Socially Responsible Supply Chains

Introduction

Corporate Social Responsibility at Marks and Spencer has traditionally been interpreted as the provision of quality and value for money for the customers and a paternalistic regime for the large labour force of shop assistants. As 90 per cent of these were women cared for by women supervisors, perhaps �maternalistic’ would be a better word. However, a more important and original dimension of chain stores’ strategy has been the paternalism exhibited in relations with a large body of supplier firms, first in the clothing industry and more recently in food supply. This policy, which was pursued for 70 years or more, and has only collapsed very recently, forms the main focus of this paper. The employee and supplier policies were not wholly separate operations because supplier paternalism covered (among several other things) the welfare of the manufacturing labour force in numerous factories around Britain. Consequently it is best to begin with an evaluation of what industrial relations have come to call the �Marksist’ labour policy. The paper then traces the shift from supply chain principles driven by family owner paternalism to those necessitated by global market regulation, examining the problems involved.

The Company’s staff welfare programme was laid out by Flora Solomon in the 1930s. Simon Marks appointed her to take charge after she stunned him with the rebuke �it’s firms like Marks & Spencer that give Jews a bad name’. In the post-war years, his nephew Marcus Sieff adopted a more explicit moral starting point for his �human relations’ policy, as he called it; he insisted that �the chief executive has a duty to treat his employees as he would like to be treated himself, to do as he would be done by.’

Marks & Spencer’s stores were furnished with good staff canteens, rest rooms, medical and dental care, hairdressers, chiropodists, clean toilets and good training facilities, all supervised by a staff manageress in each store. Sieff had no doubt that these facilities were a necessary investment - 1 -

in the efficiency of his and all other firms and saw to it that they were adopted by all the firm’s suppliers as a condition of maintaining the contracts, whether the factory owners liked it or not. The welfare facilities were no doubt appreciated by the Company’s numerous retail workers, but the system has not been without its critics. An article on вЂ?Marksist’ management in the Industrial Relations Journal XXIX (1998) maintained that “the reality falls somewhat short of the rhetoric” and that over 60 per cent of staff in one retail store perceived management-employee relations to be poor, вЂ?In fact, a more appropriate characterisation of Marksist (sic) management is perhaps sophisticated paternalism, where care, humanity, welfare and the like are emphasised primarily as a means of legitimising managerial authority.’ In The Times series of Corporate Profiles of 2003, the verdict on M&S’s attitude to employees was 7/10, a respectable figure, but no better than the much more down-to-earth Morrison’s Supermarkets. Morever, the вЂ?fact cat quotient’ at M&S has a high 8/10, Morrisons 5/10, figures that fail to match M&S’s self-pride in their corporate social responsibility.

With those perspectives in mind, we may turn to the relationship with the suppliers. The foremost element in Marks & Spencer’s success in its more creative period was its unique relationship with its British suppliers. From the 1930s to the 1980s the family directors repeatedly called attention to the �special relationship’ with the manufacturers that contracted with them. The traditional channel from the factories to drapers’ and tailors’ shops had been through the warehouses in the commercial sectors of London, Manchester, Glasgow and other cities. When some of the departmental stores tried to by-pass the wholesalers by buying direct from the producers, the Wholesale Textile Association was formed in 1912 to vigorously defend the middlemen’s established positions. By a sequence of secret deals beginning with Corahs of Leicester in 1926, Marks & Spencer established direct relationship with the firms that made their merchandise.

The relationship was soon much more than a steady flow of orders. The British textile industry always consisted of a large number of small firms

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that, because of the established wholesaling system, had little experience of marketing, and because of lack of scientific and commercial education, too often failed to recognise new opportunities. Marks & Spencer created a Merchandise Development Department to show producers how to reduce costs, improve quality and respond to new production technology, sharing the benefits of greater efficiency with them. The heads of a handful of larger suppliers came to enjoy further benefits, notably provision of capital and new factory executives to secure the intimate relationship. A few of these favoured suppliers, like John Goodenhay of Kayser Bondor and the Djanogly brothers of Mansfield Hosiery Mills, were Jewish, but others (like Corahs and Dewhirsts of Leeds) were not. If there was a Jewish trait, it was in strong loyalty and bonding, rather than any synagogue or Zionist connection.

This loyal following was trumpeted to the chain store’s growing army of customers by means of the proud claim to buy 90% of its merchandise from British producers. Indeed, for many years, the only significant imports came from two favoured producers in Israel. Marcus Sieff was always proud to declare his company’s undying commitment to domestic sourcing, and the policy was only significantly eroded after his retirement from the Chairmanship in 1984. The downside for suppliers was the exact specifications that M&S enforced the tight profit margins and the loss of their individual identities in the St Michael brand name.

The system was no means static. Suppliers had to be efficient to meet M&S’s exacting standards and to retain their powerful customer. Long-standing suppliers that faltered might be propped up for a period by advice and possibly injections of new leadership and capital, but if the local family leadership was running out, M&S would encourage a better performing competitor to take the firm over. Meanwhile, a handful of efficient supplier firms grew rapidly. In clothing, the Djanogly brothers (later known as Nottingham Manufacturing Company, or NMC for short)