Why is Wal-Mart Cracking Down on Suppliers?

Wal-Mart (NYSE:WMT) once had a “three strikes” policy for policing its suppliers, but after it became public knowledge that some of its clothing items were made at a Bangladesh factory where a fire killed 112 people in November, a facility the company was no longer supposed to use, the retailer changed its position. Now, Wal-Mart is telling suppliers that it may adopt a “zero tolerance policy” for violations of its global sourcing standards, reported The Wall Street Journal on Sunday.

In a 10-page letter seen by the WSJ, the company informed its partners that it will end business relationships with suppliers that subcontract manufacturing to factories without its permission.

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“Obviously our three-strike policy wasn’t working as well as it could have,” Rajan Kamalanathan, the company’s vice president of ethical sourcing, said in an interview with the publication. “Our message of zero tolerance is meant to get people’s attention.” He added that Wal-Mart will begin listing the names of factories on its corporate website that are not authorized to conduct business with its suppliers for more “accountability and transparency.”

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