Federated Department Stores, Inc. and its subsidiaries are firm in their
resolve to do business only with those manufacturers and suppliers that
share the company's commitment to fair labor practices, including
adherence to laws that protect workers and their salaries, both in the
United States and abroad.
As a condition of doing business with Federated, it is required that
manufacturers comply with all laws applicable to the country in which
the merchandise is manufactured, including but not limited to laws
against child or forced labor and unsafe working conditions. This
condition is reiterated on every purchase order issued by the company;
the purchase order contractually commits product manufacturers to adhere
to applicable laws in the fulfillment of the order, providing Federated
with an avenue of legal recourse should the contract be violated.
To further the objective of ensuring the protection of workers,
Federated requires its core vendors annually to acknowledge in writing
their understanding of the company's policies requiring full compliance
with all applicable laws in the manufacture of products to be carried to
Federated stores. Relationships with manufacturers and suppliers who do
not sign this agreement are immediately terminated by Federated. In the
manufacture of private label products being made exclusively for
Federated, the company routinely inspects factories for contractual
compliance, as well as compliance with laws and regulations dealing with
child or forced labor and unsafe working conditions.
Upon learning of a potential or actual violation of law by either a
supplier of merchandise to Federated or a subcontractor hired by such a
supplier, Federated will take the following actions:
- When notified by the U.S. Department of Labor or any state or
foreign government, or after determining upon its own inspection that
a supplier or its subcontractor has committed a serious violation of
law relating to child or forced labor or unsafe working conditions,
Federated will immediately suspend all shipments of merchandise from
that factory and will discontinue further business with the supplier.
Federated will demand the supplier institute monitoring programs
necessary to ensure compliance with applicable laws prior to the
resumption of any business dealings with that supplier. This action
will be in addition to any contractual or legal remedies available to
Federated pursuant to the purchase contract.
- Upon notification of a violation of law by a supplier or its
subcontractor, other than as set forth above, Federated shall
immediately suspend further shipments from that factory, pending
receipt of a detailed explanation from the supplier that describes the
circumstances surrounding the violation, the supplier's position with
respect to the violation, and a commitment by the supplier to take
remedial action to Federated's satisfaction. This action will be in
addition to any contractual or legal remedies available to Federated
pursuant to the purchase contract.
- Federated reserves the right to investigate any potential
violation of law and, at its discretion, to suspend, discontinue or
terminate its relationship with any supplier for its failure to comply
with any laws applicable to merchandise produced in the United States
or any other country.
Through the establishment of these policies, Federated believes it is
most effectively exercising its economic leverage with manufacturers to
encourage their full compliance with laws designed to protect their
workers; manufacturers who violate these laws know the consequences of
their actions. In addition to its commitment to fully enforce its
policies with manufacturers, Federated is committed to cooperating with
state and federal agencies who ultimately are responsible for enforcing
FPD Business Principles & Vendor Compliance
The following summarizes Federated Product Development's business
principles as they relate to our international sourcing strategy and
vendor compliance program.
Statement of Principles
- We are committed to legal compliance and ethical business
practices in all of our operations.
- We choose suppliers which we believe share the commitment.
- In our purchase contracts, we require our suppliers to comply with
all applicable laws and regulations.
- If it is found that a factory used by a supplier for the
production of our merchandise has committed legal violations, we will
take appropriate action, which may include taking rehabilitating steps
to bring factory back into compliance, cancelling the affected
contract(s), terminating our relationship with the supplier,
commencing legal actions against the supplier or other actions as
- We support law enforcement and cooperate with law enforcement
authorities in the proper execution of their responsibilities.
- We support educational efforts designed to enhance legal
compliance on the part of the U.S. apparel manufacturing industry.
We are committed to the above principles wherever we have our private
brands & labels manufactured worldwide. While foreign labor laws may
differ from country to country, we first and foremost follow the local
law of the country in regard to sup porting the minimum age and minimum
wage requirements. We follow our policy in regard to strictly forbidding
the use of forced labor and/or ozone depleting sub stances in the
manufacturing of our product. When in our vendor's facilities, we will
check for common-sense employee safety issues such as fire hazards,
clearly marked and unblocked exits, cleanliness, and poor lighting.
Vendor Approval Process
The most important part of our compliance program is the
identification of those vendors that share in our commitment before any
business is transacted. Therefore, it is our policy that all suppliers
and their manufacturing facilities must go through a formal evaluation
and approval process prior to the placement of any orders. Furthermore,
these vendors must agree to authorize, in advance, unrestricted access
to their facilities - including the ability to conduct unannounced
New vendors can only be approved by senior executive for that Region
booking the order. If the merchandise is to be inspected by another
region, then senior executive for that inspecting Region must also
approve the manufacturing facility.
The standard procedures is as follows. Specific examples of the FPD
forms and documentation are included in the Appendices attached.
- New Vendor/New Facility Approval Request submitted
- Terms of Engagement Letter notification
- New Vendor/New Facility Questionnaire completed
- Factory evaluation conducted and report submitted.
- Credit & litigation background check performed by an independent,
accred ited organization
- Vendor approved (ID number issued) & entered in the MPS system and
pur chase order creation enabled
- Rejected vendor/facility summary data maintained on file as part
of a Red Flagged list
- Purchase order issued with contract terms including compliance
requirements on reverse side
Assuring vendor compliance includes the following key components and
formal documentation of these activities:
- Regular in-line and final inspection of all orders with a
reporting section specifically covering observation of legal and
- All purchase orders issued with clearly stated compliance
- Unannounced factory visits for the express purpose of identifying
legal, safety and policy non-compliance
- Regular re-certification of all facilities by authorized Quality
- Annual notification to all active suppliers of our Terms of
FPD personnel look for violations of our policies which would include
compliance with Federal, state and local law. Safety, wage and under-age
worker violations are essential elements of our monitoring process. All
documented violations must be reported to the Corporate Legal
Counsel and the President/COO of FM/FPD for action.
Clearly defined levels of authorization have been established and
audited for compliance.
- Inter-regionally: Only Executive Vice President-Asia, Senior Vice
President -Europe and Vice President Production can approve new
vendors and factories.
- All factory evaluations must be counter-signed by a General
Manager or Divisional Vice President
- All facility approvals must be authorized at the Senior Executive
level for that region
- New Vendor Approval Requests must be counter-signed by
Merchandise, Production and Control Vice Presidents
Education & Training
Internal training by FPD Corporate Counsel, Corporate Quality Control
& Overseas Offices managerial staff.
State and local government educational seminars and training
National Retail Federation sponsored seminars & conferences.
Independent Labor & Wage Experts (as available).
1 North/South America Region requires letter to be signed by an
Officer of the Company and returned.
2 Only managerial level or pre-designated Quality Assurance staff are
authorized to evaluate factories.
3 US vendors are in an on-line database.
4 Worldwide roll-out and training completed by October, 1996
5 Example: New York State Apparel Industry Task Force