George: Doing the right thing 2011 2011 - ASDA...

George:Doing the rightthing 2011

2011

Doing the Right Thing 2011

Section 1

Our Beliefs

Section 2

Delivering on our commitments

Section 3

Community Projects

Section 4

Evaluating our success

page 03

page 08

page 11

page 16

Contents


ExecutivesummarySuccess…but not at any price

Why you can shop at George with a clear conscience...

We’re proud of ourreputation for qualityclothing at affordableprices. But we’re equallyproud that our success goes hand in hand with this guarantee:

From factory to wardrobe, we carepassionately about the people whomake our products.

We work with more than 720 factoriesin 23 countries and although we don’tdirectly employ the people in them we take responsibility for protectingand promoting their welfare.

We work with NGOs and charities to improve workers’ rights, reduceworking hours, improve workingconditions, increase skills and provide health and education benefits.

Our pilot scheme in Bangladesh hasbeen so successful we’re going to rollit out in factories in India and China. It has achieved:

That’s just the start. This report setsout our commitment for the next twoyears.

By 2013, our biggest suppliers mustprovide us with open costings abouthuman labour and full transparencyon workers’ pay and rights.

By always doing the right thing, weguarantee our customers can shop atGeorge with a clear conscience.

1 A 14 per cent increase in wages2 A 10 per cent drop in absenteeism3 A 5 per cent drop in labour turnover4 A 17 per cent increase in efficiency

This year, Georgewill celebrate awatershed – the

21st birthday of our brand.Reaching this milestonegives us an opportunity tocelebrate and a chance toreflect on our journey so far– not only on the successwe’ve achieved, but also on our wider influence andimpact as a company.

Throughout those 21 years, we’veremained true to a set of beliefsfounded on the importance of value,quality and trust and importantly ondoing the right thing. As a clothingretailer, we recognise that ourbusiness relies on a supply chain thatreaches across continents,encompassing factories and workersin 23 countries.

As a responsible business, it’s ourpriority to ensure we treat peoplefairly, and show our customers theycan trust us to do the right thing sothey can shop with us with a clearconscience.

Because we’re part of Asda, offeringour customers quality, stylish clothingthat’s fantastic value for money is inour blood. The trust we have builtwith our customers over the past 21years is of paramount importance to us.

Sharing the progress we’ve made inhow we work with our overseassuppliers shows our customers theyhave a real reason to put theirongoing trust in us for another 21years.

This update represents the first stepin what is a complex journey. We’vemade some fundamental changes tothe way we’re working with oursuppliers to create new levels oftransparency within our supply chain.

From 2013, we will require all globalsuppliers working on core volumelines to share open costings on humanlabour. This is something that’s neverbeen done before and it’s a changefor the better; a change we’recommitted to help them make overthe next two years.

We also want to share how we areimproving workers’ rights, promotingfemale empowerment, deliveringhealth and education, and at the sametime delivering quality and value forour customers.

It hasn’t been an easy journey and wedon’t pretend we have all the answers.But with this update, we want tohighlight the important progresswe’ve achieved so far and to share ourhopes and aims in building Georgeinto a sustainablebusiness for the future.


Our Beliefs

Andrew MooreMD, George at Asda

In 1990, George Daviesestablished the George atAsda brand, the firstsupermarket clothing brandin the UK. Throughout its 21-year history, George hasremained true to its beliefs :

The George Beliefs:• The George brand stands for quality,

style and value• We put our customers first every day• We care for our colleagues every day• We strive to be the best we can be

every day

We also believe passionately in doing the right thing. Our vision forsustainability is to ensure that Georgeis recognised as a trusted andinnovative leader in ethical sourcingand environmental protection.

Through Asda, we were a foundermember of the Ethical TradingInitiative (ETI) and although this was a great starting point on which to base our ethical standard we want tocontinue to develop and deliver thehighest standards possible.


Our Beliefs

Our Commitments

1 High quality at anaffordable price

2 Style that lasts – indurability and in design

3 Customer involvementand influence within thebusiness

4 A sustainable approachfrom factory to wardrobe


Delivering on ourcommitments:From 2013, we will require allglobal suppliers working on core volume lines to share opencostings on human labour with full transparency on worker pay,including workers’ rights. We are committed to helping themmake that change over the nexttwo years.

How will we do that?

2

1 Through Lean manufacturing

Standard Minute Value

3 Engagement of local NGOs andunions with internationalexpertise on workers’ rights


About one in eight of the 721 factories we work with are based inBangladesh. Following a listeninggroup with the internationaldevelopment agency ActionAid and a number of Bangladesh factoryworkers in 2008, we committed to a12-month pilot project designed toincrease factory productivity, improve worker skills, drive socialimprovements, raise pay, improvequality, and reduce working hours,labour turnover and absenteeism.

We partnered with the local Dhaka-based arm of GTZ – the Germangovernment’s overseas developmentdepartment – to help improve theproductivity and efficiency of anumber of our Bangladeshi factoriesby reducing waste, what’s known aslean manufacturing.

Working with four key factories, we introduced a pilot programme to retrain workers; improve andreengineer production flow; andreduce both product damage anddowntime.

The Aim• Empower the local workforce

through improved skill levels• Increase earning potential for

workers, enabling them to enterskilled pay-band levels

• Reduce working hours to ensure abetter work/life balance

The ResultThe pilot was incredibly successful,with factories achieving on average:• 14.2 per cent increase in workers’

wages• Reduction of 7-10 hours wasted

time per week, per worker• 17 per cent improvement in

efficiency• 5 per cent reduction in labour

turnover• 10 per cent decrease in absenteeism

We are now rollingout the Leanmanufacturingprocess oncontinuity linesacross 17 factoriesin Bangladesh. The programmewill then be rolledout to factories inIndia and China.

Lean Manufacturing

1

% wage increase % wage increase Feb 2011 vs before LEAN % increase including benefitsAvergare wage (before Lean) After Lean 2010 Lean 2011 Total including benefits

8000

7000

6000

5000

4000

3000

2000

9000

12%

10%

8%

6%

4%

2%

0%

14%

8000

7000

6000

5000

4000

3000

2000

9000

Progress report on factoriesthat have participated inLean Factory pilot program.The graphs show the detail behind the progress takingplace to date on wages, absenteeism, labour turnover and efficiency.

% Wage Increase

Lenny Valiant Toyo KDS

60%

50%

40%

30%

20%

10%

0%


Productivity


Wages


Absenteeism

Lenny Valiant Toyo KDSBefore Lean After Lean 2010 Lean 2011

Before Lean After Lean 2010 Lean 2011

20%

15%

10%

5%

0%

25%Labour Turnover

Lenny Valiant Toyo KDSBefore Lean After Lean 2010 Lean 2011

% Productivity Increase

Lenny Valiant Toyo KDSAfter Lean 2010 Lean 2011

180%

0%

160%

140%

120%

100%

80%

60%

40%

20%

After Lean 2010 Lean 2011

% Absenteeism Improvement


80%

-80%

60%

40%

20%

0%

-20%

-40%

-60%


We are embarking on an impactassessment an international NGOusing local unions in factories usinglean manufacturing to see how furtherimprovements can be achieved.

With NGO and union expertise, we aredeveloping a training model focussedon workers’ rights and best HR practices.

Current programmes within Bangladeshhave been reviewed and shared with UKNGOs as Bangladesh does not have aneffective industry best-practice model.

The Bangladesh Garment Manufacturersand Exporters Association are keen towork with us to evolve the leanconcept even further.

George has always been committed todoing the right thing for all of itscolleagues, customers and suppliers.Although workers in the factories we source from are not directly employedby us, we recognise that we have ashared responsibility with otherretailers to these workers to protectand promote their welfare.

Following the launch of ActionAid’sreport, we have been investigating aninnovative new benchmark called‘Standard Minute Value’. This processmeans factory owners can showaccurate labour costs when quotingthe cost of a garment. It’s a pioneeringapproach that defines aninternationally-recognised method ofaccurately calculating, and thereforepaying for, the work that goes intomaking a single garment.

For example, if the SMV for sewing insleeves is 10p and it takes two minutes,the cost per garment is 20p. Factoryowners usually calculate labour costs outof what’s left after they’ve accountedfor the price of commodities, freight andtheir profit margin. However, the Georgeteam will now work directly withfactory owners and insist that costprices to George buyers includeaccurate labour costs upfront. Thishelps us to check that workers arebeing paid a fair rate for the job.

Standard Minute Value

Workers’ rights/NGOEngagement

2

3

Keren Long (Second left) and Indira Chauhan (Right) from the GeorgeBangladesh team


Delivering on ourcommitments:

At George, we recognise that timesare extremely tough for customers.We have a duty to provide highquality clothing that is affordable forall. But how do we achieve that?

It is often wrongly assumed thatGeorge’s low prices are simply a resultof how we source our garments. Infact, it is because of a consistent focuson efficient operations, and marginsthat are considerably less than thoseof the High Street fashion retailers.

From supply chain to the shop floor,we reduce excess costs we can passthose savings on to our customerswhile ensuring that our businesspractices remain ethical andsustainable.

Reducing costs is not achieved by one single measure but insteaddemands a holistic view and rigorousexamination of all our processes,spanning everything from supplierrelationships to reducing the size ofswing-tag labels.

It is important to understand how our business model differs from atraditional clothing retailer on theHigh Street. Being part of Asdamakes a major difference.

How we provide quality and valueto our customers every day

Around 80 per cent of what Asda sells each weekis groceries, with the restmade up of non-foodpurchases. Clothing makesup about half of our non-food sales. We havearound 380 stores acrossthe UK, the vast majority ofthem fairly large edge-of-town supermarkets. Wealso have more than18million customers who dotheir weekly shopping withus. So our Georgedepartments benefit fromthe huge footfall our foodbusiness generates eachweek.

Our customers tend to pick up anitem of clothing while shopping fortheir food, rather than visit our storesjust to buy clothing. This is importantfor a couple of key reasons.

Firstly it means that it’s not necessaryto spend huge amounts onadvertising; and secondly, becauseour stores tend to be quite large, and they are located on the edge oftowns, our operating costs as aproportion of revenue are significantlylower than smaller High Street stores.This delivers savings in rent and it isfar more efficient to deliver productsin bulk to our stores than to smallerHigh Street stores.

As a result we don’t need to chargeour customers a premium for clothes,and we are able to operate on muchslimmer margins than traditional HighStreet fashion retailers.

Our focus at George has always been on selling large volumes of lowerpriced garments. Over the years thathas proved to be a winning formula,and means we are now a largeclothing retailer in our own right.

That scale has in turn deliveredfurther benefits and cost savings. The largest cost in a garment is fabric.We centrally source high volumes ofmaterials including cotton, fabric,buttons and zips to drive cost savingswhich are then shared with factoryowners. In many instances weleverage our scale with Walmart tosource globally.


Transportation: Boat five timescheaper than airThe second largest cost is freight. The ways in which we transport ourclothing ranges allow us to reducecosts. By planning our ranges well inadvance, expensive air freight is usedonly as a last resort. The average costof transporting a garment by boat isfive times cheaper than by air. We canalso radically reduce our freight costsbecause of the economies of scaleavailable by working with Walmart.

20% reduction in garment transitpackagingThrough volume we are able tonegotiate much better rates on aglobal scale. In 2010 we committed todeliver a further 20% reduction ingarment transit packaging viameasures such as redesigning ourfootwear packaging and theintroduction of thinner garmenthangers to reduce the amount ofplastic used.

Cut out the middle manWe work directly with factory ownersand manufacturers to avoid expensiveagent’s costs. Because of theserelationships we can also work inpartnership to create more sustainablebusinesses; improve factory conditionsand efficiencies in productiontechniques and, as a result reduceworking hours and align working paywith improvements in productivity.The work we have done in the pastyear in Bangladesh is a perfectexample of that.

Resampling costs reduced by 40%We work with our suppliers to planand control our mutual business toreduce costs. Our suppliers, withwhom we have long-standingrelationships, work on long-lead times of up to nine months, and onhigh volumes, allowing them greatercontrol of production planning. Inaddition, we’ve invested in local on-the-ground teams who work withfactory owners. That means, forexample, that quicker decisions aretaken on design, avoiding re-samplingcosts. Our local team in Bangladeshhelped reduce re-sampling costs by40% in 2010.

Good for people, good for the planetWe centrally source all packaging, hangers and

swing tags and have even reduced the size of thosetags to cut costs. Through our in-store garment

hanger recycling process we have recycled over 65million hangers.



CommunityProjects

As part of its ongoingcommitment to corporateand ethical responsibility,George has partnerships with a number of leadingcharities and other cause-related organisations thatreflect its ethical prioritiesand supplier locations.Examples of theseprogrammes include: -

• Phulki - improving the lives of 300familiesGeorge works with the BangladeshiNGO Phulki which aims to promotethe rights of women and children,providing access to in-factorychildcare centres and ensuringadequate care and educationfacilities, with the target ofimproving the lives of 300 familiesby 2015

• HERproject - promoting the healthand empowerment of 20, 000 femaleworkersWorking with BSR Business forsocial responsibility on female healthand education and the female healthcharity HERproject, we areintroducing factory-based initiativesdesigned to improve female healthand empowerment in Bangladeshand India, with the aim of reaching20,000 workers by 2015

• Geosansar - providing 20, 000 bank accounts We also work with Geosansar, whichprovides access to banking servicesfor workers who don’t possess bankaccounts, promoting inclusion andenhanced quality of life throughbenefits including lower interestrates, local out-of-hours bankingkiosks and other financial products –targeting 20,000 accounts by 2015

• Other cause-related partners thatbenefit from George’s support includeWaterAid and the Ethical TradingInitiative

• Zero waste to landfillWe have signed up to the DefraSustainable Clothing Action Plan. As part of this, we achieved zerowaste to landfill by the end of 2010.We are rolling out recycling bins in allour stores as part of a Salvation Armyinitiative where money is also donatedto Children In Need.

• New LIfe - improving the lives ofterminally ill and disabled childrenWe give all our returned anddamaged clothing to New LifeFoundation. All our clothing is eithersold to customers, recycled throughNew Life or sent by the foundationfor reuse in other industries such asmattress fillers. By doing this wesupport New Life to fund medicalresearch and give specialistequipment helping improve the livesof terminally ill and disabled children.

Paul WrightHead of Quality and Ethics

Indira ChauhanSenior Ethical Manager

Meet the team

Community Projects

With the help of the HOPEFoundation worldwide, weopened the JamgaraGeorge School in Ashuliain March 2009. There arecurrently 182 childrenattending the school andby 2013 we hope to have250 pupils.

The school is also used as avocational training centre whichoffers courses in tailoring, reading,writing, computer skills and beauty.200 people take advantage of thecourses available there, some evengoing on to start their own business.

By the end of 2013, we hope to offerscholarships for further educationand university, and opportunity forwork experience within the Georgebuying office.

George HOPE School

Successful Stories

Community Projects

Adhuiry Begum moved to Jamgara when she marriedthree years ago. Her husband works in a medicinecompany and earns 2,000 taka per month. Adhuirywas in education but was unable to complete itbecause of financial problems.

When she heard about IndustrialCentre of HOPE from a friend, she

was very happy to train in thetailoring Centre, because the fees

were affordable. She was veryattentive and keen on learning,

and though she was still a studentshe managed to get many

orders from different people. Atpresent she earns 2,000 to 3,000

taka per month.

Joshna Begum has lived in Jamgara for three years withher husband and two children. Her husband has a smallgrocery shop. She married when she was sixteen butbecause of complications with her first child, she wasunable to work and support her family.

When she heard about the trainingcentre, she immediately joined thetailoring centre. While she was still

a student, she started her ownbusiness and managed to secure

orders from many differentpeople. Now she earns about

4,000 taka per month.

Jamgara Industrial Centre of HOPE

Successful Stories

The vocational training centre has helped manypeople, these are a couple of stories where HOPEand George have helped turn lives around.



- Bangladesh- India- Sri Lanka- China- Turkey- Brazil- Britain- Bulgaria- Italy- Portugal- Romania

- Cambodia- Indonesia- Mauritius- Pakistan- Taiwan- Thailand- Vietnam- United Arab Emirates- Egypt- Morocco

We source from thesecountries:

Ethical performance to date

Num

ber

of fa

ctor

ies

700

600

500

400

300

200

100

0

2006

Orange

2007 2008 2009 2010

42%

27%

29%

36%

31%

33%

23%

39%

37%

10%

44%

45%

9%1%1%

55%

34%

Yellow Green Disapproved Industry audit

Over the past 10 years,George has worked hard to promote the welfare ofworkers in the countriesfrom which we source.Historically, our programmeof work has relied heavilyon a rigorous scheduled ofproduction site audits,conducted against thecriteria provided by the ETI Base Code – a voluntarysystem that addressesissues including childlabour, forced labour,working hours, freedom ofassociation and living wage.

We currently use 150 suppliersthrough 721 factories across the world.Each year, we conduct approximately500 unannounced ethical audits,specifically across our George clothingfactories and processing plants.

Each audit takes a minimum of oneday, is conducted by two independentauditors, and involves interviews withworkers, site inspections anddocument reviews. We conduct all ofour audits unannounced.

All factories used by George must beethically audited before they areapproved for production. Once theseaudits have been completed, a riskassessment process is then conductedand factories are graded using a trafficlight system.

As part of Asda, our audits areconducted through Walmart’s globalsupplier programme, making it thelargest and most rigorous programmeof its kind in the UK.


Traffic Light System

Green = No issues

Yellow = Minimal issues, for example missing EXIT sign on fire door, incomplete First Aid box – the site isrequired to develop a corrective action plan and a re-audit is scheduled for one year’s time

Orange = Major issues, for example non payment of overtime, excessive working hours – the site isrequired to develop a corrective action plan and is re-audited within six months

Red = Major violations occurring – the site has 30 daysto appeal, before being delisted

NB: Where a site has been graded as orange three times (not necessarily consecutively)within a period of two years, that site will be delisted for up to one year. Audits are thencarried out continuously on all our production sites. George will not take on any newfactories until they are graded as yellow or green.

Tracking the results of ourfactory audits and re-auditshas revealed a significantimprovement in the wayproduction sites haveaddressed labourstandards, including wagesand freedom of associationissues.

However, industry experience shows that, at a global level, routineviolations of voluntary supply chaincodes are still sadly rife. Manyindustry stakeholders therefore argue that audit-centric assessmentprogrammes such as that operated by George must be supplemented byother innovative approaches totackling this problem.

Whilst we have no plans to abandonour audit-driven system – quite theopposite, in fact – in 2008 we alsoadopted a number of supportingmeasures that we believe will help oursuppliers and factories addresssystemic issues.

These additional approaches include:-• Working closely with factory

management to understand rootcause of issues such as excessiveworking hours, and to drive change,identify solutions and establish bestpractice.

- Our orange school programmegives dedicated in-country trainingand guidance at factory level on aone-to-one basis to supportfactories in driving change andimprovement

• Coaching and training suppliers’middle-management on George’sCSR requirements

• Educating workers as to what theyshould expect – right down to suchsimple steps as how to interprettheir payslips and what informationto look out for, as well as makingsure that all workers have a contract

• Conducting workers’ interviews off-site, through local NGOs, in order togain a full picture of labourconditions

We also value collaborative efforts,especially around issues of suchcomplexity that they are difficult toresolve through audit programmesalone. In 2009, George moved to asystem of 100 per cent unannouncedaudits and also partnered with anNGO to conduct a pilot project ofaudits off-site.

We also publish details of ananonymous ‘whistleblower’ hotlinenumber in all those factories thatsupply George products, enablingworkers to report instances of labourstandards violation.

By using the best-practice ethicalauditing codes developed by ourparent company, Walmart, andcomplementing these with innovative,collaboration-based approaches tomonitoring labour standards acrossthe supply chain, George aims tomake a positive, lasting difference tothe clothing industry at a global level.

Training and coaching• We have rolled out a George

academy training programme for all colleagues, focusing on ethicaltrading

- This programme offers aninduction session in ethical trading to all newcomers to thebusiness, as well as all newsuppliers and factory owners westart working with.

• We also offer a bespoke ethicalbuying course, developed anddelivered in conjunction with an ETI trainer, which aims to createawareness of the impact of buyingdecisions on the production floor.

• We are part of the ETI purchasingpractice programme which reviewsthe impact on workers through thesupply chain.


Monday

Our Bangladesh office was opened in2010 by Keren Long, a longstandingGeorge colleague who moved fromLutterworth in Leicestershire to Dhaka.Having a team on theground allows us todevelop ourrelationships furtherwith factory owners,NGOs and workers.Keren now has ateam of 30 people.

1 to 1s with team toplan priorities for theweek, weekly updateon key projects likeLEAN, trainingsessions.

FridayTime for churchfor me and prayerin the mosques forthe team, criticalpath meetings.

TuesdaySupplier and NGOmeetings, planningand strategy work.

Wednesday &ThursdayFactory visits and/orsupplier meetings,Catch up with UKteams.

K eren

George started by George Davies as the firstsupermarket clothing brand

George bought by Asda

The Ethical Trading Initiative is established.Asda is a founder member

George moves to a system of 100%unannounced audits

George joins the DEFRA sustainable clothingroadmap

15th July: George introduces the first ever 100day quality guarantee on school uniforms

November: In partnership with GTZ, Georgelaunches pilot project to increase productivity,upskill workers and increase wages

8th March: 100 day quality guaranteeextended to all George clothing

15th March: George is first clothing retailer toput webcams in clothing factories

George pledges that from 2013, we willrequire all global suppliers working on corevolume lines, to share open costings on human labour

Timeline of progressVisual of key milestones in George’s 21 year history

1990

1995

1998

2009

09

09

09

10

2010

2011


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