The liberalisation of goods and finance has led to a global division of labour in which each country focuses on its competitive advantage. Developing and emerging economies usually offer production at particularly competitive prices. For this reason, many international retail companies, Tchibo among them, source a substantial part of their consumer goods from Asia. This international division of labour can provide great opportunities for all – but only when these opportunities are not achieved at the expense of employees’ rights. Governments, trade unions, NGOs, retail companies and suppliers all share responsibility to compliance with social and environmental standards.

Fairness and responsibility – in the value chain

We want to supply our customers with top-quality products with as little negative impact as possible on people and the environment – when extracting raw materials, in production, in use and in disposal. Our attempts to achieve this objective centre on one key element: working together in collaboration with suppliers and stakeholders in society, both in Germany and in our sourcing countries.

For example, we require all our suppliers to adhere to our Social Code of Conduct, which has been an integral part of all our purchasing contracts since 2006. Based, amongst others, on the core labour standards of the International Labour Organization (ILO), the code comprises a total of ten principles for safeguarding working conditions compatible with human dignity – such as a ban on child and forced labour and adherence to maximum permitted working hours. We review factories level of social standards not only before we award a contract, but also once production is underway, in regular audits.

Creating enduring change through qualification and cooperation

We support our suppliers actively toachieve the dual aim of uncovering possible infringements of standards and of creating long-term, enduring improvements in this process: Our WE (Worldwide Enhancement of Social Quality) programme, which we initiated in 2007 in cooperation with the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) and with the support of the German Federal Ministry of Economic Cooperation and Development as part of a pilot project, is the basis for this endeavour. The training concept empowers managers and employees to recognise root causes of issues and to independently develop solutions to the challenges they face in their work settings – and indeed to implement them. In 2010, after a successful three-year pilot phase involving the participation of 40 factories in China, Bangladesh and Thailand, we scaled the project into a programme.

However, not all issues around social standards can be solved on the micro-level of individual workplace settings. Some require consensus at societal level or corresponding legal frameworks, particularly living wages and the rights of employees to form and join unions and conduct wage negotiations. For this cause we collaborate with different stakeholders both at a local and international, as well as a civil society level.

We talk – we don’t preach

We are convinced that the best results are achieved by working together to generate practicable approaches to challenges. For us, this means that rather than preaching, we build trust and achieve results through a dialogue drawing together all involved. This includes managers of factories, their employees, buyers, trade unions and representatives of local governments and NGOs. We will only succeed in giving international human rights a firm footing in the areas where our products are sourced if we respect the culture on the ground and deal sensitively with the prevailing conditions in each individual country.

Our goal: Transparency and long-lasting working relationships in the supply chain

Where, under what conditions, and by whom are our products made? If we intend to support minimum social standards in our countries of production, we need to know the answers to these questions. This is why cooperation, transparency and longterm working relationships are important in our work with suppliers and producers. This is the only way in which we will achieve improvements, working together step by step.

One of our challenges:Avoiding subcontracting  

One of the challenges we face regarding longterm business relationships lie in the diversity of our product range and therefore of our supplier structure. Each product category – particularly in consumer durables and electronics – calls for different production processes, which means that many of our suppliers specialise in individual products.Consequently, we depend on a wide range of different suppliers. In 2010, for example, we purchased products from approximately 930 suppliers. This number and diversity of suppliers increases the risk of parts of a production contract being outsourced to what are known as subcontractors without our knowledge.

One of the key ways in which we counter this danger is by our plan to concentrate our supplier and producer network in the area of consumer goods on our most important suppliers. By doing so, we aim to increase the duration of our business relationships, strengthen relationships of trust with our suppliers and reduce the risk of non-approved subcontracting. At the same time, we will be enabled to plan and implement our measures for the improvement of working conditions still more systematically.

Everyone benefits

Everyone involved benefits from transparent long-term business relationships, which boost product quality and efficiency in order processing – a central concern for us as a company. Our suppliers, meanwhile, enjoy increased certainty in planning and benefit from our willingness to invest in more up-to-date production processes and improved working conditions – which in turn help employees and the environment.