VENTURES AFRICA – Walmart Stores has alerted its global suppliers that it will immediately drop them if they subcontract their work to factories that haven’t been authorised by the discounter.
This call also affects Africa because a couple of years ago Walmart, the US biggest retailer, acquired Massmart, a South African retailer with operations in 12 sub-Saharan African countries.
Massmart is a globally competitive regional management group, invested in a portfolio of differentiated, complementary, focused wholesale and retail formats.
Massmart is the second-largest distributor of consumer goods in Africa, the leading retailer of general merchandise, liquor and home improvement equipment and supplies, and the leading wholesaler of basic foods.
Walmart’s stricter contracting rule, along with other changes to its policy, comes amid increasing calls for better safety oversight after a deadly fire at a Bangladesh factory that supplied clothing to Walmart and other retailers.
The fire in late November killed 112 workers at a factory owned by Tazreen Fashions. Walmart has said the factory wasn’t authorised to make its clothes.
In a letter sent Tuesday to suppliers of its Walmart stores as well as Sam’s Clubs in the US, Canada and the United Kingdom, the company says it will adopt a “zero tolerance” policy on subcontracting without the company’s knowledge, effective March 1 this year.
Previously, suppliers had three chances to rectify mistakes.
Walmart also said it plans to publish on its corporate website a list of factories that haven’t been authorised to manufacture goods for Walmart.
Also, starting June 1, suppliers must have an employee stationed in countries where they subcontract to ensure compliance, rather than relying on third-party agents.
“We want the right accountability and ownership to be in the hands of the suppliers,” said Rajan Kamalanathan, Walmart’s vice president of ethical sourcing said. “We are placing our orders in good faith.”
Walmart will hold a meeting for clothing suppliers from the US and Canada on Thursday to explain the new policy changes.