Nike Standards of Compliance
Nike has a high standard when it comes to dealing with suppliers violating their laws and conditions. Nike ensures that the factory that violates these standards is responsible for improving performance if it is found to be in violation of those laws. To monitor each factory that Nike employs they have a master plan in place, once a factory violates their laws or standards they are subject to that action plan. If no progress is made then the factory is subject to review and sanctions as well as the possibility of termination.
Nike have a number of different processes involved to monitor and ensure that their standards are being met by every one of their factories producing the Nike Brand. They monitor both management and labour, as well as environmental, safety and health items in factories, they are assessed by a overall rating system in place to grade them on their performance as shown in the illustration below. Each Nike contracted factory is subject to an audit and assessment every one to three years depending upon their previous compliance record. If a factory receives a compliance grade of either a C or D then Nike will work with them to improve their performance by using the specific steps in place based upon Nike’s action plan. If the factory continues to have poor performance and doesn’t show any progress being made on that action plan then Nike will either sanction or terminate their contract with that factory.
To correctly manage factories standards of compliance, Nike has expanded its audits and assessments to conduct deeper studies. They have put in place the Management Audit Verification Tool (MAV) that allows them to dive deeper into factories 4 core areas. These areas include the employee’s hours of work, wages and benefits, labour relations and grievance systems. This allows for Nike to closely monitor factories standards and provides Nike with more in-depth analysis of each factories conduct with their employees and labour laws.
By having these systems in place it has allowed Nike to lower the number of factories that are violating their standards of compliance. Nike has evolved its audit and assessment processes over the years to ensure that each factory is producing a good product under the right labour laws and conditions. It has given them a better understanding of their production problems that they face and how to have the correct steps and plans in place to fix these compliance issues.