Sharing compliance information
Here Selcuk Buyukozer, SEA programme operations manager in the Americas region, discusses sharing supplier compliance information and collaborating with other brands.
Q: How do you manage the compliance performance data of your supply chain?
A: We have been using the Fair Factories Clearinghouse (FFC) as our compliance database since 2006. All the factories are added to this system by our Sourcing colleagues and the factories are audited either by our team or by an authorised External Monitoring (EM) company. All these audit reports are archived in the FFC.
Q: How do you share compliance data and reports, and with who?
A: The FFC developed a new feature in 2008, enabling its member companies to share information regarding factory audit reports, corrective action plans and other related documents. Besides the adidas Group, there are major US retailers and brands like Wal-Mart, Nike, Levi's and Timberland using the FFC sharing platform. We started sharing audit information in November 2008, and we have been sharing our audits in the system with all the other FFC members since then.
Q: What are the benefits of sharing compliance data with other companies?
A: Some of the major ones are that suppliers receive more consistent code of conduct communication from FFC member companies and fewer audits are needed, saving resources for both companies and suppliers.
Q: Is there any compliance information that you do not share?
A: Yes. We do not share:
- Any information regarding worker names and other confidential information that can be harmful to workers
- Pricing and sanctions, production volumes, sales forecasts
- Factory ratings, compliance approval and designations
- Any other competitive information.
Q: What does it mean to collaborate on supply chain compliance?
A: For the compliance world, I can define collaboration as partnership activities among brands to improve the workplace conditions in shared factories. Collaboration can happen in many different areas such as sharing audit reports, conducting joint audits, working together on remediation and capacity building.
Q: What does the adidas Group actually do to promote collaboration on compliance?
A: We believe that collaboration is a step forward from just sharing audit information. We prefer to develop harmonised Corrective Action Plans (CAP) for a factory working together with the other brands and the factory itself. The FFC provides a very effective structure for that. With the involvement of the factory, CAPs from different brands can be combined in the FFC and a harmonised CAP can be developed.
Q: What is the benefit of a harmonised Corrective Action Plan?
A: First of all, the factories do not need to respond to different CAPs anymore. By reporting their remedial actions into the harmonised CAP, factories will be able to fulfil all the brands' CAP requirements.
Going forward, brands might also choose to do audits consecutively and update the harmonised CAP. That will again avoid multiple audits and CAPs done at the same time identifying similar issues.
Collaboration is also very beneficial for the brands because we are using our resources in a smarter way.
Q: What else would you like to say about collaboration and compliance data sharing?
A: In addition to the audits, we are also evaluating the compliance performance with the Key Performance Indicator (KPI) scorecard. As a result of the KPI assessment, the factory gets a score out of hundred. Factories with a score of 80% and higher are managed through our new Self-governance model (read more in the Strategic developments section).
These factories already have established human resources and health and safety management systems and have internal audit programmes. We decided not to audit these factories any more but to focus on evaluating and improving their self-governance performance. By doing that, we are able to prioritise our team's time and effort to support those factories which scored less than 30%.
We are also ready to collaborate with organisations who have credible compliance programmes such as the Fair Labor Association or multi-stakeholder initiatives such as Better Work.