Measuring and analyzing supplier performance is a critical part of our Corporate Responsibility program. We firmly believe that "what gets measured gets managed." We use this information not only to assess new manufacturers who seek to become approved suppliers, but also how existing suppliers are performing over time. Regular review and analysis of this data not only helps our team identify regions or issues that may need special attention, but also drives our discussions with Production and Sourcing and decisions about where to place our business.
Some of the key metrics that we use to assess the performance of our suppliers on labor standards and working conditions can be found in the drop down box below.
"When I visit factories, I look at workers' faces and smile at them. Sometimes they smile back, sometimes they hesitate. I also approach them and shake hands, which puts them a little more at ease. I think it is these moments of interaction that keep me fresh and committed to the work I do. I have been doing this work for many years and yet I still believe we have the power to change people's lives here at American Eagle - a power that, when used wisely, just might change the world for the better."
- Aykut K., Corporate Responsibility
This chart shows the percentage of factories, by region, that we inspected in FY2010 as part of our New Factory Approval Process.
The data show a below average rate of non-approved factories in the South Asia region. Our team has initiated a series of focused inspections in India, Bangladesh, and Pakistan to ensure that we are assessing factory compliance levels accurately.
We strive to re-inspect approved garment factories at least once a year. While we occasionally are unable to get to a factory, our internal inspection team partners with third-party auditors and independent, locally-based monitors to make our best effort to meet this goal. In FY2010, we inspected 98% of garment factories that were part of our base for the entire year.
The chart below shows non-compliances identified in our approved supplier base during ongoing annual inspections.
We identified nine instances of underage labor in FY2010, all of which took place in China. In three cases, the factories fully implemented our remediation policy, which requires that the child be removed from the workplace immediately, given access to schooling, paid full wages up to the age of legal employment, and guaranteed a position at the factory once he/she reaches the legal working age. In the other six cases, the factories were unwilling to take some or all of these steps, forcing us to terminate our business relationship. We believe these cases stem from the significant labor shortages that have impacted certain regions in China.
Excessive working hours continue to be a significant challenge in our industry. We have been working to better identify the root causes of this problem, which range from poor production planning and inefficient practices at the factory level to overbooking, unrealistic timeframes, or last-minute changes to purchase orders by merchandising and production teams. For more information on what we are doing to streamline our business practices, please see Making Smarter Business Decisions.
We believe that issues related to freedom of association are more widespread in our supply chain than this chart suggests. In addition, this chart does not identify regions where freedom of association is unlawful. We are working to revise our inspection protocols to capture concerns related to freedom of association more accurately. In addition, we are working through multi-stakeholder organizations to tackle challenges in specific countries. For more information on what we are doing about protection contract issues in Mexico, please click here.
Adequate infrastructure and management systems to ensure the safety of workers in the event of a fire remain a challenge in all regions. The number of occupational health & safety related issues we found in FY2010 tells us that supplier management systems are inadequate across much of our supplier base. We are working through training and on-site engagement to help ensure that factories have processes in place for pro-actively addressing these items. For more information on our efforts to address this problem, particularly in Bangladesh, please see Leveraging Collective Efforts.
In FY2010, we identified several cases in which factories were unable to produce acceptable labor contracts or were lacking complete employee records. We believe this is due in part to improper usage of temporary worker arrangements. This is an important issue which we are currently working to tackle more effectively in our inspection process and with our multi-stakeholder partners.
The following table and map illustrate countries and regions where we had at least one active supplier in FY2010. All data in this report is reported according to these regions.