It has been 13 days since the building collapse in Bangladesh housing six apparel factories among other businesses. The death toll is tragically up to 900 persons. As we pen this posting, there is a report of yet another apparel factory fire in an industrial district of Dhaka that has been reported to have killed at least 8 persons.
Our previous Supply Chain Matters commentaries have focused not only on the Rena building collapse tragedy itself but the implications to global branded apparel supply chains.
Our initial commentary noted an environment of see no evil, tell no evil among retailers and other contractors for apparel sourced across Bangladesh. We joined other voices in urging the apparel industry to initiate a serious call to action regarding current global sourcing practices and supplier standards. Last week’s commentary focused on increased media attention, and we especially noted an opinion piece published in The Financial Times. That editorial stated it would be a tragedy for retailers and apparel sub-contractors to walk away from Bangladesh to continue the quest for the lowest cost apparel, regardless of the consequences. We opined that we did not dispute the difficult challenges that lie in apparel sourcing within low-cost manufacturing regions. At the same time, retailers and contractors cannot continue to turn a blind eye or hide behind sub-contracted chain of custody regarding unsafe working conditions. Neither can global social responsibility standards continue to be ignored.
Business and social media continue to provide added attention and opinion on this supply chain tragedy, and that, in our view is a good thing. There is a need for additional discourse for the buy, sell and consumption side of the apparel industry.
Here are just a few examples:
In an article published in Bloomberg Businessweek, Charles Kenny declares that pulling out of the country is the wrong call. “The right response of the Western retailers who source from Bangladesh is not to walk away from the country but to work with officials and owners to make the situation better. And consumers who claim to care about people in developing countries shop at retailers who make that choice.” The author calls for global retailers to sign on to commitments such as the Bangladesh Fire and Safety Agreement which mandates independent inspection and renovation of unsafe factories.
An Op-Ed article published in the Los Angeles Times, authored by Richard Greenwald, dean at St. Joseph’s College in New York, parallels the building collapse to the 1911 Triangle Shirtwaist factory fire in New York City that led to new safety and health codes, labor law reforms and modern regulations to a termed “primitive” industry. “Rana should be our global Triangle fire moment. It should force us to wake up as consumers support the workers who make our clothes. It is our moral responsibility to demand that the labels we wear not be stitched in blood. To do nothing, to simply wait for the next tragedy, is to remain guilty as charged by Schneiderman in 1911”
Steve New commented on the Harvard Business Review Blog that this latest tragedy is a “hideous sense of déjà vu.” “We’ve seen this before and we know that it will happen again.” He calls for broad public disclosure of factory sourcing data and that all concerned parties should focus all their energies on only one area of supply-chain ethics, the freedom of association and the right to collective bargaining.
In a published article in yesterday’s Wall Street Journal, Kathy Chu observes that big apparel retailers seeking better standards, without giving up the requirement for low-wage workers, are not going to find better prospects across the rest of the developing world, and that many Arian countries do not fare much better than Bangladesh in independent assessments of labor conditions. She further notes: “Apparel retailers however, face potential threats to their reputation just about anywhere they turn for their wares.” The article quotes the CEO of the Fair Labor Association: “The manufacturing industry is running out of low cost sourcing destinations, and it’s time to invest in making factories safer and better, rather than searching for cheaper labor.” The article again calls attention to concerns for the industry de-facto practices of sub-contracting, allowing contractor to secure orders for apparel that far exceed owned capacity and forcing the final sourcing decision to sub-standard factories.
The bottom line is that the apparel industry, in our view, is facing an important crossroad. On the buy side, retailers and contractors believe they can continue to find yet another low-cost sourcing option regardless of the implied working conditions. While the industry mantra is to avoid the dreaded “unionization effect” driving-up labor rates, as noted above, collective voices calling for a sole focus on the right of worker collective bargaining. Similarly, additional options related to added sourcing in newer low-cost manufacturing geographies will come at a brand reputation price.
On the product demand side, the calls for consumers to stand-up to ethical standards in clothing and other apparel demand visibility to factory origin and paying a little extra to assure social responsibility will only get louder. These voices will only get louder and more vocal.
In short, these latest incidents may or may not endure past the latest hyper news cycle, but should remain a threshold for improved accountability and responsibility.
It is time for the apparel industry to step-up and take the lead in responsible sourcing and stop pretending that these issues will just fade away with the next fashion cycle. Global retailers such as Disney, H&M, PVH, Wal-Mart, and others need to continue to take an open lead in coming up with solutions to a global-wide problem for the apparel industry. The good news is that solutions may not be as expensive as perceived if the majority of the industry comes together.
Supply Chain Matters also calls on the supply chain management technology and professional services community to add their voices and expertise to help the industry in more transparent visibility to apparel sourcing and to worker standards.