The Gap's Child Labor Blow-Up: When Supplier Performance and Risk Investments Fail

In the past few weeks, two of the more advanced companies from a supplier performance and supply risk management perspective have encountered problems, despite their investments in people, processes and technology. The first to hit the headlines was Boeing, whose 787 will now take flight six months behind schedule thanks to supply-related delays. The latest supplier performance and risk related news on the Gap hit the wire over the weekend.

According to MSNBC's coverage of the event, "An Indian vendor assigned work on an item for the company's GapKids line to an unauthorized subcontractor." The UK Observer broke the story originally noting that this subcontractor's facility was "smeared in filth, the corridors flowing with excrement from a flooded toilet” and that "child workers" were present at the facility. The irony of this development is how sophisticated Gap has been in the past relative to its peers from a supplier performance perspective. I actually had the chance to sit in on a panel with an executive from the Gap to discuss supplier performance and risk issues a couple of years ago. And I can vouch for the sophistication of their monitoring, audit and forecasting processes, at least back then. Still, mistakes like this can -- and do -- happen, even to top performing organizations.

Jason Busch

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