Background
No one had died so far, but after serious incidents at its suppliers, an Italian fashion company wanted to check all business partners in its supply chain for compliance violations.
The company’s suppliers were wholesalers and contract manufacturers such as weaving mills and sewing shops, as well as dyeing plants, cotton farms, sheep farms and logistics organisations in various countries around the world.
From small farmers to listed corporations, a total of more than 300 companies were to be audited. Among them were 50 direct suppliers, which were to be checked for the first time by the fashion company itself. This direct control was possible due to an already existing contractual audit clause which has never been activated before.
Task
REMARKABLE Compliance was given the task of visiting only the particularly problematic contract partners, in order to examine the situation on site. On this occasion, further discreet investigations were also to be carried out into the known and previously unknown subcontractors working for the contract partners.
In partnership with REMARKABLE Compliance, these additional companies were then to be checked for indications of particularly serious compliance violations, with the investigators initially focused on the analysis of publicly available information.
In the event of further evidence, open or covert visits to the companies would be carried out in order to obtain a reliable picture of the situation.
Findings
In total, approximately 150 companies in the supply chain were audited by REMARKABLE Compliance. Investigators visited companies in Bangladesh, India, Pakistan, Peru, Turkey, Thailand, Vietnam, China, Indonesia, Morocco, Romania, Bosnia-Herzegovina and Italy.
In this way, numerous serious violations of both compliance guidelines and local occupational health and safety laws, criminal laws, environmental standards and building regulations were detected. Violations of competition law and even US sanctions were also documented.
The audit also uncovered some very positive working methods, and identified promising ways in which significant improvements could be made, with easy-to-implement adjustments.
Using the experience gained, REMARKABLE Compliance then developed a monitoring system, and an onboarding process for new companies that were joining the supply chain.
Results
The client was able to eliminate numerous reputational and legal problems through contractual agreements, and also significantly reduce the resulting economic risks.
Exclusive supplier contracts were concluded with those producers who already met the compliance requirements. There was also additional support for companies in the supply chain that wanted to raise standards. These investments resulted in significant competitive advantages, and company investors rewarded this commitment to improved sustainability and social responsibility.