Walmart released a statement to all its suppliers, dated Janunary 22nd, outlining a new Ethical Sourcing and Zero Tolerance policy regarding unauthorized sub-contracting that is in effect as of March 1st, 2013. This update to Walmart’s Ethical Sourcing initiative comes in the wake of a horrific fire that tore through a Walmart supplier’s facility in the Bangladeshi capital of Dhaka, reportedly killing as many as 120 people. Tragically, the letter was released just days before another blaze would claim 7 more lives at a factory in the same city.
The policy states that no unauthorized sub-contracting will be tolerated by the retail giant. Furthermore, ALL Walmart suppliers will now be required to hire monitoring representatives in China, separate from their existing buying agents. These representatives can be either internal staff of the actual organization supplying products to Walmart, or 3rd-party ethical sourcing experts. From the Walmart statement:
"...all suppliers are required to have a representative employed by the supplier, and not just an agent, responsible for ensuring compliance with our Ethical Sourcing requirements stationed in all countries in which the supplier is actively sourcing Walmart product."
An outline of the Walmart statement is as follows:
- Introduction - Statement of the new policy and effective dates
- Appendix A: Merchandise in Scope for Walmart’s Ethical Sourcing Audit Program
- Appendix B: Critical New Program Information
- Appendix C: Enhancements to Fire Safety Requirements – All Countries
- Appendix D: Additional Safety Requirements for Bangladesh
- Appendix E: Standards for Suppliers Poster
Any organization that is currently supplying Walmart should review these updates to their requirements in great detail. Once that is done, it is highly recommended that all Walmart supplying organizations develop and implement their own ethical sourcing policy that reflects or even expands on Walmart’s own requirements. To do so, follow these steps:
1. Emphasize Internal Compliance and Understanding
It is absolutely crucial that from the very beginning, your organization’s ethical sourcing policy includes all of Walmart’s regulations and procedures for ensuring your supply chain is in complete compliance with the retailer’s standards. Wherever it is feasible, it is even recommended to expand on Walmart’s policy by adding additional checks and record keeping measures. The goal of your organization’s policy should be to catch and correct any instances of non-compliance before Walmart’s own policies are triggered, potentially disqualifying your suppliers and disrupting your supply chain. This policy should be distributed at all levels of your own organization, along with relevant training and access to reference materials and supporting information.
2. Deploy In-Country Monitoring Representatives
Whether you rely on your own staff or hire 3rd party experts, Walmart now requires that all suppliers maintain monitoring representatives anywhere that production of Walmart goods is active. These representatives should be absolute experts in both Walmart’s Ethical Sourcing policy as well as your organization’s own policy, and should apply the requirements of each policy verbatim. Ideally, these representatives will also be well-versed in both manufacturing and the local culture and language of the countries in which they operate.
3. Communicate with Your Suppliers
Make absolutely certain that your suppliers understand not only the requirements of both Walmart’s and your own ethical sourcing policies, but also the 
consequences for failing to comply with them. Equip your in-country representatives with all of Walmart’s ethical sourcing documentation, and send them to each of your suppliers to hold informational sessions. These sessions could include presentations, hand-outs of the relevant documents in the native language, as well as a factory walk-through to identify obvious areas of non-compliance. Finally, the policy should be presented to the management of your overseas suppliers to gain their written consent with regards to adhering to the policy, allowing for its implementation and monitoring (audits), and accepting the consequences of non-compliance.
4. Perform Regular Audits and Constant Follow Up
In addition to the communication described above, your in-country representatives’ primary responsibility will be to coordinate regular audits of your suppliers’ facilities. On-site auditing is the only reliable way to ensure compliance with all relevant ethical sourcing doctrines. Audit schedules should be based on Walmart’s own requirements, but it is advised that audits are performed even more frequently than Walmart requires. By requiring bi-annual or even quarterly audits at all of your suppliers, it will be much easier to maintain excellent levels of compliance with all of Walmart’s ethical sourcing guidelines and prevent tragedies such as the fires that have plagued Bangladeshi suppliers.
5. Maintain Meticulous Records
Document control cannot be ignored as part of your overall ethical sourcing program. All documentation related to your efforts to implement the ethical sourcing initiative (such as audit reports and corrective action plans) should be fastidiously organized and updated. Clear communications to your suppliers outlining their commitments in regards to ethical sourcing, their history of violations (or compliance), and your directives for continuous improvement in their operations should also be documented. It may be necessary to submit such documentation to Walmart in order to prove that you are making every effort to comply with their policies.
