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Article

11 Feb 2016

Author:
Linda Kromjong, Intl. Organisation of Employers (IOE)

Commentary: Intl. Organisation of Employers Secretary-General reflects on the extent to which companies control their supply chains

“Companies have total control over their global supply chains”  – true or false?

Let’s take a closer look at the leeway and capacities companies really have to control their supply chains...The UN Guiding Principles on Business and Human Rights acknowledge the difference between the activities of an enterprise and the activities of a business partner and distinguish between their respective obligations...[T]he  extent to which companies can influence their supply chains depends on several factors: the number of suppliers, the structure and complexity of the supply chain and the market position of the companies. Depending on the nature of their business, many  companies have tens of thousands of suppliers in different tiers. It is often impossible or impractical, either economically or logistically, to control all suppliers and subcontractors...[E]ven rigorous auditing cannot guarantee full control over a supplier ’s behaviour...Furthermore, a buyer’s ability to influence the business conduct of the supplier depends on market position...Wages are an inevitable issue in this discussion. However, buyers are not in a position to dictate wages unilaterally , especially when rates relate to supplier companies in a second or a third tier position...Current and upcoming debate should go further in identifying best practices in promoting decent working conditions through supply chain relations hips, and outcomes should support companies in their daily struggle to meet expectations. Companies big and small, buyers, suppliers, workers and societies at large all have an interest in more and better jobs globally.

 

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