Improving company business models

New report: Business models and labour standards, making the connection

A report commissioned by ETI has investigated how business models are at the forefront of creating pressures on labour standards in global supply chains.

The Business Schools of King’s College London and the University of Warwick find that aggressive price competition and a reliance on supplier sourcing models drive deteriorating standards.

Meanwhile, the rise of fast and super-fast fashion compounds problems. As do ‘no-frills discounters’ in food retail.  

Against this backdrop, the report recommends changes across the business spectrum – at shareholder, consumer, competition and production levels.

But, the report highlights how the changes needed can be gradual, using a mix of business model adaptation, redesign, experimentation and industry-wide collaboration.

Unprecedented change

ETI spokesperson Martin Buttle said: “Businesses are going through a period of unprecedented change.

“From shifts in shopping habits through to evolving technology affecting the production and manufacturing processes, supply chains are being transformed. But too often this is at the expense of labour standards.”

At the launch of the report, Martin Buttle pointed out that mass production has led to sourcing from low-cost and low-wage economies.

He said that in these markets, brands can dictate prices, quantity and quality, with little consideration for the impact on supplier factories and their workers.

Implementing recommendations

To find solutions to these supply chain challenges, ETI will be discussing the report’s recommendations with its members. These include:

• Help for corporate members to review their business models and integrate commercial and ethical strategies.
• Support to supply chain partnerships to improve supplier-buyer relationships.
• Greater pre-competitive collaboration to address social issues.
• Help with improved industrial relations as the most important factor in advancing working conditions, including wages.

 “Until the pressures that current business models create are tackled, workers in global supply chains around the world will continue to have their rights denied,” said Martin Buttle.