1. Commitment to the Flying Tiger Copenhagen Supplier Code of Conduct.
All product suppliers must sign the Flying Tiger Copenhagen Supplier Code of Conduct. The Code is based on international standards as defined by the United Nations (UN) and the International Labour Organisation (ILO). It defines our requirements in the areas of workplace health and safety, terms of employment, working hours, wages, environmental protection and business ethics. Among other things, it prohibits child labour, forced labour, dangerous or severely unhealthy working conditions and abusive disciplinary practices. No purchases can take place without a valid Code in place. Commitment to the Code must be renewed every 2nd year in writing.
2. Risk assessment and factory audits.
Factories are selected for audit in a two-step process:
I. Factory information for all items is gathered from the BOM tool and items are automatically assigned a risk rating based on: i) country of production; ii) purchase volume; iii) product category.
II. The automatic risk rating is combined with a manual process looking at: i) brand exposure of product; ii) audit history and performance of factory, including sub-contracting practices.
Factories rated high-risk are selected for audit. On-site factory audits are carried out either by our China-based audit team or by Elevate, an organisation specialised in social compliance factory audits. All audits follow the Flying Tiger Copenhagen Audit protocol that consists of 115 questions and assess practices in the areas of ethics, sub-supplier management, human rights, labour practices, and the environment. Audits include a combination of site assessment, documentation review, management interviews and anonymous workers' interviews. Audits can be announced, semi-announced and unannounced, depending on progression of audits and types of findings in previous audits. All factories are evaluated from A (compliant) to E (Zero-tolerance) and most of the factories we used are rated C. We have a strategic target to raise the rating of the factories we use.
3. Improvement and remediation
All factories, apart from A rated factories, must implement a corrective action plan (CAP) within a defined timeline. The CAP is reviewed regularly until closure by Flying Tiger Copenhagen, and the factory must go through a re-audit to verify improvements. Re-audits are semi-announced or unannounced. Factories that present severe zero-tolerance issues are rejected (e.g. use of child labour, forced labour, severe safety and human rights issues, attempted bribery of auditor). In some cases, where good faith and procedural errors can be verified, the factory is put through a requalification process which includes training, a strictly monitored improvement plan and a re-audit. In case a supplier and/or factory is unwilling to improve, we will stop the collaboration permanently.
We do on occasion come across factories using child labour. We have a zero tolerance for child labour and strict rules for young workers (between 16 and 18). If we find child labour, the factory must immediately remediate the case and will be put on hold until further notice. We have entered a collaboration with The Center for Child Rights and Corporate Social Responsibility (CCR-CSR) in China that helps us with child labour remediation and prevention. CCR-CSR makes sure that every case is handled with respect to the individual child’s circumstances. They engage in dialogue with the family and ensure appropriate measures like enrolling in vocational schools and monthly living stipend throughout the remediation period.
In 2019, we have conducted more than 300 audits at factories in Asia. The most common issues that required improvement were ensuring a safe and healthy working environment and reducing overtime. Our target for 2020 is to maintain the number of audits and pursue greater transparency by introducing a pre-screening through the entire range of assortment, and further build the capacity of our suppliers.
In 2020, we will revise our sourcing strategy in order to further simplify our supply chain. We will also introduce more requirements to our existing and new partners, to further increase compliance and transparency in our supply chain.