FIT5 - Factory Improvement Training in China

Globalization is a market driver in all economies around the world. Rapidly growing and emerging markets offer high potential, but also high risks when measured against international standards and common business behavior. In order to improve the situation of suppliers in these new economies, it is necessary to inform, train and support factory owners as well as workers in implementing management systems and improving production.

Increasing production while at the same time being a socially responsible employer can be a challenge. Particularly well-known are examples from the sportswear and textile industries. Being a supplier for brands that are sold all over the world often means adopting the standards of the brand owner. Enabling the suppliers to have a say in the process and deciding which standards are important to them are some of the goals of the FIT5 Program (Factory Improvement Training based on 5 integrated modules: Communication, Human Resource Management, Lean Manufacturing, Occupational Health and Safety and Social Accountability). The key to success is to transfer responsibility and ownership, making it a desired change that comes from within rather than one forced by customers or buyers.

TÜV Rheinland Group in Shenzhen and CSR Asia, in collaboration with the German not-for-profit organization InWEnt gGmbH (Capacity Building International, Germany), have developed this multi-supplier training program linking productivity, quality management, CSR and the essential basic rights with respect to selected ILO standards, Chinese labor law and workplace conditions.

Implementation of the program is usually a process lasting six months, where experts accompany the factory’s management and staff in putting the agreed measures into action. The program can be conducted in a group with up to six factories simultaneously. The results of the progress evaluations in the selected companies were impressive – even after the short 6-month period. After the companies participated in the program, working hours were reduced by more than a third, productivity increased by up to 50%, and employee satisfaction was improved by 40%.

Five integrated modules, consisting of communication, human resource (HR) management, lean manufacturing, occupational health and safety (OHS) and social accountability, are the core of the program. To begin with, all managers take part in a seminar to improve how they communicate with customers and employees. Communication is the foundation for successful completion of the program. The topics covered in the management seminar are team building, managing complaints and effective grievance procedures. This module takes into consideration Principle 3 of the UN Global Compact, supporting open structures to enable collective bargaining and the freedom of worker association.

In the second module, a coherent HR management policy is developed together with the participants – recruitment and selection processes are defined, training and performance management developed. Here the emphasis is on the UN Global Compact Principles 4, 5 and 6, making sure that the company’s HR department is aware of international labor standards and the internationally recognized rights of workers.

Module three, Lean Manufacturing, drives all other aspects of FIT5; followed by the fourth module, Occupational Health and Safety (OHS), which, together with Social Accountability (module 5), puts the focus on employees as the main asset of a sustainable manufacturing process. TÜV Rheinland also makes sure that all managers are aware of human rights and possible human rights abuses that could take place in their factories. Suggestions are made on how to stop any breaches of international law and prevent abuses in the future.

Implementation of the program also follows five successive steps. Before starting the program, consultants schedule an on-site factory visit, report their findings in a status assessment and, together with the management, decide on key performance indicators for the project as a basis for all subsequent actions. The assessment is followed by a training seminar for the company managers, in which progressive communication and modern management structures are discussed. After this step, another factory visit takes place, where initial improvements are monitored and advice is given for further implementation of the socially responsible manufacturing process. If all relevant criteria have been fulfilled after six months from the first visit, progress reports are provided and a FIT5 certificate awarded, which confirms that participation has actively improved structures for implementing a standardized sustainable manufacturing process.

What happens if a supplier is not successful? In a few cases, managers’ commitment was low, even though they had voluntarily signed up for the program earlier. In severe cases, when management continuously arrived late for the training, only assigned junior staff to participate in the program, and did not increase their commitment even after in-depth discussion, the companies had to drop out of the program.

In summary, it can be said that, before starting the FIT5 program, the 18 participating companies had needs for improvement in various areas: production was organized ineffectively, standard working hours had not been recorded, factories were cluttered with semi-finished products and waste. In addition, a lack of communication between functions was apparent, employee turnover was enormous and local and national legal requirements where in many cases met only in part.

All monitored factories made improvements on the points assessed over the six months of the FIT5 program. Every achievement was unique, based on the factory’s situation, but all provided some relief of problems with excessive working hours, a crucial component of the CSR work that is integrated into the lean manufacturing module, or better human resource management via the HR module. Additionally, all factories were able to increase worker satisfaction and could thus significantly reduce employee turnover.

Because the program has been a great success in South China, there are plans to expand it to other developing regions. FIT5 has been approved as a significant Sino-German CSR Public-Private Partnership Program from 2009 to 2011 by the German Ministry for Economic Cooperation and Development (BMZ).