Walmart: Welcoming Better Supplier Management, Not Compensation Funds

Thomas Kase recently wrote about how Walmart has taken a lead role in disclosing supplier problems by providing specific details on the results of supplier audit reports. We applaud these efforts towards transparency, and based on our own experience managing and developing global suppliers in various markets (our deepest experience being metals and professional services), we know the sanitizing effect that daylight and data can have on supply chain and supplier behavior.

Unfortunately, try as others might, there is no question compensation funds (i.e., well intentioned feel-good “guilt funds”) would have the same effect. Which is why I think Walmart is in the right not to support them and to focus supplier management investments in other areas to prevent future tragedies.

For further detail on how Walmart is not agreeing to play a role in these compensation funds for the victims of plant/facility accidents, see the New York Times story: U.S. Retailers Decline to Aid Factory Victims in Bangladesh. The author spends a good deal of time shaming Walmart and other, primarily American, retailers who are not participating in an effort “to compensate the families of the more than 1,200 workers who died in those disasters.” This does not mention the tens of millions of dollars (if not more) Walmart is investing annually in new or enhanced supplier management initiatives. As the story notes in this regard, “ to the dismay of those pushing to create the compensation funds, neither Walmart, Sears, Children’s Place nor any of the other American companies that were selling goods produced at Tazreen or Rana Plaza have agreed to contribute to the efforts.”

The story quotes “industry analysts” that note “Walmart, Sears and other American retailers are reluctant to join the compensation efforts because they fear it could be seen as an admission of wrongdoing, perhaps leading to legal liability.” But my view is that Walmart is leading the retail world in investing in better supplier management for the future, rather than going for the easy, “PR” way out.

No doubt, we can and should applaud the charity that other retailers, unions, and individuals are bestowing on the victims of the tragedies. But such deeds will not systematically change a supply chain as much as a giant like Walmart creating a new rules set for global suppliers and holding them accountable to it. If we want to prevent tragedies in the future, we should applaud Walmart for taking a leadership role in creating a new global set of expectations rather than shaming them alongside other retailers for not agreeing to a victim’s fund.

For further reading on supplier management:

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

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First Voice

  1. Jonathan Messinger:

    With all due respect, of course, I think setting it up as investing in better supplier management vs. contributing to the compensation fund is a false dichotomy. Surely Walmart could do both, and the case could be made that preparing for the future does not necessarily atone for the past. I understand the argument that a compensation fund does not address the systemic issue of how the fire happened, but neither is it set up to: It’s simply to help the bereaved who lost family in a fire caused by poor working conditions in Walmart’s (and Sears’, and Children’s Place’s) supply chain. One could even argue that accepting some responsibility for the tragedy would even show a greater commitment to supplier management and transparency.

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