Tier 1 suppliers to be paid digitally, says Gap

Clothing retailer Gap has announced that all of its tier 1 suppliers are to be…...

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Clothing retailer Gap has announced that all of its tier 1 suppliers are to be paid digitally by 2020.

The move away from a cash-based system towards fully digital payment methods will increase supply chain transparency and efficiency as well as empowering and improving the livelihoods of workers, the company said.

Roughly 800 factories employing over one million garment workers in 30 countries will be affected by the change, which is expected to have a positive impact on supply chain employees’ welfare.

David Hayer, Gap Inc.’s Senior Vice President of Global Sustainability and also President of the Gap Foundation, said that by having suppliers pay their employees digitally the company hoped to “accelerate the transition towards a more transparent workplace”.

Over 60% of the organisation’s supplier factories already use digital payment methods such as online bank transfers and e-wallets. Gap claimed in a statement that using electronic wage payment methods had the advantage of integrating ‘cash in hand’ workers into the banking system, thus giving them greater financial protection and security.

The statement particularly highlighted how this would give women workers greater control over their finances, allowing them to save and invest their money more easily, in addition to sending it safely to family members elsewhere and using it to pay household bills.

The company also emphasised the advantages of the new payment system to factory owners. Increased efficiency and speed would inevitably lead to cost reductions, it claimed, while all parties would also benefit from “increased accountability, transparency and security”.

Gap also announced that it had joined the UN-supported Better Than Cash Alliance. This is a partnership of businesses, governments and international organisations aiming to reduce poverty and drive growth by accelerating the conversion from cash to digital payments worldwide. These developments certainly suggest that Gap is committed to the digital switchover in order to benefit its workforce.

Ed Cross

Ed founded Odesma in 2014 with the explicit intent of creating a new kind of procurement consultancy founded entirely on cloud principles. Deploying best-of-breed subject matter experts alongside the best on demand technology to deliver rapid and effective change for customers.

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