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Bangladesh Fire Exposes Complex Fashion Supply Chain

By APICS Staff | 12 | 23 | December 04, 2012

After the Bangladeshi fire that killed more than 100 workers at the Tazreen Fashions factory last week, experts wondered how so many brands headed for major US retailers could be found among the ashes at such a facility. As the Associated Press reports, Tazreen was part of a complex, ever-changing supply chain made up of links of interchangeable parts, one characterized by particularly low labor costs, high flexibility, delegated authority__and considerable risks.

As the article describes, the question of how so many disparate brands such as Wal-Mart, Sears, and Disney obtain clothes from Tazreen is a difficult one to answer. Some large retailers buy directly from multitudes of factories such as Tazreen to secure the large production capacity to meet heavy fast-fashion demand. Other companies engaging in vertical manufacturing make most of their wares in-house, but leverage other facilities to handle specialty lines.

There also are many companies that place themselves as intermediaries between brands and make use of factories. Adding extra layers between links can create additional complexity and mask supply chain problems. “All of these layers … result in a system that is pretty irrational, where you have a real lack of transparency about exactly what is going on,” says Josh Green, CEO of Panjiva, which provides customers with access to a detailed supplier database. “And when you have a lack of transparency, you have a lack of accountability,” he adds.

Contamination Highlights Manufacturing Issues at Overseas Drugmakers 

A drug company plagued by manufacturing issues at its facilities has stopped production of a generic version of Lipitor after glass particles were discovered in pills, reports the New York Times. Ranbaxy Pharmaceuticals has been carefully monitored by the Food and Drug Administration (FDA) in 2012 after manufacturing issues surfaced in its facilities and false data were discovered on the company’s FDA drug applications. Now, Ranbaxy is prevented from making any drugs at its most troubled plants until it can demonstrate it is meeting US standards.

The contamination highlights what are perceived as quality and oversight disparities in US plants versus those overseas. Currently, the FDA only inspects foreign generic drug plants every 7 to 13 years, versus once every two years domestically. A law passed this year will require the FDA to apply the same standards to all plants, but it has not yet gone into effect.

There have been no reports of injuries from the contaminated drugs.

Industrial Internet to Revolutionize Maintenance and Repair: GE

Not far into the future, complex systems and machinery will anticipate their need for repairs and spare parts, which will be located and shipped before anything breaks. At least, this is General Electric’s vision for what it calls the “industrial internet,” reports the Wall Street Journal [subscription publication]. Under the company’s plan, devices will contain proprietary technology that self-monitors and transmits status updates over the internet to enable higher efficiency and billions of dollars in savings, particularly in industries such as aviation, power generation, and health care.

“The ability to marry real-time customer data with real-time performance data of our products__to me that’s the Holy Grail in our business,” says Jeffrey Immelt, GE’s chief executive officer. He adds that industrial internet technology and advanced analytics will enable GE to learn more about the performance of its products.

GE expects the technology to benefit large-scale industries and also have application to appliances in homes and offices.

Zara Commits to Eliminating Toxic Chemical Discharge

Clothing retailer Zara’s parent company Inditex has announced it will eliminate all hazardous chemicals released into the environment from its products and its supply chain by 2020, Environmental Leader reports. The company also will disclose its supply chain chemical discharges beginning in March 2013. 

These actions are in response to a Greenpeace report that targeted Inditex, as well as a number of well-known brands including Calvin Klein, Benetton, Giorgio Armani, and the Gap, for containing high levels of carcinogenic compounds in their clothing. Zara’s clothing was singled out for containing multiple types of toxic chemicals.

Greenpeace has called on clothing manufacturers to support a global ban on the family of chemicals known as alkylphenol ethoxylates.

Measuring the Benefits of Employee Training and Education

Is it possible to improve the skills of workers without taking measurements first? Unfortunately, not enough companies are engaging in this simple practice, according to a survey by the Association of Accounting Technicians. As Advertising Age reports, one in five employers surveyed do not take any actions to measure the benefits of improving employee qualifications or skills. Even those that do may not be going far enough: Most employers do not discuss training or skills during the appraisal process.

Companies do, however, perceive the benefits of training and staff development. According to the survey, 71 percent think a higher standard of performance comes from improving staff skills. And about 51 percent say training and education make staff members more committed to the company.

Survey: Consumers Want Supply Chain Transparency

There is increasing demand from manufacturers and consumers for supply chain transparency, according to a recent survey conducted by Underwriters Laboratories, a safety testing and certification organization. The study examines manufacturer and consumer attitudes about product manufacturing, sales, and consumption.

“We are seeing manufacturers showcase aspects of their supply chain as consumers demand more transparency,” says Keith Williams, CEO of Underwriters Laboratories. “Where a product’s made, how it’s made, and what’s in it are paramount,” he adds.

According to the survey, manufacturers and consumers in both developed and emerging economies are taking increased notice of supply chain issues, including component sourcing, ethical working conditions, developed versus emerging markets, and product safety.

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