Responsible sourcing by improving workplace safety through buyer–supplier collaboration

Abstract

In this paper, we study a problem where a buyer and a supplier collaborate to improve safety at the supplier’s facility. We analyze and compare three policies; for the first policy, the buyer and the supplier jointly collaborate to improve safety at the supplier’s manufacturing facility (this policy is known as Accord in the industry). For the second policy, the buyer supports the supplier by providing external funding (this policy is named Alliance). The third policy is the Base policy, which is used as a benchmark. Under Base policy, the buyer does not provide any support to the supplier on the safety front. Using analytical frameworks, we determine and characterize optimal policies from buyer’s, supplier’s and system safety perspectives. We find that a low capability supplier prefers Accord when the buyer’s capability is high and Alliance, otherwise. However, from safety perspective, for low capability supplier, Alliance should never be preferred.