HM: Supply Chain and Outsourcing

HM Supply Chain and OutsourcingA international federation is a term referring to an organization that conducts transmission line operations place of countries other than the home nation. As economic orbiculateization be move ups an increasing private road in modern society, it is not abnormal to see a great frequency of these types of corporations conducting their business with a variety of countries. More specifically, everywhere time, nations of the globose S bring outh remove experienced a dramatic increase in corporate appeal from the enclothe producing industry. It is no surprise then, that with cheap force, rag to sore materials and a promise of rapid development, countries in this region own seen a rise in the demand of outside(prenominal) establishments vying to carry out work here.As a Hennes and Mauritz (HM) employee of three years, I own come to be familiar with their foreign affairs in the Global South, curiously in Bangladesh. Bangladesh is the main re gion in which HM out informants the output of their intersection before shipping the majority of these goods to the Western world. It is not uncommon for the keep bon ton to take many opportunities each year to educate and update their employees of their inter accomplishmentions with Bangladesh. organism presented with iodin-sided information concerning these interactions, I was made to believe that HMs nominal head in this terra firma is beneficial for the development of the nation on a global scale. Such things as training syllabuss in the operation of sew together machines with the endorsement of employment at HM are features I understood to be aiding the republic in economic sustainability. However, after study on the yield of the effects of globalization and multinational corporations in develop countries, I fare that there are arguments vociferationing global outsourcing in the Global South is a roadblock to the possibility of progress in these nations. Through critical epitome of arguments supporting and against HM in Bangladesh, it is evident that the existence of this confederacy in a developing nation does affect the growth of the rural area. Despite the position that HM may abide by the labor and surroundal policies of Bangladesh, their armorial bearing in the rural as a foreign transnational corporation hinders the likelihood of economic or political growth and negatively impacts the nations stairs towards development.Founded in 1947, Hennes and Mauritz (HM), is a habilitate company that originated in Sweden. Today HM operates out of 38 countries, backed with 87,000 employees (HM 2011 ). Alongside having stores across the globe, HM has particular(a) bloods with certain countries in which it outsources the majority of its production. One of the essential countries in which HM relies on for the outsourcing of their trade in is Bangladesh. Bangladesh, considered being one of the Least Developed countries (LDC), has been tre mendously influenced by globalization, particularly the restrictions in the apparel industry over the hold out decades (Uddin 2006 7). Bangladesh achieved freedom as an independent region in 1971, and after undergoing commerce liberalizations in the 1990s, Bangladesh made the switch from an agriculturally dominant economy to that of a securities industry led one (Uddin 2006 7). When multinational corporations such as HM figure that a country is hotly liberalized, it is common for them to step in and produce the country their business, along with reasons why their business will guarantee this country fast development. For Bangladesh, the quotas acted as a guarantee for certain quantities of export sales, aid to establish market presence (Uddin 2006 7). The concern attached to these types of export sales for Bangladesh, is that the business HM is outsourcing is the most basic among all the aspects that raise up this company.HM sources their manual of arms labor to Bangladesh so as to keep freshly business issues in the mother country. By sourcing non-core business activities a company can focus on its core business in a better way (Alim 2010 30). By HM outsourcing its production tasks to Bangladesh, Sweden is sending its no-brainer business to a developing country. The business sector in Bangladesh is less belike to achieve development through HMs outsourcing habits because these punt hand projects focus on manual labor. universe that the majority of its market based economy deals with manual labor, Bangladesh is deprived of working with new technology which is the norm for capitalist countries. then development in Bangladesh cannot be attained, as the spirit of the work perpetrate is not advancing.The emergence of American, European, Japanese and Third World multinationals has created a new competitive environment, requiring the globalization or at least semi-globalization of corporate dodging (Alim 2010 24). HM is among the worlds leading mu ltinational garment retailers, they promise their customers fashion and character reference at the best price (HM 2011 ). In hunting lodge to remain in a position of competitive advantage, somewhat would say corporations of this nature have to maintain a certain reputation concerning all the aspects of business they conduct. In modern society, methods of sustainable production are being favored as the general public is aware of certain on goings in the production of goods such as child labor, and the exploitation of human rights and environmental laws. Companies of this nature than need to take certain precautions to ensure that their business is being conducted in a manner that follows regulations of the outsourcing country, and in a manner that will resolving in a satisfied consumer.It is fair to say that the consumer has a of import influence on the way HM conducts their business. Now that awareness regarding the environment is important on a global scale, many consumers fir st curb that a sustainable company is manufacturing the merchandise they are purchasing. For example, HM has interpreted initiative in ensuring that the cotton they use in their products is increasingly organic fertilizer cotton is the raw material we use the most. Although we do not source any raw materials, directly, we are committed to actively contributing to sheer their impacts (HM 2009 33). This is extremely popular for HM, who stresses the importance of their products being made in an eco gracious environment. Often times, transnational corporations view outsourcing as a win-win situation (in ground of maintaining a good reputation among customers) as they take their production over seas to developing countries that offer cheap production be, alongside lenient labor and environmental laws.A unique fact when analyzing the outsourcing habits of HM in Bangladesh is that they do not own any of the factories in which production of HM merchandise takes place. Instead, roughly 700 independent suppliers deliver their products (Alim 2010 62). This allows HM to maintain a reasonably reputation amongst other multinational corporations to its customers in terms of abiding by environmental policies and human rights laws. Due to their large purchasing volumes HM is the second largest buyer in Bangladesh as a single buyer (Alim 2010 65), HM plays a large role in the economy of Bangladesh. Seeing as the business they bring to the country is mainly exporting primary material, the country needs to produce these goods in volume for cheap. This can lead to dismiss of human rights, The claims surfaced as in Bangladesh, violent protests by tens of thousands of garment workers demanding higher(prenominal)(prenominal) pay forced the closure on Tuesday of 700 factories that supply the top call in Western retail, including HM (Fashion Giant HM evades Taxes in Bangladesh ). Being that HM does not own the factories in which this neglect takes place, they frequently claim to encourage management of factories to abide by human rights laws. Although, it is hard for one to tell for certain if this is the case. In an industry where the demand for these products continues to rise, it is very grueling for Bangladesh to break a cycle of human rights abuse in order to meet a quota. A history of exploitation of human rights referable to the demand by foreign corporate parts in the country is a factor contributing to the lack of development or authorisation for development in Bangladesh.There are 2 million individuals that make up the workforce of the garment industry of Bangladesh of this figure, 70% are women (Wulff 2008 1). HM takes time to inform their employees of employment opportunities they provide for those in developing countries. They are particularly proud of the work-training schedule implemented for those who show interest in making clothes in Bangladesh. HM trains prospective manufacturing plant employees in operating sewing machines with the promise of guaranteed work after successful finale of the program. Though there are obvious benefits to the idea of providing jobs for people of Bangladesh (especially women), the work-training program HM has put into practice has long-term negative effects on the development of the country. An evident gain of the program being that women are provided an fortune to work and help support their families, has the negative side effect of women go on to be perceived as a domestic figure sewing clothes while men manage the factories.Aside from a sexual urge bias that will be hard to break as the popularity of this program grows, there is also the issue of young adults not continuing in a higher education. A direct correlation can be seen with respect to the consequence of people working in a factory, and the number of people in that factory who have received a higher degree of education. Of the amount of individuals producing clothes in a given factory in Bangladesh, the majorit y has achieved no more than a high inculcate diploma (Uddin 2006 72). With less of the population attaining a hire education, difficulty in developing an interdependent economy arises due to the addiction on entry-level positions created by HMs work-training program.One of the reasons why outsourcing in Bangladesh is extremely popular for HM, a company that stresses the importance of their clothes being made in an eco friendly environment, is a result of the leniency of labor and environmental laws. Important for consumers to be reminded, is that policies protect the environment in the Western world are generally oftentimes more strict than those protecting the environment in the Global South. transnational corporations are often the reason why environmental laws in developing countries are so lenient. Governments and authorities in these countries generally feel pressured to keep an eye on with the influences of the business needs of transnational corporations. According to the BGMEA (Bangladesh Garment Manufacturers and Exporters Association) officials, the social duty initiatives of BGMEA directly responded to the concerns of multinational buying companies the group they believed constituted the most respectable stakeholder group. The BGMEA executives made specific reference to the expectations of, and pressures exerted by, buying companies such as Nike and HM (Azizul 2009 108). These pressures felt display a direct relationship with the development of a country. When the government which is supposedly the highest authority in a given region, is pressured to act a certain way by a foreign investor, the country ceases to develop in an independent manner, as there is a dependence on the business this investor provides. The extent of Bangladeshs dependence on multinational clothing companies such as HM is seen in the fact that around 4,500 garment factories accounted for roughly 80% of the countrys 16-billion-dollar export income in 2009 (Anger after de adly HM factory fire ).In the process of outsourcing the production of their merchandise, HM often demands the usage of raw materials that need to be sourced from various countries. It is interesting though, that they present the chore of purchasing these materials to the production factories in Bangladesh. most of the time, suppliers import the raw materials from abroad due to unavailability in the local market. In some cases, HM nominates the raw materials supplier. In that situation, suppliers purchase the raw materials from those nominated sources, whether they are local or foreign (Alim 2010 72-73). HMs Sustainability Report from 2009 states that transporting raw materials from a country remote Bangladesh can take up to 44 days to arrive, cause potential delays in the production of merchandise (Alim 2010 73). Importing materials from nations outside of Bangladesh for the production of goods presents a conflict in terms of development. Firstly being that Bangladesh produces merchandise under the condition of cheap labor, expenses of importing materials from other countries can damage their overall profit rate. More importantly however, is that by sourcing raw materials from places outside of Bangladesh, domestic businesses suffer when trying to compete against more powerful foreign corporations. Through this cycle, foreign transnational corporations shape the economy of Bangladesh.Through investigating on the subject of the impact of globalization and the presence of transnational corporations in the Global South, strong arguments declare that global outsourcing in these regions is a barrier to the possibility of development. As an employee of a multinational corporation, I have considered its relationship to Bangladesh through two perspectives. Firstly, the relationship presented to me through HMs viewpoint being that their presence in Bangladesh allows for them to outsource quality merchandise for cheap labor costs while increasing capital of the e xport sector and creating jobs. As good I have analyzed a more negative berth on the issue of HM in Bangladesh. This being that HM is prevent the possibility for development in Bangladesh through creating dependence and pressuring the government. Both perspectives have in common the argument that HM in Bangladesh acts as a major influence on the development of the country. Although HM follows the labor and environmental policies in Bangladesh, the companys existence in the country is enough to decrease the likelihood of both economic and political growth while negatively bear on the nations ability to develop.