Lack of Supply Chain Transparency in the Textile Industry

In the old days, a clothing manufacturer would design apparel, produce it in a little factory in their hometown and  then sell it directly to customers or to a local retail store. Over time they would build a reputation and create a “brand” by which all of their products were known.

The Garment Production Chain

These days an original brand manufacturer (OBM) seldom makes its own goods. Instead, after designing a product, it outsources the making of it to garment manufacturers, with an agreement that they will sell the completed product back at an agreed-upon, discounted price. The garment manufacturer then does the same thing, keeping part of the job and outsourcing the rest to suppliers of its own.

In this way, garment production has acquired a chain of suppliers, each providing a different level of the work required. And these suppliers can be located in any country around the world, connected to each other by whatever shipping, warehousing, and communications facilities are available. Sometimes OBMs don’t even know who their suppliers are, much less have control of them.

Because an apparel manufacturer is usually making clothes for many different designers, not just one brand, they can purchase raw materials in bulk for a reduced cost, which is eventually passed on to the various OBMs. Each level down the supply chain does the same, eventually allowing the OBM to sell more product to consumers for a lower price.

Common Issues Faced by Supply Chains

Every manufacturer faces common issues, but there are some that are unique to textile and clothing supply chain manufacturers.

The lack of transparency is one of the biggest concerns of textile and clothing supply chains. Given multiple tiers and multiple players within those tiers, it is almost impossible for any supplier, let alone brand, to know under what conditions their products have been made.

The availability of reliable, cost effective and environmentally friendly transportation and warehousing is another such issue, especially if a producer of yarns is located in a different country from its fabric manufacturing customer.

These issues are magnified when product adaptations require adjustments down the entire supply chain, and communication and transportation can be difficult between both time zones and countries.

Another critical concern is poor labour wages and work conditions across the tiers. Even if some companies might want to raise worker wages, they are likely to be stopped by the government, which keeps wages low to out-compete other countries. This is because the textile industry is considered a large driver of GDP especially in developing nations. The industry survives by being able to provide competitive prices, beginning with the supply of cheap labour.

Making Supply Chains More Sustainable

Making supply chains more sustainable is a humungous task that requires awareness, responsibility, accountability and appropriate action.  While it appears a daunting task, there are easily achievable first steps any brand / company can take.

When a brand manufacturer wants its suppliers to operate more sustainably, the first thing to do is to let them know. It can develop written expectations and requirements to send to the host government and potential suppliers. Expectations could include a sustainability scorecard or specific certifications, like Fair Trade or ISO manufacturing standards. It could provide reports that show the cost benefits of operating sustainably. It could hire its own inspection company to check all suppliers in the supply chain. And it could encourage sustainability by including supplier operations in its annual sustainability report.

This is the closest way an OBM can bring back some of the control it used to have in the old days. But it has to begin with brands desire to want to become more transparent and sustainable.

References:

  1. http://www.eticanews.it/wp-content/uploads/2014/09/Report-Bank-J-Safra-Sarasin-Supply-Chains-in-the-Clothing-Industry.pdf
  2. http://apparel.edgl.com/news/Sustainable-Textiles-Begin-With-a-Sustainable-Supply-Chain89270
  3. https://www.chainpoint.com/industries/sustainable-textile-apparel/
  4. http://ojs.excelingtech.co.uk/index.php/IJSCM/article/download/587/329
  5. https://www.odi.org/sites/odi.org.uk/files/odi-assets/publications-opinion-files/3361.pdf

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