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- July 18, 2013 -

 
       
   

Supply Chain Graphic of the Week: Comparison of the Euro and US Plans for Apparel Factories in Bangladesh

 

Same Basic Goal, but Many Important Differences between the Two Plans; a Supply Chain Inflection Point?

 
       
   

By SCDigest Editorial Staff

 
   

 

If you follow SCDigest, you will know we have devoted quite a bit of coverage to the on-going saga of the global apparel supply chain woes generally and specifically the recent tragedy in Balgladesh, in which more than 1100 workers were killed following the collaPse of a building that housed five different Apparel manufacturers.

Worse still, the disaster occurred after factory managers ordered workers back inside the building following an evacuation by inspectors who saw cracks in the structure. But the factories were behind on their orders for large Western retailers and brand companies, and forced the workers back inside.

 

As we predicted, this set off a flurry of reactions, culminating in a May plan by several dozen European companies and a couple of from the US that would legally bind participating companies to fund needed improvements in factories in the country. But US retailers such as Walmart and the GAP were leery of that accord, uncertain of the legal ramifications and perhaps open-ended financial commitment.

 

Last week, a group of 17 US retailers and brands, including Walmart and GAP, announced their own plan, which commits money ($42 million over five eyars) for inspections and training, and will provide a fund for low cost loans for factory owners, but does not directly fund needed improvements, as the Euro plan does.

 

SCDigest had planned to work up a table showing the differences between the two plans, but found someone has already done so, which we are pleased to bring you. This good work comes from Lily Kuo and Ritchie King from a news web site called Quartz, and we appreciate their efforts.

 

Comparison of Euro and US Plans for Bangladesh Apparel Factory Improvements

 

 

Source: Quartz/www.qz.com

 

 

Again, the biggest difference is the Euro plan's commitment to fund factory improvements directly if needed, while the US plan provides for loans.

 

Many workers' rights groups have criticized the US plan as being inadequate.

 

We continue to ask these questions: Is this the model for low cost country sourcing going forward? What countries or industries are next?

 

This may be seen later as a supply chain inflection point.

 

 

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