Wal-Mart toughens rules with its suppliers

Wal-Mart is now demanding its suppliers be authorized. Wal-Mart is now demanding its suppliers be authorized. It claims a fatal fire in Bangladesh last year was at an unauthorized factory. (Nov. 25, 2012) Photo Credit: AP

advertisement | advertise on newsday

Wal-Mart Stores Inc. has alerted its global suppliers that it will immediately drop them if they subcontract work to factories they haven't authorized.

Wal-Mart's stricter contracting rule, along with other changes to its policy, comes amid increasing calls for better safety oversight after a fire in November at a Bangladesh factory that supplied clothing to Wal-Mart killed 112 workers. Wal-Mart has said the factory wasn't authorized to make its clothes.

In a letter sent Tuesday to suppliers, the company says it will adopt a "zero tolerance" policy on subcontracting without the company's knowledge, effective March. 1. Previously, suppliers had three chances to rectify mistakes. Wal-Mart also said it plans to publish on its website a list of factories that haven't been authorized to manufacture goods for Wal-Mart.

Also, starting June 1, suppliers must have an employee stationed in countries where they subcontract to ensure compliance, rather than relying on third-party agents.

"We want the right accountability and ownership to be in the hands of the suppliers," said Rajan Kamalanathan, Wal-Mart's vice president of ethical sourcing. "We are placing our orders in good faith."

Wal-Mart will meet with clothing suppliers from the United States and Canada Thursday to explain the new policy changes.

Critics quickly dismissed Wal-Mart's moves as inadequate and said that the retailer needs to do more.

"It shows that Wal-Mart is feeling a great deal of pressure in the wake of public scrutiny," said Scott Nova, executive director at Workers' Rights Consortium, a labor-backed advocacy group.

But Nova said the company's response isn't adequate unless Wal-Mart and others pay suppliers more so they can cover the costs of repairs.

The latest LI business news in your inbox daily. Get the Biz Briefing newsletter!


Newsday.com now uses Facebook for our comment boards. Please read our guidelines and connect your Facebook account to comment.

You also may be interested in: