5. Sustainability of the supply chain

The ultimate goal of Inditex’s Strategic Plan for a stable and sustainable supply chain 2014-2018 is to achieve sustainability understood in terms of both time and social aspects.

All the policies, programmes and activities set out in the sections on identification, assessment and optimization have the final goal of ensuring sustainability in the supply chain and compliance with the principles of the Ruggie Framework (see page 43). Inditex has 10 supplier clusters in the geographic areas where it has a larger and stronger presence: Spain, Portugal, Morocco, Turkey, India, South East Asia, Bangladesh, China, Brazil and Argentina. In 2014, the production of suppliers located in the various clusters accounted for 91% of total production.

Further information at www.inditex.com/en/sustainability/suppliers/working_in_clusters

Cluster	Spain	Portugal	Morocco	Turkey	India	Bangladesh	South East Asia	China	Brazil	Argentina
Internal team	12	2	2	6	6	7	1	8	1	1
External team	26	36	10	32	45	25	48	412	51	16


	Spain	Portugal	Morocco	Turkey	India
IDENTIFICATION
Traceability	-	-	163 production audits	57 production audits	152 production audits
	Coordination with purchasing teams in the different brands, local CSR teams and suppliers to ensure traceability throughout the supply chain	In 2014, design of a Production Control programme based on analysis of information and production monitoring visits to be implemented in 2015	The information provided by the supplier is compared with the factories’ capacities, while regular monitoring visits are also performed	Production monitoring is performed not only by means of production audits but also during each social audit or factory visit. Orders are analysed and compared with the relevant documents on the factory’s production	The production monitoring process begins with an analysis of orders and processes along with a preliminary analysis of the factory’s capacity. Monitoring measures are also applied to raw materials and all the components required to finish production
Training for auditors	13 auditors trained	39 auditors trained	7 auditors trained	85 auditors trained	78 auditors trained
	Various sessions were held on the launch of the new methodology for audits	Apart from the training sessions imparted to new auditors, training sessions were held with the aim of standardizing and improving the audit process	Specific training for occupational health and safety auditors (relevant legislation, monitoring of health and safety systems, best practices in risk assessment)	One of the aspects focused on by the cluster in the training given in 2014 is improving the quality of initial audits	Of the nine sessions held in 2014, five had the aim of training auditors in the performance of pre-assessment audits. The four remaining sessions focused on the performance and improvement of the social audit process
Audit quality management
Pre-assessment audits	64	305	45	436	125
Social audits	64	701	105	730	308
Special audits	-	33	462	24	404
ASSESSMENT
Compliance programme
Suppliers A:	103	115	55	65	69
Suppliers B	80	29	42	68	41
Suppliers C	11	5	7	14	11
Suppliers CAP	5	5	10	10	5
Worker participation	Coordination of the global implementation of the Framework Agreement with IndustriALL Global Union and all activities developing the Agreement in the different clusters	Collaboration and ongoing dialogue with the Portuguese trade union FESETE to promote worker rights in the country’s textile industry	Visits to manufacturers in the Inditex’s supply chain with the aim of performing and analyses of the textile industry in Tunisia, establishing relations with local trade unions and designing future actions to meet worker needs	Joint Turkey Programme: Collaborative programme with IndustriALL and other international brands to improve working conditions and labour relations: in 2014, training was imparted to 116 workers’ representatives, supervisors and management in the rights and duties of workers and communication and negotiation	Completion of the pilot programme in collaboration with St. John’s Medical College to protect the hygiene, nutrition and health of workers based on training and participation of employees to ensure their welfare. The programme will continue to be implemented in 2015
Corrective Action Plans	n/a	41% success rate	82% success rate	31% success rate	84% success rate
Sharing good practices	Representation of Inditex in international platforms such as the Ethical Trading Initiative, UN Global Compact, ILO, or participation in the Better Work Global Buyers’ Forum, in which international brands collaborate to achieve progress on sustainability issues	Collaboration with the Catholic University of Portugal, Porto, to train young social auditors	Launch of a programme in collaboration with Medicus Mundi to provide care for the health and safety of workers in the supply chain	Collaboration with the NGO Refugee Support Centre to address the working conditions of immigrant workers, establishing corrective plans, including requesting work permits and the development of training programmes tailored to worker needs	"Sowbhagyam” programme against worker exploitation in the south of India in collaboration with the NGO SAVE with the aim of raising awareness in the community of the prevention and abolition of the sumangali system in the textile industry. To date, more than 26,806 young people have benefited from the programme, which has covered 136 towns and 231 schools
OPTIMIZATION
Effective auditing	187 new employees in Inditex Spain trained in CSR	Coordination with purchasing teams by means of the Spain cluster	Communication of the results of audits and the development of Corrective Action Plans to purchasing teams	Six training sessions for local purchasers in CSR issues	Four training sessions on traceability and other sustainability practices for local purchasers with a total of 41 participants
Training and capacity building for suppliers	Daily management of supplier capacity building and coordination with training activities held in clusters	27 suppliers trained	24 suppliers trained	77 suppliers trained	368 suppliers trained


	Bangladesh	South East Asia	China	Brazil	Argentina
IDENTIFICATION
Traceability	60 production audits	123 production audits	153 production audits	1,313 production audits	438 production audits
	During the year 2014, 60 production audits were performed in order to ensure production traceability in the country. “Chalanes”, documents recording deliveries and dispatches of merchandise are analysed and compared for each factory	The method used in production audits includes the analysis of information concerning Inditex orders, which is compared with the factory’s documentation and real production	Traceability monitoring in China is performed in all visits and audits. Moreover, the specific production audits performed – 153 in 2014 – allow the analysis of the capacity of factories and the identification of areas for improvement	100% of orders in Brazil are monitored every two weeks, ensuring sufficient monitoring of all phases of production for every order	The auditor checks where garments are manufactured according to the sample of orders contained in the audit request. In order to document the process, the auditor produces a report, order by order, attaching documents that support their conclusions.
Training for auditors	26 auditors trained	27 auditors trained	53 auditors trained	3 auditors trained	30 auditors trained
	The cluster held two training sessions to strengthen the methodology used for the pre-assessment audits performed for all production processes	Training for auditors; shadow audits were also performed in which a member of Inditex’s team accompanied the external auditor to observe and assess their performance	During the year 2014 training sessions involving external auditors were held to train new auditors	The cluster combined training targeted at auditors working for external companies with training for the Group’s internal team	In line with the objective of developing a comprehensive production traceability process, and in collaboration with the National Industrial Technology Institute (INTI), the cluster held training sessions on various production techniques key to detecting cases of order diversion
Audit quality management
Pre-assessment audits	96	102	810	88	50
Social audits	310	163	870	248	140
Special audits	324	176	126	-	2
ASSESSMENT
Compliance programme
Suppliers A	23	2	47	23	30
Suppliers B	57	5	191	1	2
Suppliers C	-	1	52	1	-
Suppliers CAP	3	1	7	-	-
Worker participation	Collaboration with the communications department of IndustriALL to raise awareness of the textile industry, the positive effects of the Framework Agreement and joint work on the implementation of the Accord	Representation and presence of international and local trade union representatives in meetings and training for suppliers in the region	Development and implementation of the first three modules of the International Labour Organization’s SCORE programme in two factories. The programme aims to combine the efforts of employees, management and trade unions to improve productivity in factories	Regular collaboration with the National trade union CONACCOVEST ( Conferação Nacional dos Trabalhadores nas Indústrias do setor Textil, Vestuário, Couro e Calçados) to improve social conditions by means of increased productivity	Identification and adjustment of job categories to the corresponding trade union, guaranteeing improved remuneration for employees and greater control for factories
Corrective Action Plans	79% success rate	62% success rate	63% success rate	100% success rate	n/a
Sharing good practices	Active participation as a member of the Steering Committee of the Accord on Fire and Building Safety in Bangladesh and ongoing collaboration with the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and other entities representing the sector	Collaboration with the ILO Better Work programmes with more than 30 factories registered to the Better Factories Cambodia programme and four factories registered with the ILO Better Work Vietnam programme to protect human rights	Active participation in meetings of the China Caucus of the Ethical Trading Initiative in 2014 to deal with the challenges faced by the industry and share good practices, seeking joint solutions	Support for the social organizations Centre for Human Rights and Immigrant Citizenship (Centro de Direitos Humanos e Ciudadania do Imigrante, CDHIC), the Migrant Support Centre (Centro de Apoio ao Migrante, CAMI) and MISSÃO PAZ, reiterating Inditex’s commitment to promoting human rights and improving employment and social conditions within its supply chain. Some 17,524 immigrants in a situation of social risk have benefitted directly from this initiative	Collaboration with the National Industrial Technology Institute (INTI) to develop competencies in aspects of production and improve the efficiency of audits by means of the inventory of processes
OPTIMIZATION
Effective auditing	Regular training for 14 local purchasers on purchasing practices and supply chain management	Ongoing monitoring by purchasing teams of the working conditions of employees	14 meetings with local purchasers on traceability and Corrective Action Plans	Coordination of CSR activities with all business areas	18 meetings with local purchasers to deal with specific themes related to supply chain management
Training and capacity building for suppliers	371 suppliers trained	16 suppliers trained	240 suppliers trained	27 suppliers trained	21 suppliers trained