Concerns rise for wellbeing of staff in global supply chains

Research shows benefits accrue all round if standards improve
Protesters and relatives of the victims of the Rana Plaza disaster demand compensation © Reuters

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Whether you are riding a bike or a motorbike, helmets in India are not the “done thing”, says Matthew Rae. For Vodafone’s director of health, safety and wellbeing, dealing with the safety and wellbeing of workers across the group’s supply chain means he often encounters local practices that are drastically at odds with the standards he is tasked with maintaining at the FTSE 100 telecoms company’s London head office.

In India, where Vodafone has thousands of suppliers and a large logistics operation, the company responded five years ago by requiring all staff and contractors on two-wheelers to wear helmets — several years before the authorities tightened regulation on the same thing.

Managing those nuanced cultural differences requires “perseverance and consequence management”, says Rae, adding that the group has developed strict procedures to guide supplier behaviour if things go awry.

Multinational companies such as Vodafone face considerable challenges to ensure the health and wellbeing of their wide network of staff and suppliers. Some 40 per cent of senior business leaders surveyed by the Economist Intelligence Unit say adverse events associated with their suppliers are becoming more frequent. Risks range from suppliers being involved in criminal activity to breaches of regulations on human rights, they say.

Many developing countries find it hard to achieve compliance with international standards. Research suggests that only 10 per cent of the working population in developing countries are effectively protected by health and safety laws. “Globalisation means there are increasingly complex and extended supply chains,” says Richard Jones, head of policy and public affairs at the UK’s Institution of Occupational Safety and Health.

Helmetless moped riding in the Indian city of Ahmedabad © Reuters

There has been some progress in recent years. For example, clothing retailers made efforts to improve health and wellbeing among their suppliers in the wake of the 2013 Rana Plaza disaster, when a garment factory in Bangladesh that supplied overseas companies collapsed, killing more than 1,100 people.

“A big driver in this area now is reputation,” says Jones. “There’s this corporate desire for maintaining a ‘social licence to operate’ that can help companies to attract and retain talent in their workforce, [and] to secure investment.”

Beyond reducing accidents, there are proven business benefits to improving supply chain safety and wellbeing. Research by Tufts University for the International Labour Organization shows that garment factories in the global supply chain where workers report better working conditions and better compliance on health and safety are more productive and more profitable. In contrast, the research found, putting suppliers under too much pressure to complete jobs quickly and the threat of penalties for late deliveries can result in greater stress among supervisors, which in turn can increase verbal abuse in the workplace.

“It’s fundamental that we don’t see safety as a competitive element . . . it’s something we see as a shared goal and value,” says Vodafone’s Rae. The company has established its own safety forum where four times a year it meets with global suppliers that it believes represent the highest risk of falling below safety standards.

A garment factory in Bangladesh; such businesses are key suppliers to western clothing retailers © Getty

Workers in other industries are also affected by time and cost pressures. Lawrence Waterman, who oversaw health and safety for the Olympic Delivery Authority during London’s 2012 Olympic Games, says the “most powerful programmes” around supply chain health are linked directly to the job the contractors have been asked to do.

During construction of the venues Waterman noticed an uptick in the number of minor accidents in the morning involving building workers — incidences of fainting, for example. He soon discovered that many workers were eating takeaway food late at night, then skipping breakfast the following morning. He decided, therefore, to offer porridge breakfasts for just £1 at the canteen. As well as cutting the number of accidents, this “aligned safety, health and wellbeing — and was a way of demonstrating to the workforce that we really did care about looking after them”, Waterman says.

Getting that right boosted other areas of collaboration, he says. “At London 2012, by working cooperatively with the construction companies on health, safety and workforce wellbeing, it made co-operation in all sorts of other areas, like logistics, so much easier because the relationship had been built up,” he says. “There was trust there.”

Sometimes small changes can make a big difference. UK utility company Thames Water says one initiative that has had a surprisingly positive impact was its requirement that workers in the supply chain wear protective equipment but also drive vehicles bearing the company logo. “The family has been branded,” says Karl Simons, Thames Water’s head of health, safety, security and wellbeing, of the company, which has 10,000 supply chain workers. “Above all, it shows they are working in compliance with our standards and expectations.”

Karen McDonnell, occupational health and safety policy adviser at the UK’s Royal Society for the Prevention of Accidents, agrees. “Successful organisations should have very clear values and monitor the supply chain — as opposed to over-managing them — to ensure some kind of cultural transference,” she says.

On top of a careful selection process when bringing suppliers on board, companies should carry out regular audits of their existing supply chain to identify strengths and weaknesses, she says, then work with them to raise their standards where needed. Training offered to core employees should be rolled out to the supply chain where possible.

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