Bangladesh and Ethics in Retail

Outsourcing is one of the hottest topics debated among industry professionals. Some argue that hiring cheaper workers helps keep costs down, while others point out that those savings can come with some high costs, which recently included the collapse of a clothing factory in Bangladesh. The collapse of that factory led to many companies discussing the issues of ethics in the retail world.

Stephanie Overby recommends that companies look at several factors before deciding on outsourcing. The process essentially involves sending work to other countries where the cost of living is lower because companies can pay less for workers. Overby suggests that companies look at the risk of doing business in a specific area. Risks might include the environment in that country, the cost of doing business there, and the quality of workers available in that country. You might find that the cost of training new workers is too high to offset the savings on manufacturing. Overby also points out businesses should look at how different regions value human lives, which relates back to the problems in Bangladesh.

More than 1,000 workers died in Bangladesh after a factory that made Western clothing collapsed. Reports from the country indicated that the collapse came about because of a lack of safety features. The factory had a number of problems that inspectors found after the crash, but because the factory didn't have regular inspections, no one noticed those issues. PVH, which owns retail giants Tommy Hilfiger and Calvin Klein, signed an agreement that it would check the safety of all factories used by the company. A petition that circulated online begged other corporations to join the fight in the hope of reducing the risk of another event like this occurring.

Global manufacturing can lower the cost of creating new products, but after the building collapse and a major fire in November 2012 that left more than 100 Bangladeshi workers dead, an ethical debate erupted over whether outsourcing is worth the potential costs. Companies must now question whether the cost of losing human lives is worth the cost of saving money in terms of manufacturing. Several companies and businesses found that shoppers were willing to spend more for products created locally, while other companies use global manufacturing but pay their workers a living wage.

Companies that practice outsourcing want to increase profits by reducing manufacturing costs, but the collapse of a factory in Bangladesh showed that some companies aren't aware of the potential risks. By reducing costs and ignoring safety inspections, other events like this can occur. Before your company decides on outsourcing, weigh the issues and risks carefully.

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