COVER STORY
APPAREL RESOURCES NEWSLETTERS
To subscribe , send us an email at subscribe @ apparelresources . com
FACEBOOK FRIENDS
Join more than 10,000 people who are already fans of Apparel Resources on facebook . Search for Apparel Resources at https :// www . facebook . com / apparelresources /
Paradoxes of Ethical Sourcing
• As per claims made by the NGOs , Changing Markets Foundation recently suggests that many certification schemes are so focused on signing up industry partners that they are accepting lower sustainability standards and providing cover for environmentally damaging corporate practices .
• The report alleges that much of the textiles sector still lacks transparency and causes serious industrial water pollution , despite the numerous certification initiatives at work across the industry .
• Popular initiatives such as the Higg Index , which helps to measure and score textile companies ’ sustainability performance , are criticised by the report for a reliance on self-assessment , while it claims that the Better Cotton Initiative ( BCI ) has driven more farmers to switch from organic cotton to GM cotton as a result of its policy of allowing the use of chemicals and GM modified seeds .
Summary of the findings of the research titled ‘ Binding Power : The Sourcing Squeeze , Workers ’ Rights , and Building Safety in Bangladesh Since Rana Plaza ’
• The hyper-competitive structure of apparel global supply chains has contributed to a buyerdriven sourcing squeeze that has pushed down prices , shortened lead times , and contributed to low wages , health and safety concerns , and violation of freedom of association rights .
• In case of Bangladesh , since Rana Plaza , the price paid by lead firms to supplier factories has declined by 13 per cent . The cause of this decline cannot be linked to the price of cotton or exchange rate fluctuations . Rather , it is related to a retailer and brand pricing squeeze on supplier factories , whose profit margins decreased by 13.3 per cent from 2011 to 2016 .
• Lead firms have also significantly pushed their supplier factories to make products more quickly as part of a trend towards speed to market and fast fashion . On an average , lead times declined by 8.14 per cent between 2011 and 2015 . This has increased a pattern of forced overtime and work intensity .
• This price squeeze has contributed to declining real wages and an increase in workers ’ rights violations since Rana Plaza . Real wages have dropped by 6.47 per cent since the wage increase of December 2013 , and – based on the data provided by the Labour Rights Indicators – the violations of workers ’ rights to form unions , bargain , and strike increased by11.96 per cent between 2012 and 2015 .
• Within this challenging context for worker rights , limited progress has been made in the formation of new unions , most notably in the year following Rana Plaza , when international pressure was most pronounced and in the context of some pro-union labour reforms following . Combined with the determined efforts of garment workers between the middle of 2013 and the end of 2014 , some 228 new unions were registered in Bangladesh . However , of late in 2014 and 2015 , the Government rejection rate of union registration escalated .
The BBPPI finds room for all companies to improve , as well as evidence of good practice . Key findings published in the report include :
• The average overall Better Buying score for buyers was 2.5 out of 5 stars ( scores were awarded using a 0 to 5-star rating system ), meaning that the kinds of practices suppliers face result in significant challenges .
• In most cases , suppliers were paid on time and at the price agreed upon ( 4.5 out of 5 stars for Payment and Terms ), while the worst performing category was Sourcing and Order Placement with an average of 0 , meaning that suppliers were not rewarded for compliance to their codes of conduct and legal requirements and received highly inconsistent order volumes from month to month .
• Buyers scored better where they had a direct relationship with the suppliers rating them compared to buyers using a third-party , which is reflected in overall Better Buying scores , Cost and Cost Negotiation , and Management of the Purchasing Process categories .
• No significant correlation was found between the length of a buyer-supplier relationship and overall Better Buying scores , which implies that a long-term relationship does not improve purchasing practices .
selected , long-term association is a foregone conclusion ! “ Our suppliers are our partners and it is all about growing and developing together … This attitude in terms of sourcing in many ways differentiates us from many other brands ,” underlined the person concerned about the company ’ s approach , whose sourcing volume from Bangladesh , which in 2004-05 stood at approximately US $ 6-7 million , is expected to reach a staggering US $ 800 million by the end of 2018 , comprising the brand ’ s total global sourcing volume of around 39 per cent from the country . As per its sourcing head in the country , the company not only maintains its business association with the suppliers for years together , but also helps them to diversify into critical and value-added products to garner better price points by sharing its global knowledge and understanding of the markets while also engaging its in-house experts to help the partners in their endeavour for excellence , value-addition and product development , and business growth .
“ We ’ ve not only challenged ourselves but our partners as well towards attaining the level of maturity in terms of building our capacities to make new and critical products for business sustainability … We
14 Apparel Online Bangladesh | JUNE 2018 | www . apparelresources . com