New garment factories must pass an initial inspection in order to do business with us. In FY2010, we evaluated 77 new factories. Of these, 17% were unable or unwilling to meet the standards required to pass our inspections and were not approved for AEO, Inc. production.
Once garment factories are approved, we strive to re-inspect them at least once a year. While we occasionally are unable to get to a factory in a particular year, we work with third-party auditors and independent locally-based monitors to make our best effort to meet this goal.
We review the outcome of these inspections with factory management with the goal of helping them to continuously improve their performance. We recognize that compliance may not be achieved immediately, but our strong preference is to keep working with factories to help them improve over time.
"In recent years, we have noticed that AEO has become more understanding of compliance realities in the factory. They now look beyond the "pass" and "fail" of compliance and have been more supportive in giving advice so that the factories can improve in their CSR efforts."
- A Korean Supplier
Unfortunately, there are some instances where a factory is unable or unwilling to meet our standards. In those cases, we will take steps up to and including the severance of our business relationship. In FY2010, we terminated our business relationship with 9 factories, approximately 2.7% of our total active supplier base, for compliance violations. For more information on the types of non-compliance issues we find during factory inspections, please see Our Performance.