Boohoo calls halt to UK suppliers sub-contracting from next month
As Boohoo expands radically by acquisition and is battling its way back from supplier scandals that emerged last year, the company has told its UK suppliers that they need to bring all of the work they do for it in-house by early next month.
Last year, it emerged that some factories making products for the company were paying less than the minimum wage and conditions in those factories were below standard. But the problem for it in many cases was that suppliers it had deals with were sub-contracting to unauthorised businesses.
As part of its much publicised attempt to get its supply chain under control and repair the reputational damage that was done, it's now clamping down on the practice of sub-contracting.
It's an important move for the online fashion retail giant as it works to protect its share price (which has been more volatile than might be expected for a business as hugely successful as the company is), and also as it integrates the big operations of acquired brands Debenhams, Dorothy Perkins, Wallis and Burton.
The BBC reported that the new rules for suppliers have caused concern among some of them about having to move quickly to employ new workers and take on new space given that they have a deadline of only March 5.
The move by Boohoo comes after a report it commissioned that criticised it for not taking enough responsibility for those who make the clothes it sells. That report was published in September and recommended that it should take action within six months to “reduce its approved suppliers to a list which contains a manageable number of companies, ideally without reducing capacity [with] the goal of reducing and ultimately eliminating sub-contracting.”
The BBC has seen an email sent to suppliers saying that those lacking the expertise and knowledge to run a factory need to buy that capacity and that the change in policy isn’t open to negotiation.
Boohoo told the broadcaster: “As we state in our letter to suppliers, the group is committed to growing our business in a more sustainable and transparent manner. Working with suppliers in a more strategic and sustainable way, is a key part of our partnership approach to improve transparency, efficiency and accountability. One of the key recommendations [of the] review was to consolidate our supply chain. Supporting suppliers to bring their CMT units in-house shortens our supply chain and is just one of the ways that we are helping them to build stronger more sustainable businesses that can thrive.”
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