Sharing costs for inspection and dispute resolution in Bangladesh

An article in the Wall Street Journal (May 13, 2013) describes an agreement between European and Canadian retailers to create a board to oversee factory inspections, resolve disputes and ensure compliance with wage standards in Bangladesh. The costs to a retailer are limited to $2.5 million over five years. But the cost to operate the board will be divided among retailers proportional to their volume of production in Bangladesh. In a parallel move, the Bangladesh government is raising the minimum wage for the apparel industry. Will these moves, which will protect workers but make Bangladesh a more expensive production location, maintain the country as a competitive production source ? Should companies be required to share their production experiences in a common database to pre-empt such disasters ? Given that Cambodia has already raised its wages to be significantly higher than Bangladesh, does this enable Bangladesh to remain competitive vis-a-vis India, China and Cambodia ?

Unknown's avatar

About aviyer2010

Dean and H. William Lichtenberger Chair in Management at the School of Management, University at Buffalo, State University of New York.
This entry was posted in Global Contexts, Operations Management, Supply Chain Issues and tagged , , , , , , , . Bookmark the permalink.

Leave a comment