Aligning Sourcing and Compliance Inside a Global Corporation

Abstract

This chapter focuses on a detailed investigation of a global retailer's attempt to integrate sourcing and compliance as a way to increase the coupling of private regulation and worker outcomes. The case study shows how this global retailer successfully aligned its sourcing and compliance activities and offers lessons for the rest of the industry. First, the case implies that it is highly unlikely large companies' compliance departments can establish the linkage between compliance and sourcing on their own. Second, it is worth noting that the linkage would not have been possible had it not been for a well-developed compliance system already operating for many years with a high profile in the corporate organization. Third, developing a software architecture that included comprehensive supplier scorecards facilitated linking compliance with sourcing. Fourth, the Pangia case highlights the transactional mentality that permeates sourcing operations in the apparel industry. Fifth, the case makes clear that changing the transactional mentality may well require a change of talent. Sixth, benchmarking with firms outside the industry was crucial for learning new lessons. And the final lesson is that vendors will respond to incentives to change their behavior.