Suppliers as stakeholders

by Gordon on Monday 27th February, 2012

Shares of Alibaba.com, China’s biggest business-to-business e-commerce site, have risen 43% after its parent Alibaba Group said it would take the company private to gain full control.  Group chairman Jack Ma said: ‘Taking Alibaba.com private will allow our company to make long-term decisions that are in the best interest of our customers and that are also free from the pressures that come from having a publicly listed company.’

Alibaba.com brings together small manufacturers with buyers around the world.  It said it had recently shifted strategy towards improving the quality of suppliers and the customer experience, instead of increasing the number of manufacturers which contributed to strong growth in recent years.  (22nd February 2012)

Suppliers are key stakeholders for any business: they can have a major impact on the range and price of products available to customers, as well as the quality and speed of supply.  Like most high street fashion retailers, Primark sources clothes from suppliers in various countries across Asia and Eastern Europe.  As part of its focus on ethical business, the company is engaged in a number of projects amongst its worker communities.  These include programmes with organisations such as the UN’s International Labour Organisation to improve working conditions and the health and education of workers.

To ensure its manufacturers meet its high standards, Primark has, in addition, established a Code of Conduct.  This sets out how its suppliers should behave as well as providing a structured approach to auditing factories in order to seek out and remedy poor practices.

These programmes reinforcing ethical business behaviour help to protect workers in communities from poor labour practices.  They also help to improve productivity and reduce absenteeism in the factories, which means that Primark also benefits from a more robust and cost-effective supply chain.

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