When the Euro Sko Group developed its Supply Chain Risk Assessment Strategy in 2009, it was important to find good partners at the local level who had experience of both risk analysis and corrective action. Eurosko initially chose to focus on a single producer country, China. The idea was, and still is, to develop a tailor-made, effective programme for risk analysis and improvement that can be used by other producers and in other countries.

After consulting with IEH - Ehtical Trading Initiative Norway, Eurosko chose to cooperate with the Training Auditing Organisation Systems (TAOS) network, a Chinese non-profit organisation that has extensive experience of corrective action. The Euro Sko Group considers it important to establish close, long-term relationship with local organisations, as doing so gives them a better opportunity to take a hands-on approach.

TAOS carried out its first survey, i.e. audit and control, of the working conditions in one of the producer’s operations in the second half of 2010. Eurosko wanted to take part in the survey so as to gain a better understanding of the process and to demonstrate that they genuinely wanted to cooperate with the producer. In addition to the factory management, TAOS and Euro Sko, the producer’s agent also took part in the meeting.

A representative of TAOS chaired the meeting. By way of introduction, it was stressed that Euro Sko did not expect perfect working conditions from day one. It was also emphasized that Euro Sko had no intention of terminating its supply contract if the survey showed a breach of our code of conduct. At the same time, it was equally made clear that improvement measures would have to be implemented if any shortcomings or deficiencies were detected, and that Eurosko would assist the producer in this work.

Looking back, it is easy to see how important and valuable this communication was in terms of the factory management’s willingness to cooperate and their openness about actual conditions at the factory. TAOS ensured that the necessary trust was established, and during the meeting, the factory management admitted that they had bluffed about working hours, wages and other conditions to other customers and their auditing firms. We learned how essential knowledge of social codes, culture and language is for obtaining credible and correct information.

During the survey (interviews with management and workers, review of documentation and observations), TAOS found disparities in the payroll and time sheet. Management admitted that they had parallel systems to satisfy other customers. Double standards are very widespread in China. TAOS underscored that this is unacceptable and provided detailed instructions on how wages and working hours were to be registered. The management explained that they did not know how this was supposed to be done, and so were very grateful for and willing to implement the changes proposed by TAOS.

The factory management were understandably concerned that the survey would expose their previous practices and that other customers would therefore cancel their orders. In consultation with TAOS, we agreed that the shortcomings should be documented in the report to the Euro Sko Group and the corrective action plan. The most important thing for us was that the factory management were willing to make improvements.

Within the Euro Sko Group, buyers and the sourcing team have been informed of this process and the problems that were revealed – including those in the operations of other suppliers. Eurosko have experienced greater awareness, commitment and interest among buyers and the rest of the product-development team, and are pleased with this result. Participation in the survey process has made them better able to identify risks when they visit a factory, and has also given them insight into the real situation which exists in parts of their supply chain.