Manufacturers Collaborate on Compliance Audits

With the growing reliance on contracted manufacturing, more top-brand manufacturers are moving from individually spearheaded factory inspections to jointly planned audits and sharing information with other brands that source in the same factories, according to Fair Factories Clearinghouse (FFC), a non-profit organization dedicated to cutting redundancy from factory compliance programs. International apparel manufacturers including adidas, Nike, and VF Corporation are looking beyond competitive concerns to change the way they and other major brands assess and communicate with factories.

The goal is to achieve sustainable improvement in factories.

“Today’s approach to factory compliance audits isn’t optimal,” said Peter Burrows, executive director of Fair Factories Clearinghouse, which developed the enabling technology. “Factories spend more time scrambling for upcoming audits and squelching highest priority corrective issues rather than creating long-term sustainable change. By adopting a collaborative approach, brands can shift their focus to correction of root cause issues through long-term and sustainable improvements to management systems, employee relations, and environmental issues.”

Following the U.S. Department of Justice’s issuance of a business review letter dated June 19, 2006, the FFC began offering a secure hosted platform for brand and retailers to share information on factory compliance audits.

“The DOJ Business review letter issued to FFC was a first step to permitting FFC member companies, with safeguards in place, to minimize the possibility of any anticompetitive conduct when collaborating on improving factory conditions,” stated Robert M. Langer, an antitrust partner at Wiggin and Dana LLP, the Connecticut, New York and Pennsylvania-based law firm that spearheaded the FFC DOJ request. “The FFC and its members have established a variety of protocols of behavior regarding the sharing of compliance information that provided DOJ with sufficient comfort, thus permitting the issuance of the Business Review Letter.”

FFC’s audit collaboration release allows for:

• Calendar sharing—FFC members can post upcoming events to enable joint factory visits or training;

• Audit database integration--Sharing members can initiate collaboration audits on the FFC platform with other members, then export audit data back into their own proprietary audit databases for full company reporting;

• Role-based security system expansion—Members can add employees at other brands as participants on new audits;

• Social networking collaboration—Allows members to create multi-company work teams, store, search, and rank audit-related documents;

• Improved internal and external communication, including the ability for all participants to comment separately on issues found and corrective actions.

“NIKE has been working with the Fair Factories Clearinghouse to further enhance our Brand Collaboration Program and commitment to transparency,” said Elizabeth Garvey, External Partnerships/Sustainable Manufacturing Performance for NIKE. “In FY11, we shared 39 percent of our audit results through the FFC and look forward to increasing our capabilities on their platform.”

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