Let’s talk about Compliance and Product Tracing

In the wake of another series of human disasters in Bangladesh’ textile industry the question of compliance and product tracing are again coming to the forefront of the fashion industry agenda.

The key word that is historically branded around is ‘compliance’. Companies in the fashion industry often state that their factories are compliant. This essentially means they have decent facilities (fire exits, extinguishers and toilet facilities are key checkpoints here), wages that are in line with locally legislated levels and that the people are working reasonable hours out of their own free will.

The fashion industry definitely has good players and bad ones. There are those that make serious efforts to control their external production and supply chain and those that proudly control nothing much more than cost-price and look.

As an industry insider I would say that in this day and age the poor handle the industry has on compliance is just not good enough. It could be considered somewhat understandable that small orders with sporadic suppliers do not get the same amount of resource applied to them as large orders with regular suppliers. I do however think that the fashion industry should ensure that it is more locally aware, especially when planning to place orders which are of a size that would make an impact in the receiving community.

This is particularly important after the initial compliance process has already taken place and the value of orders is going up. Where significant amounts of money are starting to be sent across the receiving end is more likely to become focused on profit rather than compliance. This should be taken into account and the cost of monitoring at that stage is actually a small portion of the total value spent on goods.

large_8731789941-300x200We only have to mention ‘illegally built floors in factory buildings’ at this point and the result of this change of focus towards profits becomes painfully obvious, if not devastating.

To physically do all the checks regularly is going to be a challenge to an industry that is as high-pressured and locally unaware as it is. However, this is why it needs to think beyond the short term and put the right tools in place. Agreements like the Accord on Fire and Building Safety in Bangladesh are not the only requirement from a compliance or even business perspective. These agreements can have a good overall effect, but in future disasters they also give brands the escape clause of stating that they were acting within the boundaries of the agreement (and therefore not at fault).

I think it is a good thing that people like Ineke Zeldenrust from the Clean Clothes Campaign lobby for workers rights. Their activities bring the very real issue of forgotten, remote workers to the forefront.

Those that choose to ignore the impact they are having on people’s lives should indeed be reminded that they are doing more than just a job.

On the other hand, we do need to acknowledge that average people working in typical fashion companies were probably never trained to understand the impact their job is having on other parts of the world.

In reality, they are people just like you, going to work every morning to make ends meet, sending out documents and paperwork like they are expected to. ‘Fashion Brands’ are made up out of lots of individuals who are good at figuring out how to make a collection of product which suits their brand well and is desirable to their customers. They are not necessarily experts in how and why things in developing countries are operated as they are.

That does not mean they can not do the right thing. I would expect them to have adopted a very strict set of rules which stops them from dealing with facilities who do not see and treat their workers as appreciated human beings.

But I don’t think I could expect a typical fashion brand to have effective control over corrupt or unscrupulous individual factory owners who choose to send workers into a building that is showing signs of structural damage. The factory is a supplier of the brand, not part of the brand. The factory owner is ultimately responsible for its staff and wellbeing, but the brand does have the power to choose not to use those factories which do not have the right mentality.

large_1370860221-300x225The agreement that is currently being used to force fashion companies to become part of one method of action on the face of it blames fashion companies 100% for the fact that factory owners do not treat their staff well. Laws on minimum standards in the workplace, including an embargo on the importing of goods which have been made outside of these standards, might in reality be more effective.

In other words, do not let us consume anything which has not been made under humane conditions. Not just in Bangladesh, but anywhere.

Companies within fashion need to invest in monitoring methods which allow verifications and compliance monitoring in a cost effective way. This way the smaller and sporadic orders can be dealt with as well. It also needs to be part of the company culture that if something is not right, the need to correct that immediately is more important than hitting the revenue targets.

All too often fashion retailers and brands are completely unconnected with the issues or knowledge that could help them to make decisions on which facilities are good or bad to get involved with from an ethical point of view. This is why they often use large local suppliers that have the infrastructure in place to not only run the factory selection, but also take responsibility for the quality and timely manufacturing of the goods.

Take the Benetton example. In the recent disaster in Bangladesh, Benetton took a huge amount of the media attention, highlighting the company for its role in the disaster.

origin_4260033460-300x199As it turns out, Benetton as a company could have been aware instantly that their supplier in India had subcontracted orders to a facility in Bangladesh. However, it did not have the information, systems or tools in place to make that connection when it was faced with questions from the media.

As a company that buys garments, trims or fabrics you are in a position where you can generally force your supplier to have a level of compliance to a common set of rules or guidelines. You can set your own set of rules as well, allowing you to emphasise points which are more important to your brand than they would be to others.

If a supplier clearly does not have the ability or desire to abide by your set of rules, you do have the power to walk away and give your business to a supplier that will comply. Of course I am not taking into account the pressures on you to just get things in on time, to ever declining purchasing budgets. As a company you should know when and why to stop though. Your suppliers should also be fully aware that you will do just that, without exception.

If you are in a leading position within a fashion brand, think about that. You are the influencer in this scenario.

In practice many companies do have compliance rules in place and have either audited suppliers factories or borrowed approved status from other companies. I have lost count of the number of factories that proudly showed me they were Marks and Spencer or Wal-Mart approved and that therefore they felt they did not need to be inconvenienced with another audit. These attempts make it quite clear that many brands will see a third party certificate as a suitable alternative to a full audit.

Is that right? Should a factory be able to wave a competitors audit certificate or even an agreement such as the one just signed for Bangladesh and use it to entice you to bypass any verification process? Or is it your responsibility to make up your own mind? At the end of the day you are responsible to your customers and shareholders, not to those of your competitor.

Regardless of participation in agreements, you still want to know that what you as a company are doing is right and justified.

By now a dynamic industry such as fashion should have really gone a few steps further. Compliance is one thing. Communicating this compliance and related details to the consumer via interactive product tracing is an entirely different story, and in my opinion it is the necessary next step.

sourcingmenu675-300x200-1I have seen at first hand the development of compliance tracking software such as the one included in the WFX Cloud PLM system. A system which allows a transparent and process driven approach to compliance can help you make the right decisions when allocating production orders to manufacturers of garments or components.

Product tracing is sometimes used within the brand’s own supply chain. In this case the brand is aware where their products are at any given time. However, with the situation in Bangladesh getting more news coverage than some companies are comfortable with, it is time to refocus.

You might be aware that I was involved in developing product tracing technology, primarily marketed as anti-counterfeit (Authicode). However, look at this kind of technology in a different way and it becomes clear that it is not only suitable to track and trace products from the factory to the consumer.

So, using existing technology you can easily communicate any aspect of the products journey to the consumer, giving them direct information at the point of purchase. This information (received via their smartphones after scanning the QR code on the product) could even include details such as the name, location and compliance status of the facility who made that particular product. In a more artisan brand it could give you the name and role of the person who made the item.

iPhone-Screenshot-300x65Compliance is a key aspect of doing things right. It is a crucial component of your sourcing strategy. It really is no luxury to ensure that you are covering all bases when it comes to being a responsible buyer.

However, do you have the tools in place to not only comply but to communicate details to the consumer, in store,  at a product by product level?

Why not?

I would encourage you to think about this, the market will soon demand it and there is only so much grace consumers will give the fashion industry before they rebel.

Written for 1970i by Ben Muis
Fashion Industry Consultancy – www.benmuis.com

Photo Credits:

Bangladesh building: rijans via photopin cc

Benetton: sivinjski danijel via photopin cc

Labour Behind The Label protest: Labour Behind the Label via photopin cc

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