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 ?

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About aviyer2010

Professor
This entry was posted in Global Contexts, Operations Management, Supply Chain Issues and tagged , , , , , , , . Bookmark the permalink.

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