The true cost of our 'value brand' clothing was revealed on the day that more than 1,000 people lost their lives to a negligent factory owner in Bangladesh.
The agreement is a brave and important step for retailers, which are used to working in fierce competition, to collaboratively coordinate to reduce risk in the industry. Other sectors should follow their lead.
However, this agreement should really be a first step on a long journey to making the clothing industry safer and more sustainable.
Anyone who has ever checked the labels on their clothes knows clothing manufacturing is not confined to a single country in Asia.
It is a truly globalised industry, with millions of people buying and selling to each other across the world through increasingly complex supply chains. And without further precautionary measures, the industry could see the same tragic loss of life in any one of those countries.
While we are fully supportive of the agreement, we would urge retailers to go one step further, and make it global.
With collaboration in place, these 70 retailers have a unique opportunity to protect everyone involved in the manufacture of clothes - regardless of where in the world they live. With a slightly edited approach, the team could proactively manage, map out and mitigate risks to help prevent another disaster.
The Agreement and Implementation
Retailers have agreed to two initial steps in the pact; revealing details of their own factories, and allowing audits and inspections of the premises.
Long term, they are also considering working with the Bangladeshi government to implement a comprehensive system of standards, assessments and improvement plans.
Their approach might sound straightforward - but in reality, it will be challenging.
Managing supply chains on a national or international scale involves organising thousands, or even millions, of items of supply chain data.
That brings a significant resource requirement in terms of staff and IT infrastructure. And that's before you consider the potential issues associated with this work in terms of HR, legal, civil, commercial sensitivities, political and data security.
In our experience of working with supply chains in high-risk industries, these tasks selected by the retailers cannot, and should not be done 'one at a time,' or in isolation.
For example, the results of a health and safety audit and an environmental assessment are intrinsically linked. Without connecting the dots between the two, the outcome of the exercise is ultimately devalued.
In a globalised world, the key issue is connectivity - linking data about health and safety, ethics, compliance, financial risk, environmental hazards and using the information to influence and make business decisions.
Is There Another Way?
We would recommend the retailers implement one global supply chain system capable of managing required data from all countries on a single platform- from basic company information to audit results, financial assessments, Corporate Social Responsibility (CSR) information, and details on ethics and sustainability.
Experience shows us this works best when whole industries form true 'supply chain communities' and implement the same, standardised criteria for all potential suppliers so that everyone can be assessed fairly and consistently.
With clear communications, all retailers could be instantly alerted in the event of a problem, anywhere in the world.
It's a big step, but, as shown by Bangladesh, one issue affects all and there is no competitive advantage in any retailer having risk in their supply chain.
This 'community' approach would also bring benefits to those in the supply chain - because they would only have to apply once to be eligible to work with 70 of the world's biggest clothing retailers Suppliers would submit one set of documents, such as audit certifications, that would then be visible to all.
With a single source of supply chain information, retailers could easily then create a supply chain map - sourcing information about suppliers right the way down the chain via cascading invitations. This would help to uncover a whole raft of further potential issues, beyond Bangladesh. We have seen other highly complex industries, such as automotive begin this process already.
The current team of retailers appears to have a highly complex organisational structure. There are more than 50 people across the steering committee, advisory board and the not-for-profit company tasked with managing most of the data. That does not include partner organisations, such as unions, which will continue to play a key role.
Failure, or even difficulties, in this project would itself present a significant risk - in terms of people's safety and reputational damage to the companies involved. While CSR lies at the heart of this effort, retailers should not lose sight of the need for best practice in terms of business operations.
Retailers should not be afraid to invest a little more time and expertise to get the process right for managing this amount of complex data. This would leave retailers to innovate and improve their own specialist business areas.
After the Rana Plaza disaster, the public put pressure on retailers to protect clothing workers and create a more ethical supply chain.
That pressure will only intensify if there are difficulties with the agreement. This is a real opportunity - the retail industry needs to get it right the first time.
Richard Collins is a Director of Achilles - a global supply chain management company.