Supply Chains

Wal-Mart Taps a Startup for a Window Into Bangladesh Factories


People stand and watch as rescue workers search for victims amongst the debris of the collapsed Rana Plaza building in Dhaka, Bangladesh, on April 26

Photograph by Jeff Holt/Bloomberg

People stand and watch as rescue workers search for victims amongst the debris of the collapsed Rana Plaza building in Dhaka, Bangladesh, on April 26

Will the Rana Plaza factory-complex tragedy in Bangladesh that killed more than 1,100 people prompt Western brands to push their suppliers to improve working conditions? Earlier this week, H&M (HMB) and Inditex (ITX), which owns Zara and is the world’s biggest apparel company, agreed to sign a legally binding accord to improve fire and building safety in Bangladesh. They joined more than 30 others, including Abercrombie & Fitch (ANF), Marks & Spencer (MAKSY), and PVH (PVH), which owns Tommy Hilfiger and Calvin Klein.

Absent from the list were Wal-Mart Stores (WMT) and other U.S. retailers, such as Gap (GPS) and J.C. Penney (JCP). In a May 14 statement, Wal-Mart said, “the company, like a number of other retailers, is not in a position to the sign the [accord] at this time.”

The same day, it unveiled a plan to conduct safety inspections at its 279 suppliers in Bangladesh, noting it will complete all reviews within six months and will publicly release the names and inspection information on all of them. The plan also includes spending $600,000 on a project that “empowers workers to have a voice in the solution.” The goal is to give workers “safer working conditions” and lift the “entire market” to a “new standard.”

How will Wal-Mart get the unvarnished truth about factory conditions from poor workers, who are likely to be worried about repercussions from their managers? By tapping a Silicon Valley startup, called LaborVoices, that sells technology to make it easy for factory employees to report anonymously on working conditions inside their factories by phone. Its voice recording systems poll workers in their native languages, aggregate their responses, and send them recordings with info about local support services. Companies that sign up for a subscription get access to an online dashboard displaying information on selected factories. (We profiled LaborVoices, and a similar service called Labor Link, in a story in this week’s Bloomberg Businessweek.)

In a telephone interview this morning, Kohl Gill, LaborVoices’s founder and chief executive, says the rollout won’t happen immediately—the goal is to connect with workers in Wal-Mart’s 279 suppliers “essentially by year’s end.” If the time frame changes, “we’ll be very public about it,” Gill says. “We’re focusing this intervention on safety. That’s the main issue we’re trying to get at here.”

In an e-mail this morning, Wal-Mart spokesman Kevin Gardner describes the partnership with LaborVoices as part of Wal-Mart’s “commitments to increased transparency in our supply chain to improve worker safety, particularly in Bangladesh.”

Nick-leiber_75x75
Leiber is Small Business editor for Businessweek.com, Entrepreneurs editor for Bloomberg.com, and covers small business for Bloomberg Businessweek.

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