Successful supply chains are closely integrated and synchronized according to Harvard Business Review (HBR). A buyer and its supplier establish common objectives like quality levels, purchase volumes or even profitability targets. When targets are missed both parties work in concert to veer back on course. This according to HBR is what allows this Japanese car company to tower over its competitors.
Toyota, the master of lean, timely and advanced manufacturing takes its incredible know how and downloads it through its supply chain. For example with strategic suppliers, Toyota deploys its own engineers in the factories of its component manufacturers to help improve quality or speed of delivery. On the business side, Toyota will even go as far as to factor in the margin targets of suppliers to its own business planning - so as to ensure reasonable profits for all. This thorough integration between car manufacturer and its suppliers has made Toyota the dominant car company in the world.
Toyota's approach provides insight to how its integrated supply chain model can make factories safer and better for workers. The non-compliance we find in our contract factories are increasingly more the consequence of operational shortcomings than the outcome of malevolence. Having said that we can't ignore the many foibles of human nature and the havoc they create. We must be guarded but also hold firm our belief that people across the world are incredibly good and well intended.
MEC is not a manufacturer nor a car company. Neither does it have loads of cash or offices of specialized engineers. MEC is a small retailer with modest material resources and a comparatively tiny but very capable workforce. It sources from over 85 factories across 12 countries, altogether supplying hundreds of different products. Size, product assortment and different cultures makes compliance understandably complex and difficult to achieve.
Nonetheless, MEC can adopt some of the principles behind Toyota's supply chain model to improve factory conditions. Namely, teaming with factories to identify the technical origins for non compliance and working with them to re-engineer operations to be compliant. With this in mind, MEC has embarked on two pilots. One is utilizing an environmental specialist to assist a long term supplier to "rethink" the way it flows its assembly lines. Something as simple as a factory floor configuration can have huge consequences on air quality (something this factory currently suffers greatly.) Another pilot is assisting a new supplier with managing its flow of components on the production floor to meet fire evacuation requirements. By simply streamlining the assembly line, workers have ready and easy access to exits. Working closely with specialists and factory managers we can design more worker benign manufacturing practices.
The integrated supply chain model, let's call it that, is the next generation of social compliance. It moves the focus from "gotcha" and "you ought to be doing this or that" to finding the operation flaw behind poor air quality and re-engineering processes to improve it. It has made Toyota the most esteemed car company in our generation and it can make social compliance more successful than before.
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