Page 118 - DMGT554_RETAIL_BUYING

Unit 8: Merchandise in Retailing

Notes
called upon management to adhere to ILO labour standards, and to report annually on
supplier compliance. As a result of this desire to manage reputational risk and satisfy
shareholder concerns, they developed a Social Compliance Program to communicate the
expectations of their CVC to suppliers, and to establish a framework for compliance
monitoring and reporting.
Demonstrates Alignment with Organizational Goals and Values
Another main driver of HBC’s Social Compliance Program (SCP) is to bring their
purchasing in line with organizational goals and values. The SCP not only helps improve
Hbc’s transparency and accountability to their internal and external stakeholders, it also
ensures that HBC plays a role in improving workplace conditions. Further, it allows HBC
to work with vendors to help advance more sustainable business operations.

Enhances Image and Brand
Reputation is extremely important to retailers for attracting and retaining customers and
ensuring the financial sustainability of the business. An unintended benefit of HBC’s
Social Compliance Program (SCP) is that it enhanced the company’s brand and their
image with customers. The SCP was designed to support the company’s operations, ensuring
that the vendors HBC buys from are well-managed, including the ethical treatment of
workers, in order to provide the best quality products. In part due to their SCP and
concern for the ethical treatment of workers, HBC is perceived as a responsible corporation
by their customers.
Implementation and Accountability
HBC implements their social compliance program through:
 Training external vendors and internal buyers on the SCP goals and requirements;

 Auditing priority vendors for compliance; and
 Enforcing a three-strike policy for non-compliance
Information and Training
HBC provides information and training on their SCP to both external vendors and internal
buyers.
Their social compliance manual introduces new and existing vendors to all aspects of their
SCP, including the CVC, and vendor monitoring and remediation process. HBC also
conducts regular vendor training sessions on the Program and Code. High priority vendors,
which are their most strategic and high-volume vendors, receive more detailed information
and training sessions, including local law requirements, common audit issues, and
processes for making improvements.

HBC requires buyers in their merchandising division take an online training course that
covers the Social Compliance Program and how to access vendor social compliance
information. Almost 1,000 employees have completed the course since it began, 613 in
2006.

Compliance and Auditing
To confirm that vendors in their vendor pool operate in accordance with the CVC, the
company uses independent audit firms to conduct audits on vendors that they prioritize
according to three categories:
 High priority vendors: the top 200 suppliers based on annual sales volume, perceived
risk; and factory location;
Contd...

LOVELY PROFESSIONAL UNIVERSITY 113