All debates about reshoring, near-shoring, right-shoring, and whatever new-fangled term have you-all have the same element at their hearts: costs. But January 2020 is not January 2005-we live in a different world where “climate emergency” is declared the Word of the Year by Oxford Dictionaries and where consumers are far more ethical, conscious and connected. And yes, demanding too.
The 2013 Rana Plaza tragedy and its fallout has been discussed before. The deaths and injuries did not result in brands changing their source points to other countries, but they were forced to put pressure on factory owners to make working conditions better and pay better wages. There were many lessons to be learnt there, and one was this: you cannot keep sourcing as you please. Five years later, corporations are increasingly under scrutiny and social media is ruthlessly unforgiving.
Sourcing needs to become ethical. Moreover, there are organizations that maintain the tempo. The World Report 2018 of Human Rights Watch remarked, “Factory building collapses and fires are not the only problems in the apparel manufacturing world. In the $2.4 trillion garment industry, which employs millions of workers worldwide, labour rights abuses are rife. In countries around the world, factory owners and managers often fire pregnant workers or deny maternity leave; retaliate against workers who join or form unions; force workers to do overtime work or risk losing their job; and turn a blind eye when male managers or workers sexually harass female workers. Why should global apparel brands care? And what is their role?
“The governments of producing countries worldwide are primarily responsible for working conditions and labour law compliance in factories. But according to international standards, though non-binding, global apparel and footwear companies or “brands” that order products manufactured in factories also have a responsibility to ensure that the rights of workers are respected throughout their supply chain. They must take measures to prevent and address human rights abuses.”
Sourcing needs to become transparent. The same report continued, “Since 2005, Nike and Adidas have been publishing their supplier factory information, and more brands followed. Some brands that closely guarded factory names as “competitive information” have now released this data. In 2013, the leading fashion group H&M-which according to a company representative used to keep its supplier factories list locked in a safe in Stockholm at one point-became the first fashion brand to publish the names and addresses of its supplier factories. Other companies followed suit in 2016, with big companies like C&A, Esprit, Marks and Spencer, and Gap Inc also going transparent.”
Popular movements like Fashion Revolution have been keeping on the pressure too. It is not enough to source economically, the sourcing has to keep people in mind too. People, as in workers. There is, therefore, more homework to be done for brands-right from fact-checking their local partners to even studying the countries they wish to source from. Or, it might become a bad investment.
Take the example of Cambodia, a small-time sourcing point and an old-time favourite with apparel companies of the West. The EU had announced last year it would begin a monitoring process to decide whether to end duty-free and quota-free imports from Cambodia. It cited “serious human rights violations” and “democracy setback” as the reasons. The EU has threatened to withdraw the ‘Everything But Arms’ (EBA) benefit to the country’s textiles and garment sector. The final report has not been revealed, but it is believed to be critical. A decision on this will be made by February. Cambodia is also under pressure from the US for undermining democracy, ignoring labour standards, disregarding human rights and failing to protect intellectual property. Such instances will increasingly put many countries under the lens, and make companies rethink sourcing strategies.
There are other trends that can make a huge impact on the very process of apparel production-the chief among them being the campaign against fast fashion. This segment of the fashion industry has been losing supporters, but it’s still booming. What is ironic is that while people from within the fashion industry are increasingly speaking out in favour of slow fashion, the segment is still being stridently promoted by other sectors that have benefitted a lot: real estate and logistics. But when the tide turns overwhelmingly against fast fashion- sustainability and circularity trends already indicate as much-both brands and manufacturers will take a hit. The small apparel producing countries would be hardhit and could do well to have contingency plans in place.
Also, the adage that knowledge is power will hold truer than before. Much of this knowledge would go beyond the realms of conventional business wisdom-into the turbulent domain of the climate crisis. According to the latest Global Risks Report of the World Economic Forum (WEF), all top five long-term risks relate to the climate. So, how does it affect sourcing? Simple example: if one were told (correctly so) that a particular coastal city will be hit by rising seas in another 20 years, one would simply not invest there. Or, if one were told that a specific cotton-growing region would be severely hit by water scarcity in 10 years, one would not set up a factory there just because access to cotton today is easy. It will pay to be climate-aware. Climate knowledge will be power.
Moreover, everything about sourcing will have to turn sustainable. The title of McKinsey’s October 2019 survey should sum up this write-up: