Just How Ethical is Global Sourcing?

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From a pure cost perspective, global sourcing often yields the cheaper option to produce a company’s end product. This means the company is left with a cost- effective finished product, ready for sale. This allows them to be competitive in the market and they will often pass on low prices to consumers as well. However, the adage “there’s no such thing as a free lunch” rings true in this situation. The cost, or lack thereof, is often felt by the people overseas who produce these products. Unfortunately, sweatshops facilitate the production of cheap products, but often compromise on ethical standards to achieve this.


Popular clothing and shoe brands are some of the companies using sweatshops to produce their products. A sweatshop is a manufacturing facility where the employees undergo long work hours, minimal wages, and bad working environments. These factors, comprised with others, lead to a violation of labour laws. Sweatshops are common in low-cost country sourcing locations (LCCS). LCCS locations are generally in developing countries and labour laws are not strictly upheld.

Factories can be in dangerous locations and workers can be asked to do precarious tasks that jeopardise their safety. It is not uncommon to find workers operating heavy machinery without the proper training or safety equipment. Additionally, workers can be exposed to chemicals and toxins in production that can compromise their health and well-being.

Do the ends justify the means?

One of the main problems with partaking in global sourcing is that it is difficult to monitor overseas facilities. Although a supplier may claim that they are adhering to strict codes of conduct, sometimes that is not the case. The codes of conduct might get ignored due to pressure from buyers. When buyers place big orders to replenish their inventory stock, the request forces the supplier to produce it cheaply and quickly.

While the buyer may get their desired end result, a fully replenished inventory stock, many workers are paying the cost. Their circumstances are less than ideal. Often they will be living in impoverished situations despite having an income. The majority of workers for big clothing and shoe brands employ young women aged 17-24. These women work incredibly long hours, in hazardous conditions for meagre pay and very little voice in their situation. The workers are aware that their wages and working environment are unjust. However, objections or protests to these circumstances can result in them losing their job.

What can consumers do?

So as a consumer, what can you do? In countries like Australia, clothing can be tagged with the Ethical Clothing Australia (ECA) label. The ECA label provides a standard for consumers to look for. It gives consumers a more transparent picture of the product they are buying. The ECA demands that the workers producing these products get paid, at the minimum, the legally stated wages. In addition, these locations need to uphold satisfactory workplace conditions. The ECA has a list of brands that have been approved and uphold ethical standards from global sourcing.

The ECA is an example of one ethical movement to make global sourcing a sustainable and fair business for all. Initiatives like this will encourage buyers to look closer at how they will source products and think twice before ordering the cheapest and fastest batch of inventory stock. Hopefully, more ethical watchdogs will need to become more prevalent in order for global sourcing to have an ethical future.

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Melanie - Unleashed Software

Article by Melanie Chan in collaboration with our team of Unleashed Software inventory and business specialists. Melanie has been writing about inventory management for the past three years. When not writing about inventory management, you can find her eating her way through Auckland.

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