Just Supply Chains Project

A DECADE AGO, American apparel and footwear executives, facing sharp criticism and public pressure, began writing codes of conduct to encourage better practices from overseas suppliers. Today, the same executives are arguing that these codes are not very effective. Many agree that voluntary standards have failed to significantly improve labor standards, while others question the benefit to the bottom line.

Yet few agree on a new solution. “There’s a lot of disagreement about the most plausible, effective strategies for promoting decent compensation, healthy and safe workplaces, and freedom of association,” says Joshua Cohen, Stanford professor of political science, philosophy, and law; director of the Program on Global Justice at the Freeman Spogli Institute for International Studies; and co-editor of the Boston Review.

In January, Cohen set out to resolve this impasse. Together with Richard Locke— professor of political science, and Alvin J. Siteman (1948) Professor of Entrepreneurship at MIT’s Sloan School of Management—Cohen created the Just Supply Chains project, a collaborative research effort by academics, non-governmental organizations, companies, international agencies, and unions to define a new agenda for achieving greater fairness in global labor markets.

One of the questions the project aims to address is about the willingness of consumers in developed countries to reward “sweat-free” or “fair trade” companies by either paying more for their products or increasing their brand loyalty. Having a better grasp of consumers’ attitudes toward sweatshops would help companies introduce new product labeling, similar to coffee companies’ use of the Fair Trade label.

Another focus of the group, which met for the first time in January at MIT and again in May at Stanford, is the “business case” for labor standards. Do better factory conditions enhance companies’ bottom line? Do gains in operational efficiencies, quality, and health and safety flow from corporate compliance programs? What is the return on investment in labor standards? These, Cohen says, are among the big questions for the Just Supply Chains project.

Some of the answers may lie in developing countries like Brazil and India, where labor ministries are experimenting with innovative programs—another issue the participants in the project are discussing.

Though research on this topic is sorely needed, the group is after something more than ivory-tower talk. Project participants come from Nike, Gap, Coca-Cola, Ford, HP, and Apple, as well as NGOs, unions, and labor ministries, and the aim is to build a long-term collaboration mixing research and practice.

Yet even as the project progresses, global supply chains are changing. “The current globalization of production was built around a few key assumptions,” says Cohen. “Cheap labor, cheap energy, stable climate.” As rising fuel prices increase the cost of sourcing abroad, the debate around supply chains will have to change—an issue the project will be addressing in a January meeting coordinated with Stanford’s GSB’s Supply Chain Management program.