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How to Develop Compliance with Sustainable Practice in RMG Industry

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How to Develop Compliance with Sustainable Practice in RMG Industry

As, Compliance is most essential term in RMG industry, it is required to maintain in sustainable way, to increase Global Image & Recognition for the Performance, which requiring for doing business in long term. This presentation has been stating on how company can co-relate the compliance practices with the Sustainability.

As, Compliance is most essential term in RMG industry, it is required to maintain in sustainable way, to increase Global Image & Recognition for the Performance, which requiring for doing business in long term. This presentation has been stating on how company can co-relate the compliance practices with the Sustainability.

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How to Develop Compliance with Sustainable Practice in RMG Industry

  1. 1. How to Develop Compliance with Sustainable Practice in RMG Industry Presented by 1 Amatun Noor MBA (HRM) Working on Apparel Sector since 2010
  2. 2. Overview 2 As Bangladesh is 2nd largest Garments Exporter country in the world and has been contesting with other rivals (i.e. – China, Vietnam & Myanmar), it demands to develop infrastructure in RMG industry with sustainability to set long term goal to survive against the rivals. Bangladesh has been facing challenges on the issue of Raw Materials, Power & Energy Resource, Lead-time, Price Competitiveness, Skill Workers, Working Hour, etc. Now international buyers are creating pressures on the issue of maintaining Compliance. Before placing the orders in the factory buyers are auditing the factories to assess the Labor standards, Employment Conditions, Work Environment, Occupational Safety & Health, Industrial Relationship and Management System exactly to the Rules and Regulations or not. So, it is the big challenge to satisfy buyers during Audits complying with International Labor Standard(s), Country Law(s) & Rule (s) as well as Buyer Standard(s). So there is no alternative to develop/establish Compliance with Sustainability in the work place.
  3. 3. What is Compliance? 3 - An affirmative Indication or Judgment that the supplier of product or service has met the requirements of the relevant Specifications, Contract or Regulations also meeting the Requirement. - In “ISO” term Compliance to Regulations, compare with Conformance; so that, Enterprise/Facilities/Industries of all sizes can ensure supplier, Operational & Regulatory Compliance to minimize the risk, increase opportunity and realize the full potential of agreement, transaction and contracts. Or, - To comply with Country Laws, Rules & Regulations and Govt. Gazette, Buyers Code of Conduct & International Standards.
  4. 4. Background of Compliance 4 - Since July 1995, there was a joint collaboration program & MOU signed with ILO, BGMEA & Bangladesh Government. - The program was one of component of Compliance, which is “Child Labor Elimination from the RMG Industry”. - Then another MOU signed at January 2001 on WIP (Workplace Improvement Plan) in RMG Industry. - Then Compliance journey had started.
  5. 5. What is Sustainability? 5 - The ability to be maintained at a certain Rate or Level. - Sustainability is the endurance of systems and processes. - The ability to continue at a particular level for a period of time.
  6. 6. Why Sustainability is Important in Compliance? 6 - Long term Business (Continual Order) - Increase the Business Volume - Buyer Satisfaction & Good result in the Audit - Avoid unnecessary penalties from the Buyer due to lack of Compliance - Reduce Employee & Worker’s Turnover Rate - Avoid workplace Incidents & Accidents - Improve Quality of Product & Increase Productivity - Reduce Business Costs - Global Image & Recognition for the Performance - Good Public & Community Relations - Good Government & Industry Relation
  7. 7. Core Actions for Sustainable Compliance 7 - Top Management Commitment - Sufficient Knowledge of Mid Management or Responsible Persons - Well Planned construction of the factory building - Process of identification of risks that an organization faces and advise on them (Identification) - To Design & Implement controls to protect an organization from those risks (Prevention) - To Monitor & Report on the effectiveness of those controls in the Management of an organizations exposure to risks (Monitoring & Detection) - To resolve compliance difficulties as they occur (Solution) - To advise the business on rules and controls (Advisory)
  8. 8. How does Compliance will be Practiced & Sustained in the Work place? 8 Plan Do Check Act Compliance is not CSR, rather than it is the basic mandatory requirement of deriving Business
  9. 9. Plan 9 - Set the Goal  “Workplace to be fully Compliant” • “Top-Management’s Commitment” to be required. - List the tasks to reach to the Goal - • Determine the External & Internal Issues, Interested Parties (i.e. – Worker, Stakeholder, Bank, Shareholder, etc.) and the Scopes. • Set COC for the company to meet Compliance Requirement/Standard. • Determine the Legal Requirements & Other Requirements (i.e. - Country Law & Rule, International COC, Buyer Standard, etc. (Annex: 1). • Collect all License(s), Certificate(s) & Permit(s) to meet legal requirements (Annex: 2).
  10. 10. Cont.…….. 10 - List the tasks to reach to the Goal - • Develop Policy & Procedure based on the Compliance Requirement / Standards (Annex: 3). • Analyse the Risk(s) & Opportunity(s) to meet the Compliance Requirements. • Set the Control Measures.  Sources of Law, Rule, Gazette, etc. -  www.http://bdlaws.minlaw.govt.bd/  http://www.parliament.govt.bd/  http://www.ilo.org/  http://www.bgmea.com.bd/  www.http://boiler.govt.bd/
  11. 11. Cont.…….. 11 - Company Policy(s) & Procedure(s) – • Those reflect how to Execute / Maintain Compliance Standards in the company (Annex: 2). • To be developed complying with Country Law(s) and Rule(s) & Regulation(s), International Standards as well as Buyer COC. • Define Company Principles & Commitments, Objectives, Target Group, In-line Tasks (How to execute the policy) & Routine, Responsible Person for each specific task and Time-frame. • To be communicated to all Workforces; both Worker & Management. • To be Evaluated & Reviewed as regular basis (At least Annually) to identify the Short Comings, for Remediation as well as next Action Plan. • To be developed in local language. • Top Management Approval is mandatory.
  12. 12. Cont.…….. 12 - Risk & Opportunity Analysis & Control Measures – • Identify the probable Risk Factors for any violation as well as the Opportunities for the implementation of any standard. • Preventive & Control Measures to be defined against all Risk factors as well as to be implemented as regular basis. • Responsible Person to be designated & accountable for each actions. • Risk Analyses to be conducted based on -  Social & Labor Standard  Twice a Year  Occupational Health & Safety Standard  Twice a Year  Fire Safety & Emergency Situation  Twice a Year  Environmental Standard  Twice a Year  Security Standard  Quarterly a Year • Training to be provided; both Worker & Management. • Use local language for Risk Analysis.
  13. 13. Do 13 - All operations to be led in line with Compliance as per company Policy & Procedure). - “Organizational Structure” & “Chain of Command” to be set-up. - Responsible Person to be made as Accountable with specific Role & Responsibility for the implementation of Compliance standard. - All Guidelines/Decisions about to be communicated to the Workforce through – • Meeting • Training • E-mail • Announcement • Notice/Circular/Letter, etc.
  14. 14. Cont.……… 14 - “Team Effort” results Good Compliance . - All depts. need to Cooperate & take Responsibilities to ensure Compliance in the workstation. - Compliance Activities to be Supervised & Directed as regular basis, not only for emergency or audit.
  15. 15. Cont.……… 15 - Training & Awareness: • To be provided both; Management personnel & Worker (Annex: 4) which is essential to –  Make the Workforce familiar with Compliance Culture.  Develop Skill & Performance of the workforce.  Lead all operations in line with Compliance.  Communicate new Standards/Changes to the workforce.  Meet the Buyer Requirements. • Emphasize on Management training who drives the operations in the workplace. • Training is not Expenditure, rather than it is the key of Development & Sustainability which are essential requirement for long-term business.
  16. 16. Cont.……… 16 - Training & Awareness: • Training & Awareness to be provided through –  Classroom Session  Audio & Video  Announcement (by PA system)  SOP (Standard Operating Procedure)  Poster, Signage, etc.  Audio & PA system are more effective tools for refresher training, as production time is not consumed by these techniques. • Need Analysis & Pre-Assessment to be conducted among the workforce to determine which type of training is required. • Post-Assessment to be conducted to measure the impact & effectivity of the Training & Awareness.
  17. 17. Cont.……… 17 - Different “Committee” may be formed to lead Compliance Activity which also required as per Country Law & Rules as well as Buyer end: • Make more functional the Committees through -  Frequent Meeting  Defining Role & Responsibility  Actions with specific Time-frame  Monitoring & Tracking (Actions are implemented or not)  Evaluation
  18. 18. Cont.……… 18 - Committees as per Country Law & Rules and Buyer Requirement: • Participation Committee • Safety Committee • Recruitment & Selection Committee • Anti-Harassment & Abuse Committee • Anti-Discrimination Committee • Grievance Redress Committee • Machine Safety Committee • Environmental Management Committee
  19. 19. Cont.……… 19 - Basic Compliance standards - • Working Hour & Overtime • Wage, Overtime Premium, Bonus, Compensations, and On-time Payment • Yearly Increment & Promotion • Leave Facility & Annual Leave Encashment • Child Labor • Force Labor, Bond Labor, Indentured Labor, Prison Labor • Discrimination • Harassment & Abuse • Freedom of Association & Collective Bargaining (PC Activity) • Grievance Mechanism • Termination of Employment including Final Settlement
  20. 20. Cont.…….. 20 - Basic Compliance standards - • Occupational Health & Safety -  PPE & Safety Precaution  Drinking Water  Structural Safety (i.e. - Building/Floor Lay-out, Crack, Occupancy Load, etc.)  Fire Safety  Locking Device  Exit. Stair & Passage Way  Fire Protection Arrangement  Emergency Action Plan & Contact Number  Electrical Safety  Medical Treatment
  21. 21. Cont.…….. 21 - Basic Compliance standards - • Security –  Periphery Security  Physical Security & Access Control  IT Security  Personal Security  Shipment Information Control  Export Logistics  Contractor Selection & Control, etc.
  22. 22. Check 22 - Compliance Activities to be monitored through – • Different Information / Data –  Accident & Injury Log  Grievance & Disciplinary Action Record  Absenteeism Record  Workforce Turn-Over Record  Exit Interview Record • Internal Compliance Audit -  Social & Labor Standard as well as Occupational Health & Safety  At least Monthly basis  Environment Standard  At least Monthly basis  Security Standard  Quarterly basis
  23. 23. Cont.……… 23 - Compliance Activities to be monitored through – • Internal Compliance Audit reports, conducted by the 3rd Party or Buyer • Survey among the Workforce (At least 50% of the total workforce) • Survey among the Community (Best Practice) • Open-door Conversation • Meeting (Especially with the different Committees of the workplace) • Help Desk & Hot-line Number - All results to be accumulated and documented in the form of “Report” for the next course of action (Evaluation & Action Plan).
  24. 24. Act 24 - Analysis & Evaluation of Monitoring Report - Root Cause Analysis - Action Plan based on the Severity & Needs – • Initiating to eliminate all NCs ASAP. • Increasing awareness among the workforce. • Revising Company Policy-Procedure, as per previous feed-back. • Restructuring Responsible Person, Job Responsibility, Accountability, etc. (if required) - Setting Plans for the next.
  25. 25. What is Compliance Audit? 25 Compliance audit is  A comprehensive review of an organization's adherence to regulatory guidelines.  An official inspection of the factory processes and performance based on standards & specific guidelines by an individual body.  Like doing a survey: a neutral point of view. The objective is to identify the compliance & non-compliance to some specifications, standards, contractual agreements or other criteria.  Made of observation which inspects the equipment and processes based on the written procedures.
  26. 26. Cont.……… 26  Audit’s important output is the non-conformity list (Minor, Major, Critical, Zero Tolerance, etc.).  It allows to define action plans to improve the implemented system. Audits can be internal or external.  Audit result can be Unacceptable, Acceptable, Good, Need Improvement, Satisfactory, etc.  Audit result can be categorized based on country law, international standard(s) as well as buyer standard(s).
  27. 27. Challenges of Factory Management 27 - Lack of strong Commitment from the Top Management regarding implementation - Investment for new requirements (Expenses) - Lack of knowledge of Designated person on compliance - Excessive Working Hours & Off Day & Festival holiday works - Minimum Wages - Trade Union - Improper Organogram & Responsibility - Make a Culture of Standard Compliance - Insufficient support of compliance requirements from Top mgt. - Safety Equipment Neglected
  28. 28. Cont.……… 28 - Lack of effective Training & Awareness - Some Safety Requirement of Alliance & Accord standard, such as • Sprinkler • Fire Door maintenance • DEA - Some License, Certificate & Permit, such as – • Environmental Clearance Certificate • Building approval from Rajuk if under DAP • BERC Certificate from Bangladesh Energy Regulatory Commission • Waiver Certificate from Bangladesh Explosive Department (if more than 2500 liter chemical stored)
  29. 29. Case Study 29
  30. 30. Case: 1 30 Renaissance Group entries in RMG business as Knit manufacturer with 55 lines in March, 2015. The owner made a 8 storied building in his own land. After completing all set-up, the factory starts production with 2500 workforce (both management staffs & workers) and declared to the buyer in March, 2016. In the first initial audit, facility achieved “Good” rating from the buyer; with no ZT or Major issue, only below 3 minor issues raised by the auditor - - Needle Guard found missing in 3 sewing machines out of 15. - Found soap inadequate in the male toilet. - Cutter found untied in 5 sewing machines.
  31. 31. Cont…….. 31 1 year later, follow-up audit conducted at the same facility by the same audit team where found 1 ZT & 4 Major Issues and audit result become Unacceptable as well as another new audit required to arrange within short time to get the new order. The issues are – - Aisles found block - Locking devices have been using - Fire Alarm is non-functional - No secondary maintained for chemical container Question Why this situation is occurred and what is the root cause behind it??
  32. 32. Case: 2 32 In June, 2016, 1 Band-Knife Operator of Cutting Section of Renaissance Group has died, suffering from Tetanus. At the time of investigation, it is found that, 11 months back, his 1 finger (Pointer) had cut-off by Band-Knife machine during working. He did not use PPE in that time and after the incident he took medical treatment but did not take any vaccine. Generally, operators do not use PPE during working in this machine, as no PPE is provided by the management. On the other hand, there is no arrangements for the proper medical treatment, at the facility. In the investigation, Management stated that, they did not guess the probability of this type of incident. Question Why this situation is occurred and what is the root cause behind it??
  33. 33. Annex: 1 List of Law, Rule & Regulation, International COC, Buyer Standard, etc. 33 - Bangladesh Labor Law – 2006, Amendment – 2013 & Bangladesh Labor (Amendment) Law – 2018 - Bangladesh Labor Rules – 2015 - Bangladesh National Building Code – 2006 and ACCORD / Alliance Standards as well as NFPA Guideline - Building Construction Act – 1952 - Statutory Regulatory Orders (S.R.O) – 109, Act – 1999, published on 25th May - Dhaka Mahangar Imarat Nirman Bidhimala – 2008 - Chittagong Imarat Nirman Bidhimala – 2008
  34. 34. Cont.…..... 34 - Circular on Building Permit on 19th August – 2010, Ministry of Housing & Public Works/Pari – 1 / Occupant – RMG 42/2007/256, Circular no. Ministry of Housing & Public Works/Pari – 1/Occupant-RMG 42/2007/302, dated on 25th November – 2008 - Circular on Removal of Temporary Tin shade from Rooftop of RMG Factory Buildings (Ref: BGMEA Letter # BGA/Safety/18000/2011/28180, dated on 28th December – 2011 - Circular on 19th April – 2013_RAJUK_Building Permit inside Detailed Area Plan (DAP) - Fire Service & Civil Defence Act – 2003 - Fire Service Rules – 1961 & Amendment Gazette – 1999 - Fire Resist & Extinguish Act – 2003
  35. 35. Cont.…..... 35 - Fire Prevention & Dousing Act – 2003 - Boiler Act – 1923 - Boiler Rules – 2010 - Electricity Act – 1910 & Electricity Rules – 1937 - Petroleum Act – 1934 - Gas Cylinder Rule – 1991 - Pressure Vessel Rule - 1995 - Explosive Act – 1884 & Explosive Rule – 2004 - The Bangladesh Environmental Conservation Act –1995 - Narcotic Control Act – 1990
  36. 36. Cont.……… 36 - Narcotic Control Rule - 1990 - The Environmental Conservation Rules – 1997 - Ecologically Critical Area Conservation Rules – 2010 (12 areas in Bangladesh like, Coxbazar, Gulshan, Baridhara Lake, Sundarban, Kuakata, Lawachara, etc.) - Bangladesh Biological Diversity Act – 2012 - The Noise Pollution Management Rules – 2006 - The Medical Wastage Disposal Rules – 2008 - ZDHC (Zero Discharge of Hazardous Chemical) Standard - Acid Control Act – 2002 - Custom Act – 1969
  37. 37. Cont.……… 37 - Company Act – 1994 - Stamp Act - 1899 & Amendment – 2012 - ILO Convention - International Standard(s), i.e. - BSCI, SEDEX, ISO, WRAP, GOTS, OCS, GRS, etc. - Security Standards(s), i.e. - CT-PAT (Customs Trade Partnership against Terrorism), SCS (Supply Chain Security), SCAN (Supplier Compliance Audit Network), GSV (Global Security Verification - Buyer COC & Company COC
  38. 38. Annex: 2 List of Licence(s), Certificate(s) & Permit(s) 38 SL Particular To be Collected from Remark 1 Certificate of Incorporation Register of Joint Stock Companies & Firms of Bangladesh One time 2 Memorandum of Article of the Company Register of Joint Stock Companies & Firms of Bangladesh One time 3 Trade License /Business License City Corporation 4 Factory License Factory Chief Inspector 5 Factory Set-up Permission Register of Joint Stock Companies & Firms of Bangladesh One time
  39. 39. Cont.……… 39 SL Particular To be Collected from Remark 6 TIN Certificate National Board of Revenue, Bangladesh One time 7 VAT Registration Customs, Excise & VAT Commissioner3535, Dhaka (Under National Board of Revenue, Bangladesh) One time 8 BOI (Board of Investment) Registration Board of Investment 9 BGMEA / BKMEA Membership Certificate BGMEA / BKMEA
  40. 40. Cont......... 40 SL Particular To be Collected from Remark 10 Bond License Bond Commissioner 11 Import Registration Certificate (IRC) Import & Export Control Department of Bangladesh 12 Export Registration Certificate (ERC) Import & Export Control Department of Bangladesh 13 Enrolment Certificate (EPB) Export Promotion Bureau 14 Certificate of Group Life Insurance Nominated Company from BGMEA / BKMEA
  41. 41. Cont.……… 41 SL Particular To be Collected from Remark 15 Building approval Rajdhani Unnayan Kartripakkha (Rajuk) / Local Government Engineering Department (LGED) One time 16 Machine Layout approval Factory Chief Inspector One time 17 Multi-Storied Building Clearance Certificate Civil Aviation Authority of Bangladesh One time 18 Multi Storied Building Occupancy Certificate Local Government Engineering Department (LGED) One time 19 Bonded Wire-house Set- up Permission Customs Bond Commissioner, Dhaka One time
  42. 42. Cont.……… 42 SL Particular To be Collected from Remark 20 Fire Insurance for factory Any Group Insurance Company 21 Factory Fire License Fire Service & Civil Defense 22 License for Captive Power Generation (CPP) / Generator Set-up Permission Bangladesh Energy Regulatory Commission 23 Electrical Set-up Permission Bangladesh Rural Electrification Board One time 24 BERC Certificate / Generator Set-up Permission (Gas & Diesel) Bangladesh Energy Regulatory Commission
  43. 43. Cont.……… 43 SL Particular To be Collected from Remark 25 Waiver Certificate from (If more than 2500 Liter chemical stored) Bangladesh Explosive Department One time 26 Fuel Tank Usage Permission Bangladesh Explosive Department 27 Steam Boiler Set-up Permission Office of The Chief Inspector of Boilers One time 28 Boiler Operator’s Competency Certificate (If any) Office of The Chief Inspector of Boilers 29 NOC for the use of Thermal Boiler Office of The Chief Inspector of Boilers One time
  44. 44. Cont.……… 44 SL Particular To be Collected from Remark 30 NOC for Water Extraction City Corporation / Union Parishad One time 31 Waste Water Test Report Nominated 3rd Party by the Buyer 32 Environment Clearance Certificate (ECC) Department of Environment 33 Initial Environmental Examination (IEE) report Recognize 3rd Party (i.e. – Bureau Veritas, SGS, Intertek Ltd. etc.) One time 34 Environmental Impact Assessment (EIA) Recognize 3rd Party (i.e. – Bureau Veritas, SGS, Intertek Ltd. etc.) One time
  45. 45. Cont.……… 45 SL Particular To be Collected from Remark 35 Air Emission & Noise Pollution Test Report Department of Environment / Certified Company 36 Hospital Agreement (As per Bangladesh Labor Rules – 2015) Any Nearest Reputed Hospital 37 Working Hour / Shifting Approval Factory Chief Inspector One time 38 Electrical Certificate Power Distribution Board (PDB) 39 Drinking Water Test Report Institute of Public Health (As per Labor Rules – 2015)
  46. 46. Cont.……… 46 SL Particular To be Collected from Remark 40 Electrician’s Competency Certificate Bangladesh Ministry of Power, Energy & Mineral Resources 41 Folk Lift Operator’s Competency Certificate Bangladesh Road & Transport Authority (BRTA) 42 Lift Operator’s Competency Certificate Lift Providing Company / Any Recognize Institution 43 Doctor’s Registration Bangladesh Medical & Dental Council 44 Nurse’s Competency Certificate Any Reputed Organization 45 Acid License District Administration Office 46 Agreement with Waste Collector Any Collector having Business License & Environment Clearance Certificate
  47. 47. Annex: 3 List of Policy & Procedure 47 - Employee Recruitment & Selection - Working Hour - Leave - Compensation & Benefit - Increment & Promotion - Loan - Prohibition of Child Labor - Child Labor Remediation - Young Worker Treatment - Employment Separation - Grievance Mechanism - Disciplinary Action - Prohibition of Harassment & Abuse - Women Employee Treatment - Disable Employee Treatment - Prohibition of Discrimination - Prohibition of Forced Labor - Freedom of Association & Collective Bargaining - Occupational Health & Safety
  48. 48. Cont.……… 48 - Fire Safety - Emergency Action Plan - Emergency Medical Service - Personal Protective Equipment (PPE) - Lockout & Tag out - Chemical Management - Needle & Sharp Tool Control - Product Safety - House Keeping & Cleanliness - Child Care - Canteen - Dormitory (if this facility is available) - Sub Contract - Precarious - Environment - Waste Management - Community Service - Anti-Corruption - Business Ethics - Security
  49. 49. Cont.……… 49 - Personal Security - Physical Security - Information Access Control - Shipment Information Control - Contractor Selection & Control - Export Logistic - ID Card - Training - Best Practices (if any) - Document Control
  50. 50. Annex: 4 List of Training 50 - Induction Training at the day of Joining - Working Hour - Leave Facility - Compensation & Benefit - Recruitment & Hiring Practices - Grievance Mechanism - Prohibition of Harassment & Abuse - Disciplinary Action Measures & Communication Channel - Prohibition of Discrimination - Freedom of Association & Collective Bargaining - Prohibition of Child Labor - Prohibition of Force Labor - Treatment of Young Worker / Employee - Buyer Code of Conduct (COC), International Standard and UNGP (United Nation Guiding Principles
  51. 51. Cont.……… 51 - Anti-Corruption - Business Ethics or Corporate Ethics - Fire Safety & Emergency Response (By Certified Authority & In- house arrangement) - Occupational Health & Safety - First Aid & CPR (6 month’s Certification Training & Regular Refresher Training) - Chemical Handling - PPE & Safety Guard / Device - Electrical Safety; based on NFPA – 70 (E) - Boiler & Generator Operation - Machine Operation & Safety - Environmental Management System - Wastage Handling - Housekeeping & Cleanliness - Special Awareness on Work-place Accident & Injury - Factory Security Procedure
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