for its vast
natural resources. In fact,
greed for the Congo’s natural
resources has been a principal
driver of atrocities and conflict
throughout the Congo’s
tortured history.
The four most commonly
mined conflict minerals (known
as 3TGs, from their initials) are
cassiterite (for tin), wolframite
(for tungsten), coltan (for
tantalum) and gold ore, which
are extracted from Eastern
Congo, and passed through
a variety of intermediaries
before being purchased by
multinational companies for
products including electronics,
like cellphones, or as solder
for use in buttons, zippers and
other fasteners or as composite
material in shoelace grommets.
A couple years ago, an apparel
factory in Bangladesh supplying
to a major U.S. retailer had a
catastrophic fire that killed
more than 100 people. The
cause of the fire was attributed
to poor working conditions.
Unfortunately, stories such as
these are not uncommon.
People respond predictably to
positive and negative incentives.
Acting as consumers, producers,
workers and investors, people
respond to incentives in order to
allocate their scarce resources
in ways that provide the highest
possible returns to them.
When we as distributors or
suppliers are presented with a
project with limited spending
capacity by the client, we try
to find ways to drive the price
down so we can win projects and
maintain decent profitability.
The issue becomes that when
price is the factor that drives
a sale, we forget that it trickles
down to all aspects of the supply
chain. Every company within
a supply chain has different
goals and faces different
rules and constraints. These
goals, rules and constraints
influence the benefits and
costs of those who work with
or for those companies and,
therefore, affects their behavior.
Because of this, when price
is a large factor, factories
look at their investments and
allocate their scarce resources
in ways that provide the
best return on investment.
Unfortunately, in cases such
as this, companies don’t make
investments to benefit their
workers or to improve the
conditions the workers have
to endure to produce these
price-driven products.
In the promotional industry
in particular, price is a huge
factor that drives how suppliers
behave when they source
products. The larger suppliers
have greater buying power so
they may be able to make up
in volume in order to drive
down price, but the smaller
companies, unfortunately,
are often not in the same
position. They cannot drive
price reductions because their
factories are unable to invest
in all aspects of supply chain,
especially working conditions.
The danger here is that
you move to factories that
are able to meet price by
compromising working
conditions. The International
Labour Organization estimates
that 20.9 million people are
victims of forced labor globally
and their labor is estimated to
generate $150 billion in profits
per year. Larger corporations
are more likely to have factory
audit policies in place to monitor
and minimize their brands
being caught up in any social
compliance issues. Even then,
transparency down the supply
chain remains a big challenge
especially when it comes to raw
materials suppliers and other
subcontractors that work with
primary factories.
The International
Labour
Organization
estimates that
20.9million
people are victims
of forced labor
globally and their
labor is estimated
to generate
$150 billion in
profits per year.
The issue becomes that
when price is the factor
that drives a sale, we forget
that it trickles down to all
aspects of the supply chain.