Global retail giant Walmart Stores Inc has adopted a ‘zero tolerance policy’ towards suppliers and it would soon end contracts with the suppliers who are subcontracting work to factories without any intimation to the retailer.
The new policy, which would become effective from March 1, 2013, was devised after Walmart clothing was traced at a garment factory in Bangladesh, where 112 workers lost their lives in a fire in November last year.
Walmart has informed its suppliers about the new stringent policy through a 10-page note.
Vice President of Ethical Sourcing at Walmart, Rajan Kamalanathan told Wall Street Journal that the new stringent policy would replace the retailer's existing ‘three strikes’ policy.
He said it is clear that the three-strike policy, where a supplier gets three chances to solve the issue before his contract is terminated, has failed to deliver desired results.
Later this year, the retailer also plans to start publishing names of the factories which have been restrained from doing business with its suppliers, on its corporate website. The move would ensure higher accountability and transparency, debarring the suppliers from taking excuse of ignorance, Mr. Kamalanathan said.
Moreover, the factories would also be required to clear preapproval audits if they wish to do business with Walmart suppliers. The retailer has also said that it would in particular require Bangladeshi factories to satisfy additional safety norms, like mandatory review of electrical and building safety.
Walmart said that it would keep on working to improve its monitoring programme, but alongside that suppliers, local governments and other stakeholders should also work for strengthening safety conditions.
In order to provide financial backing to the factories to enable them to bear the cost of safety enhancements, the retailer is also pondering on setting up a fund or revolving line of credit that the factories can use to make the changes.