Fair Factories Clearinghouse (FFC) is facilitating a pilot project where one supplier is working with seven companies to eliminate duplicate audits at shared factories. The goal is to share information from previous audits, work together on remediation, and then conduct one annual verification audit at three factories shared by the participating seven companies. Normally, each company would conduct its own corrective action plan (CAP) and audit at the factory increasing costs and resources for all involved.[1]
FFC’s first supplier member initiated the collaboration process with its customers that are also FFC members; first, by joining FFC, and then by engaging FFC to moderate the pilot project. This initiative demonstrates that the supplier can be a partner in the monitoring and remediation process. The supplier aims to share audit findings and corrective action plans (CAPs) with its customers through FFC online-sharing platform.
Marianne Voss, Executive Director, Fair Factories Clearinghouse, explains that, “FFC was originally created for purchasers, for the top of the supply chain, who managed the factory compliance process. The pilot project demonstrates that suppliers have a bigger role to play in collaboration and for this reason FFC is opening up membership to suppliers.”[2]
The pilot project demonstrates the challenges brands and suppliers face when collaborating on factory audits and remediation activity. Voss points out that one obstacle to collaboration has been the inability of companies to trust supplier data or other company’s data.[3] Negotiation and dialogue between all participants is required to gain a level of trust and fundamental to moving forward on mutually agreed conditions.
The pilot project has shown that in order to conduct a successful joint audit, it is important for all participants to agree on 1) who conducts the audit, 2) the audit template and the standards of audit questions, 3) negotiating the remediation process, and 4) delegating tasks. It was also important to get each of the participating companies, and the supplier, to agree to the highest level of standards across the brands for remediation, so that all felt comfortable that collaboration was not lowering standards. Meredith Danberg-Ficarelli, Member Services Manager, Fair Factories Clearinghouse explains that the pilot project has been a huge undertaking. The collaborative process involves a lot of conference calls, a lot of back-and-forth clarifying issues and questions.[4]
Joint factory audits will reduce costs for both the supplier’s factories and the companies involved in the pilot project. In arrangements where the factory foots the bill for audits, conducting one annual audit instead of several will see direct savings for the factory who would have normally had to pay for multiple audits. The supplier will also only need to pay for one round of remediation. In this project, the supplier’s group of factories had over 20 audits, which are now being consolidated. However, while resource and cost-savings is important, Voss points out that the biggest benefit of a joint audit and joint remediation process for a supplier is one consistent message from the companies to the supplier throughout the monitoring and remediation process.[5]
The pilot project highlights how the FFC sharing-platform can enable effective collaboration between all stakeholders in the supply chain. FFC membership allows members to share factory and audit information at their own discrepancy letting members initiate collaboration. Working with FFC’s first supplier member has helped to tailor FFC software to the supplier’s requirements and preferences.
Collaborative relationships forged among FFC members in the pilot project stress the importance of patience and forward-thinking to understand that working with several stakeholders will be time-consuming, require clear communication and accountable delegation. But once the groundwork has been laid, joint audits and joint remediation will ultimately save time and resources for both factories and companies in the audit process.
The pilot project’s joint audits are scheduled to take place towards the end of 2009. A follow-up post will review the outcome of the pilot project and the opportunities and challenges of joint remediation.
