Companies verify labour conditions in their supply chains through auditing. The design of that system explains why serious problems continue to be found in audited chains.
Visibility falls away below the first tier
Brands have contracts with direct suppliers and can require access to those facilities. Below that level, relationships are between suppliers and their own subcontractors.
Each further tier is known only through information the tier above provides, and mapping a chain to raw material can involve many intermediaries.
Because risk concentrates in lower tiers, where margins are thinnest and informality greatest, audit coverage is weakest exactly where it is most needed.
Unauthorised subcontracting compounds the problem, since an approved factory that passes work to an unapproved one moves production outside the audited chain entirely.
Announced visits are prepared for
Most audits are scheduled in advance so that management and records are available, which gives facilities time to prepare.
Preparation can include correcting genuine problems, and it can include presenting selected records and coaching workers on what to say.
Unannounced audits reduce this but cost more and strain commercial relationships, so they are used selectively rather than as standard practice.
Auditing measures documents more than conditions
An audit day is largely spent verifying payroll records, hours logs and permits, since these are the evidence the checklist requires.
Parallel record-keeping is a known problem, and hours violations are among the most frequently understated findings in the sector.
Worker interviews conducted on site, in earshot of management or without a trusted interpreter, are unlikely to surface issues that carry personal risk.
Purchasing practices generate the pressure
Suppliers face short lead times, late design changes and prices negotiated downward, and those conditions push toward overtime and subcontracting.
Auditing examines the supplier's behaviour while leaving the buyer's ordering practices outside the scope of assessment.
Programmes that measure buyer practices alongside supplier compliance address the incentive rather than only its consequence.
Longer commitments and stable order volumes also help, because a supplier confident of future work can invest in capacity rather than absorbing peaks through overtime.
Regulation is shifting toward due diligence
Legislation in several jurisdictions now requires companies to identify and address human rights risks in their chains rather than only to report on them.
These duties place obligations on the buyer and can attach liability, which changes the calculation compared with voluntary certification.
Scope, thresholds and enforcement differ considerably between jurisdictions and are still being developed, so applicable obligations must be checked directly.