Gap Inc.'s Ethical Procurement Practices

Abstract:

The case examines the ethical procurement practices at the US-based Gap Inc. (Gap), one of the largest specialty clothing retailers in the world. Founded in 1969, Gap witnessed rapid growth in its business soon after its inception. To meet the growing demand, Gap started procuring garments from several countries. In 1992, Gap laid out sourcing guidelines for the suppliers covering labor, environment, health and safety standards. The responsibility of implementing these guidelines was on the suppliers. However, Gap found several violations to its guidelines in one of its facilities at El Salvador. Realizing that such violations could be prevalent among other suppliers too, Gap formed a compliance team and a Code of Vendor Conduct (CVC) in 1996.

The CVC was comprehensive and the compliance team was responsible for ensuring its implementation. In 2004, Gap published its first social responsibility report, which covered the violations to VCC that existed at suppliers' facilities. From then on, Gap published this report every year, detailing its activities, and has also made several improvements to the process of monitoring the suppliers' facilities. The case discusses the monitoring system followed by Gap and how it ensured adherence to the rules.

Issues:

» Evaluate how Gap ensured its procurement processes are carried out ethically.

» Study the Code of Vendor Conduct and social responsibility report of Gap and analyze its implications.

» Understand how an efficient supplier monitoring system can be developed.

» Appreciate the emerging trend among the companies to assume broader responsibility towards the environment and the community in which they operate.

» Examine if an 'ethical image' differentiates a company from its competitors.

Contents:

Keywords:

Gap Inc., World's Most Ethical Companies, Ethical Trading Initiative, Ethical Leadership, Code of Vendor Conduct, Global Compliance Team, Social Responsibility Report, Procurement Practices, Sourcing Guidelines, Independent Monitoring Working Group, Sourcing Principles, Supply Chain Management, Vendor Compliance Officers, Social Accountability International, Global Regulatory System, Supply Chain Management

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