Impact in Race to the Top

The Race to the Top program sprung forth from a bold question: what if all apparel and footwear industry stakeholders who are operating in Vietnam could devise an open platform aimed at shaping a more sustainable sector, and turn the sector’s race to the bottom of pricing and manufacturing standards, into a race to the top?

As a part of this platform, a Worker Engagement an Productivity program is developed, where dialogue and LEAN experts work with factory stakeholders (IE. workers, local union representatives, supervisors, and management) to work on soft and technical skill development, to improve both sustainability and profitiability.

Looking at the first factory to graduate in the program, related to productivity and worker well-being, improvements are showing. Implementation at the factory have positive outcomes both on factory knowledge to produce more effectively, but also on worker satisfaction, with amongst others absenteeism and turnover acting as proxies for this metric.

Improvements in communication at site level were a clear success, with all stakeholders citing this aspect of the program as being the most effective and having the most positive results, including:

• Making workers aware that they could speak out safely and be listened to.
• Ensuring communication channels were known and used.
• Providing management and supervisors with the reassurance and abilities to speak and engage with workers even if they were not able to solve problems.

Productivity shows improvements, particularly through implementation of LEAN manufacturing approaches, including housekeeping and addressing storage.

The research highlighted that stakeholders had great pride and desire for the program to succeed.

Key successes identified include:

• Effective worker engagement through training resulted in improved communications between workers, supervisors and management.
• Increased Right First Time and Pieces per Hour.
• Pragmatic improvements of working conditions.
• Engaged stakeholders at all levels of the factory, being provided training that was not normally available to them.
• Increased worker voice and soft skills of workers.

As such, the factory did very well, though the program itself learned that it could improve further, for example by looking at:

• The length of time for the program.
• Optimizing the curriculum for the local context within the factory

The findings show that participants felt that the Worker Engagement training was particularly useful. In particular, worker responses highlighted that they could actively “notice” changes in supervisors and management treatment and better identify channels for raising an issue or suggestion and finding a resolution.

Improvements in Right First Time (RFT) and Pieces per Person per Hour (PPH) metrics show that the site was able to improve its production performance in a significant way. Other successes linked to the LEAN component of the program include:

• Reduction in inventory supply to only two hours.
• Implementation of a system in the raw material warehouse using a visual tool to illustrate what inventory is available and what needs to be replenished.
• 100% of senior management and supervisors confirmed implementation and continual use of basic lean tools (Kaizen5. and visual management, and line-balancing).

In regards of the amount of rework the research has shown a reduction in re-work during the pilot and since its completion:

• Workers on the pilot line noted that there was a reduction in re-work from 3% to 2% on the pilot line.
• Reworks at Tan Hop overall reduced from 6% to 2.7%.

The training provider shared that an inter-departmental training program was key to the successes in winning over management and encouraging better relationships between the office staff and shop floor. This was achieved through operational team members (HR, CR, warehouse, planning and maintenance) attending the training with the production team. This allowed the teams to gain insight into other teams roles and better develop teamwork.

The Worker Engagement component of the program consists of approximately 20 training and coaching days.

The turnover rate per month at Tan Hop has decreased, with an overall 3.6% decrease in annual turnover per month over the last 12 months.  Likewise, there is a reduction in absenteeism rate per month, resulting in an overall 5.3% decrease in annual absenteeism per month over the same period. Tan Hop tardiness reduced throughout the same period, with an overall 3.7% decrease in annual tardiness rate per month.

These metrics act as proxies to worker satisfaction (i.e. workers have a vested interest in the factory and feel more engaged workplace) and represent significant reductions and improvements. They demonstrate a key area of improvement and could, with further analysis, be monetized to demonstrate financial gain through improved worker satisfaction.

The interviews with various stakeholders illustrate that there has been a shift in the Tan Hop supervisor and management treatment towards shop floor workers. In particular:

• Increased dialogue: interviews with Tan Hop trade union representatives and workers illustrate that supervisors were actively involved in the promotion of dialogue
• Improved communication skills: supervisors and workers interviews highlight that the awareness training provided supervisors with the communication skills to explain/answer worker questions in an appropriate way.
• Management styles: supervisors expressed that as management listened to the workers more, they became better managers. This resulted in the workers feeling more comfortable and trusting the supervisors.

The analysis of the program reflect a positive increase in critical worker voice and management listening to worker concerns. This is reflected in the themes which included:

• The workers feel more secure in asking for increased benefits. This is seen as a positive, as workers are now speaking out, in comparison prior to the program.
• Improving the overall working environment.
• Health & Safety issues.
• Improved production schedule.
• Food in the canteen.
• Difficulty with new products and a request for more support to learn the product.
• More material to work with.
• Workers being better informed to explain delays or issues with suppliers to their peers.

The Worker Engagement training component has been effective as workers have been given the tools for dialogue with management, further supported by Improvement Circles. 85% of the workers knew who their Improvement Circle Leaders were and could describe their role. These figures are very encouraging as it is clear who they should turn to and therefore they are less likely to not speak out. Workers indicated to feel comfortable raising issues and are better able to use the channels available for them to do so constructively.

The following learnings have been used to improve the program:

• Develop a program that is more tailored to specific factory needs
• Increased relationship building between stakeholders

About Race to the Top

Race to the Top is a pre-competitive, locally owned multi-stakeholder initiative that was co-created to reshape the Vietnamese apparel and footwear sector by promoting and enabling locally embedded sustainable manufacturing practices.

It was designed and a pilot program was facilitated in 2016 by IDH, The Sustainable Trade Initiative. The programme is an impact-oriented coalitions between multinationals, civil society organisations, governments and other stakeholders. It convened public and private interests, strengths and knowledge to create shared value for all partners. The partnership structure of the RttT program consist of a global steering group that supports the creation of multi-stakeholders local ownership groups. These groups consist of different ministries, businesses, local and international actors, trade associations, other organisations with the aim to support individual factories and assist conversations with the government.

The RttT program consists of three main components:

1. Worker Engament-Productivity training
2. Mill optimization
3. Facilitating a public-private partnership platform and related projects on e.g. informing environmental policies and the development of due diligence tools for local industry and sector associations

Race to the Top has a Global Development Alliance with USAID

Through Race to the Top, USAID and private sector companies support factories that are suppliers to international brands. The activity provides training opportunities for managers, supervisors, and workers as well as a platform for workers and managers to interact, and for workers to have a greater voice. Workers are empowered to discuss processes with their supervisors and identify opportunities for better productivity. Additionally, they are better able to address workplace-related grievances with their supervisors before they escalate into costly strikes.

USAID