January 2011
FIBERcast announcement

Codes of Conduct—Not Just for Large Manufacturers

Sugandha Agrawal
Sugandha Agrawal

Sugandha Agrawal is an alumna of Pearl Academy of Fashion. She has interned with the Global Partnership team, Social Responsibility at Gap Inc. and is currently working on independent projects with Pearl Academy. The following article is the brief of her degree project.

Large garment exporters are well aware of their buyers’ codes of conduct and the associated inspections they require. For small–scale garment manufacturers, which often cater to domestic retailers or small boutique buyers, however, there are often no requirements made by the buyers for their suppliers to comply with a code of conduct. Furthermore, lack of government regulation, limited motivation and training, and other factors result in workplace standards among small–scale manufacturers that would be noncompliant to most codes of conduct.

The scale of these units is such that most codes of social compliance are either not applicable or expensive to follow. Small manufacturers who do observe a program for social compliance typically take on the added expense as a voluntary means of attracting concerned buyers. These factors together limit efforts by small manufacturers to improve workplace standards.

An experiment was conducted to analyze the costs and benefits of following compliance standards for a small manufacturing unit in the absence of government or brand requirements. The selected unit had fewer than 70 machines, and the owner, similar to other small manufacturers in industry, believed that social compliance is expensive to implement, increases operating costs, increases unit price per garment, does not affect productivity and therefore decreases market competitiveness. It was noted, however, that the unit faced difficulties in getting orders from more concerned buyers and also faced issues with productivity and absenteeism. Thus, the experiment was agreed upon as an investment to attract more buyers.

As part of the experiment, various codes of conduct were studied and applicable changes were made at the factory. As the records on work hours, wages and labor conditions were well kept, most of the changes were regarding health and safety of the workers and upkeep of the factory.

Also as part of the experiment, the manufacturing unit was cleaned and painted, proper lights and ventilation were installed and production lines were rearranged with proper spaces and aisle markings. Better sanitization facilities were ensured by cleaning and maintaining the toilets and providing clean drinking water.

In addition to the above, safety of the workers was enhanced by clearing emergency exits, fencing heavy machines, storing chemicals separately, installing firefighting equipment and providing doctor and first–aid facilities. Further attention was paid to workers’ health by providing proper seating, protective equipment wherever required and timely breaks. One person in the company was held responsible for maintaining the changes; after a month, the factory was revisited to observe changes.

Anyone not expecting any change would be surprised because in a month’s time various changes regarding workers and productivity were observed. The attendance register showed that the worker attendance improved by 20 percent and there were fewer complaints of fatigue or poor health. The better attendance had its direct impact on productivity. Also, providing designated break times for tea and prayers lessened the machine run down–time and improved line productivity by reducing bottlenecks associated with one or a few persons leaving the assembly line. By providing a healthier and safer workplace, workers were motivated and excited about work.

The observation over 15 days showed an average increase in productivity by 12 percent, whereas the cost of operation was increased by only 4 percent. It was calculated that the increased production rate could easily recover the investment in compliance within a period of six months. Along with the direct advantages, it was observed that the unit also attained indirect advantages through new buyers and orders.

The above facts regarding social compliance in a small–scale unit suggest that many common beliefs are actually myths. It was observed that even when the buyer does not require social compliance, a manufacturing unit can have basic social compliance at a low cost. Additionally, the image of manufacturing business changes as the unit implements a code of conduct, and it can be used as a point of differentiation for buyers to use when choosing their suppliers.