GM Supplier Factory Explosion: Thoughts on Supply Chain Visibility and Responsibility

This past Saturday, an explosion at the Kunshan Zhongrong Metal Products factory in China killed at least 75 workers and injured at least 185 others. Zhongron supplies aluminum alloy wheel hubs to another company, Citic Dicastal Wheel Manufacturing Co., which is a supplier to General Motors (GM).

In a statement on Sunday, GM was quick to note that it did not have a direct relationship with Zhongrong, which it described as a Tier 2 supplier, and added that Tier-1 suppliers such as Dicastal are “required to source from Tier-2 suppliers who must meet both in-country environment and safety standards as well as quality standards.”

And yesterday, according to a Wall Street Journal article, GM President Dan Ammann said, “Our tier-one suppliers on a global basis are required to make sure that they are sourcing from suppliers that are implementing the right safety standards…[Zhongrong] was a supplier to a supplier, as opposed to us, so we are a couple of steps removed…But obviously it is a tragic situation, regardless.”

It is clear from these comments that GM is trying to distance itself from this tragedy, but as much as the company wants to pass the buck to its Tier 1 supplier, the responsibility ultimately stops at GM.

Here’s the way I think about it: you can’t aspire to have end-to-end supply chain visibility, which is what every manufacturer and retailer wants in order to become more agile and responsive, without also accepting end-to-end responsibility.

The scope of end-to-end supply chain visibility must go beyond the status of orders, shipments, and inventory — it must also include having timely, accurate, and complete visibility to labor, safety, environmental, and legal practices across the entire supply chain.

This is by no means an easy task, especially for companies like GM with complex, global supply chains. Just look at all the time, money, and resources companies like Intel are investing to discover, report, and eliminate the use of conflict minerals in their supply chains. Companies are also making similar efforts to eliminate slave labor from their supply chains.

Not an easy task, but a necessary one.

As I wrote back in May 2013, if you want to create socially responsible supply chains, you have to develop a more granular and detailed understanding of your supply chains. You have to improve the way you communicate and collaborate with your suppliers, especially lower-tiered ones. And most importantly, you can’t outsource the responsibility; the buck ultimately stops with you, the brand owner. You have to see and walk your supply chain, from start to finish, with your own eyes and feet.

Responsibility for your supply chain does not end at Tier 1.

(For related commentary, see How Many Slaves Are in Your Supply Chain? and Why Supply Chain Mapping Matters).