Supplier Audits in Asia Are On the Rise: “CYA” or Strategic?

When I read this Apparel article, I could not help but find a bit of irony in it, knowing some of the inner workings of supplier management and development programs inside many large corporations. On the one level, you could read this piece as a wake up call pushing for supplier audits in Asia based upon the tragedies and findings of 2013 activities. The article cites data from AsiaInspection showing that 2014 will be “the year of transparency in supply chains.” It’s actually the “year of the horse” in the Chinese Zodiac, a fact that I suppose bodes well given the positive traits of the animal in question. Having the year of “the rat” coincide with the year of increased Asian factory inspections would have been too much of a coincidence, but I digress.

The article suggests that, as a reaction to the Rana Plaza factory collapse (which killed 1,129 people in Bangladesh), strikes and riots took place throughout Southeast Asia. There also came an increased focus on child labor, including a finding that “78 million children are engaged in child labor in the Asia and Pacific region.” 2014 will be a definitive year of supplier management in the region, building on activity in 2013.

Specifically, “brands and retailers are taking action, showing a 61 percent increase in audits in Asia for 2013 compared with 2012. While Bangladesh was in the spotlight, buyers took to securing their supply chain in all sourcing regions, with audits in Bangladesh up 47 percent year over year, China +58 percent and India 112 percent … While inspections in Bangladesh, the largest exporter for apparel in volume after China, were up 36 percent year over year, India exceeded this with 44 percent inspection growth, Vietnam 71 percent and Cambodia 114 percent.” Chinese inspections grew as well (17% in 2013).

As we all know, the numbers don’t always tell the full picture. In the case of apparel and high tech companies scrambling to show some level of concern/activity across their extended supply chain in Asia, I suspect, based on personal experience, that the activities are being as much done for marketing/PR purposes as they are for general procurement, risk reduction, supplier development and continuous improvement. One of the challenges, of course, is that far too many organizations lose visibility in the supply chain due to working with trading companies or contract manufactures (true in retail/apparel and high-tech, respectively).

Yet a “cover your a—” or CYA approach to supplier management will do little to help the situation over the long term. What’s needed is a sustainable commitment not only to staying out of the news but also to building foundational visibility and transparency to improve the overall inbound supply chain on a lasting basis.

If you’re curious about the topic of supplier management, I would encourage you to check out our research on the topic (reach out to us for a one-time trial if you’re not already a Spend Matters PRO subscriber).

Here are some of the research brief titles we’ve published in recent quarters:

Sustainability in Procurement: Prevent the Next “Bangladesh Factory Fire” From Happening Again

Planning a Long-Term Response to the Bangladesh Factory Fire

Sustainability in Procurement: Why Do Sweatshop Scandals Occur?

How Do You Handle Underperforming Suppliers?

Supplier Management Market Landscape: Detailed Slide Download!

Supplier Management Data: 90+ Fields Finance and A/P Want Info On

Supplier Management Data Collection: 75+ Company Level Fields

Of Supplier Management…and Horsemeat

Beyond Bird Flu 2.0 – Inoculate Your Supply Base Against Supply Chain Risk

The Policy Supply Chain: Conflict Minerals and Preparing for Mandated Ethical Sourcing

Conflict Minerals Analysis: Readiness, Technology, and Questionable Practices

Conflict Minerals Compliance: Checklists, Templates, Planning Documents

Conflict Minerals Q&A: SEC Enforcement, China, Scrap, and Supplier Views

Conflict Minerals – How To Prepare Your Supply Chain (Part 1)

Conflict Minerals – How To Prepare Your Supply Chain (Part 2)

“Be Smart About” – Supplier Information Management Solutions (Part 1)

Procurement Visibility and Insights – Supply Chain Transparency

Supply Performance Management – Introduction

Supply Performance Management: Critical For Procurement Measurement

Re-thinking and Re-claiming “Tail Spend”

Prime Contractors – Sensible Procurement Tool or Soft Option?

Prime Contractors: Sensible Procurement Skill or Soft Option (Part 2)

Offsets, Local Content, and Supplier Information Management

Offsets, Local Content and Supplier Information Management (Part 2)

Direct Material Sourcing and Supplier Management Platforms (Part 1)

Direct Material Sourcing and Supplier Management Platforms (Part 2)

Can Supplier Management Be Saved? The Problems With SIM, SRM and Risk Management (Part 1)

Can Supplier Management Be Saved? The Problems With SIM, SRM and Risk Management (Part 2)

Global Supplier Intelligence: A Bureau van Dijk Review

RollStream (GXS): Supplier Management Prospect, Customer and Competitive Recommendations and Analysis

LockPath – A Hybrid GRC and SPM Approach to Conflict Minerals (Part 1)

LockPath – Taking a Hybrid GRC and SPM Approach to Conflict Minerals (Part 2)

HICX Solutions: Supplier Management Meets Master Data (Part 1)

HICX Solutions: Supplier Management Meets Master Data (Part 2)

Cortera – Looking at Supply Chain Risk Through the A/R Lens

NMSDC Consolidation – Breaking News Around the True Story!

NMSDC’s Recent Supplier Diversity Conference: Firms to Watch Out For

Overcoming Supplier Diversity Capacity Challenges – When Suppliers are Too Small (Part 1)

Supplier Diversity Meets Supply Management: A Roadmap for Success (Part 1)

Supplier Diversity Meets Supply Management: A Roadmap for Success (Part 2)

Supplier Diversity Meets Supply Management: A Roadmap for Success (Part 3)

Supplier Diversity Meets Supply Management: A Roadmap for Success (Part 4)

Supplier Diversity – Creating Shared Value for the Future of the Nation (Part 1)

Supplier Diversity – Creating Shared Value for the Future of the Nation (Part 2)

Advanced Supplier Diversity: Addressing the Real Legacy of Triumph

Editor’s note: For total clarification on what the acronym “CYA” stands for, please refer to the second definition in the Urban Dictionary entry and allow for regional differences in spelling, etc. 

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