The Fashion Supply Chain: Unraveling the Reality

• by Alexa Cheater
• Published July 24th, 2015

Whether you’re a fashionista or overly fond of the frumpy look, chances are you’re buying into the multi-billion dollar clothing industry. And whether you realize it or not, the garment industry supply chain is changing – both for the better and for the worse.

Cambodia, China, Taiwan, India – look at the ‘made in’ labels on your clothing and you’re likely to find these popular clothing manufacturing countries. A recent Wall Street Journal article reveals African nations such as Ethiopia may soon be added to that list thanks to their lack of minimum wage regulations. Apparently, the $67 a month workers make in Bangladesh was getting to be too costly. This represents what many feel is wrong with the industry – large companies willing to sacrifice human dignity and safety to save on their bottom line.

There have been countless examples of big fashion brands finding themselves caught up in controversy thanks to their supply chain, and the use of factories that pollute, employ child labor, mistreat workers or worse. Sadly, it took a major tragedy to open the eyes of millions to see exactly what goes into making the clothes on their backs.

In April 2013, more than 1,100 factory workers lost their lives in the name of fashion in the Rana Plaza collapse in Bangladesh, now recognized as the deadliest garment-factory accident in history. Warnings to avoid using the building after cracks were discovered the day before were ignored and workers were ordered back to work. But out of the rubble several movements emerged, demanding the fashion industry straighten up their seams.

Thanks to social campaigns like Fashion Revolution Day and organizations like FairTrade, choosing clothing from companies that adhere to environmental and ethical standards is becoming more popular. In essence, fairly traded clothing has become its own fashion trend, another topic the Wall Street Journal has recently covered. Companies like Patagonia, Mountain Equipment Co-Op, Prana and many others have all lifted the veil on their supply chains to some extent, proving to consumers they care about how and where their clothing is manufactured, and the impact it has on the environment, the community and individual lives.

Hopefully, more brands will follow suit. In a recent article, Maxine Bédat, co-chair of Fashion Revolution Day, was quoted as saying, “Ninety-five percent of brands don’t know where their materials come from, and 75 percent don’t know where all their clothes are cut and sewn.”  This really speaks to the heart of the issue – global supply chain visibility and transparency. Extended supply networks create substantial obstacles in terms of supply chain visibility and coordination. Even when companies have the right intentions, being able to understand what needs to be changed, and where or how, is an enormous challenge, and then subsequently, being able to understand the options and impact of corrective action only makes the task more difficult. Companies are simply not equipped with the tools needed to manage their global supply chains in a way that keeps them in control of it.

Companies require a unified view across the enterprise regardless of the number and location of supply chain nodes. They must be able to have a full representation of their supply chain network in order to coordinate activities as if the operations had remained in house. That way when an event occurs that creates supply chain risk(immediate or potential future harm) companies can know and react quickly. Even with long term supply chain planning, knowing sooner of the market requirements, corporate risks, industry trends, and the resulting organizational impact is strategic to making the right decisions for the future.

Businesses aren’t having to answer only to the consumer on these issues. Governments are starting to get involved. The European Commission is expected to launch a flagship EU Garment Initiative before the end of 2015. The idea would be to provide guidelines on responsible business practices in the supply chain and engagement practices when dealing with producing countries. It’s still not clear whether these new guidelines will be voluntary, or enforceable regulation.

The European Commission has gone on record saying, “The issue of responsible supply chains touches upon several aspects of sustainable development ranging from safety at work, the use of chemicals, child labor, to ‘living wages’ and collective rights, including enforcement of appropriate national legislation and of international standards and commitments as well as many others issues more directly linked to the sustainable competitiveness of the EU companies involved in such supply chains. It is being proposed because it is close to citizens’ concerns and expectations, partly due to the increased attention given to this issue following the tragedy of the collapse of the Rana Plaza factory building in April 2013, which revealed serious shortcomings in the occupational safety and labor conditions of Bangladeshi workers in the garment industry.”

And it isn’t just overseas where officials are stepping in. Los Angeles’ garment industry is fretting over a city-wideproposed pay hike for workers, that would see the minimum wage in the city raised by 50% to $15 an hour by 2020. Some apparel manufacturers in the city are already considering closing up shop and moving outside the city or importing more from foreign markets to offset the increased labor costs. While the wage increase will undoubtedly have a positive effect for the workers who actually make the clothes –and there are approximately 45,000 of them in Los Angeles – it’s likely to hurt the bottom line of apparel manufacturers who for years have prided themselves on being ‘made in America.’

Will that push them to change their current supply chain and seek our factories in countries where the cost of doing business is less? Perhaps. Or perhaps consumer demand will grow enough in the next five years that ensuring a safe, sustainable and ethical supply chain will just be considered a cost of doing business. At the end of the day, at the core of any change will need to be the supply chain systems that can enable the supply chain visibility and process innovation required for ethical and sustainable global supply chain management.

So the next time you go to buy that perfect pair of jeans take a minute to consider the journey those pants have been on. The supply chain that brought them to you is made up of so much more than just trucks and cargo boxes. It’s made up of people. The person in the field harvesting the raw materials, the person in the factory who sewed the garment, and even the person who helped you find your size in the store. Each one deserves recognition and fair treatment.