Report: Brands Strive for Transparency, Held Back by Technology

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Corporate social responsibility, once a buzzy name for a small, peripheral department in only the most progressive companies, is becoming an integral part of apparel businesses—one that drives decision-making, relationships and consumer perception.

A recent report by Apparel Magazine shows that CSR, transparency and compliance goals and strategies, which were once contained in their own silos, are becoming more interwoven into every aspect of modern fashion businesses. But challenges remain as corporations attempt to transform old processes with new technology.

The authors say these measures are following a similar trajectory to quality, which once was a discreet process at the end of a production run and now is “engineered in” to design and manufacturing.

“[CSR is] an indication of the strength of a brand, how it treats its employees, how well it understands limited resources and how much it respects its customer,” said Jason Kibbey, CEO of the Sustainable Apparel Coalition, an industry alliance focused on sustainable production.

Of the 175 retailers and apparel brands polled for the report, 37 percent are looking to achieve supply chain transparency for CSR related reasons. Others think it will result in better quality (17 percent) and some are looking to achieve regulatory compliance (14 percent). Vendor management, safety, and analytics are also persuasive factors.

Companies are finding equal internal and external reasons for chasing transparency, with 54 percent driven by internal stakeholders, 27 percent motivated by consumers/customers and 20 percent reacting to regulatory forces, including governments and NGOs.

Tellingly, 84 percent say CSR impacts consumer trust.

Challenges

Despite the awareness of these benefits, respondents question whether their systems are capable of providing the transparency and compliance they need. Only 57 percent said their systems are at least somewhat effective, while another 20 percent would characterize them as ineffective.

There are many roadblocks to achieving transparency in the apparel industry. The siloed nature of sourcing and compliance teams; the global nature of the industry; and the tiered structure of the supply chain—which includes primary, secondary and tertiary agents, factories and suppliers—makes visibility and true transparency difficult.

More than 70 percent of those polled said compliance, CSR and safety are more difficult to police when working abroad.

Also, because transparency isn’t valued as much as price, quality and delivery times, it’s also not incentivized. “If there’s no reward for ensuring that the factory you’re sourcing from is a compliant factory, then that will drive a certain kind of behavior,” said Avedis Seferian, president and CEO of the Worldwide Responsible Accredited Production (WRAP) organization, the largest independent factory- based social compliance certification program for the sewn products industry.

Further, the move toward fast fashion flies in the face of compliance, which needs long-term thinking and planning, Seferian added. And the survey results bare this out. Nearly 60 percent of respondents said fast fashion has made it harder to comply with safety and CSR.

Technology

When it comes to information flow, the report said “blind spots remain,” especially for upstream suppliers. Thirty percent of companies have full visibility into their suppliers and their suppliers’ suppliers. For 55 percent, visibility only extends to some parts of their supply chain. Then there is the 15 percent that has little visibility at all.

Of those with some insights into their supply chain, 84 percent say they regularly collect data related to quality, 75 percent compliance, 65 percent safety, CSR 60 percent and 53 logistics.

Though more than 70 percent of respondents collect data on vendors, suppliers and manufacturers, only 52 percent have insights into materials and manufactured components. Fewer than 30 percent have transparency into substances, chemicals and raw materials.

Standing in the way of greater transparency is often a lack of technology.

“A big part of the problem is the manual manner in which many apparel retailers, brands and manufacturers report they are collecting and managing supply chain information,” the report said. “Additionally, when systems don’t talk to each other, it takes a lot more effort and focus for internal teams and global trading partners to do so.”

Currently, 32 percent of companies are collecting compliance and CSR information manually, 29 percent have the data in spreadsheets and 17 percent employ ERP/PLM systems. Only 12 percent use a specialized solution just for compliance.

Further, 42 percent of respondents say their system is not compatible with others and 51 percent said its at least somewhat difficult to share data. Thirty-six percent say CSR, quality and other related information is rarely shared outside of the team that manages it. The result is companies end up working off of data that’s old or false, according to the report.

Moreover, a lack of a single standard for compliance and CSR means its difficult for companies and stakeholders to understand the data and trust that its accurate. To resolve this issue, both the Social and Labor Convergence Project and the Association of Professional Social Compliance Auditors are working on auditing tools and standards.

As companies continue to invest in improved compliance, 38 percent of those polled envision sourcing and purchasing to benefit the most, followed by quality control (21 percent), safety and compliance professionals (15 percent) and marketing (10 percent).

Through systems that are automated, compatible and transparent, businesses could also save time and money and better select suppliers that meet their standards. One example, according to Seferian, is allowing companies to move from a one-size-fits all model to one that can treat suppliers according to their performance records, giving excellent partners the ability to forgo audits while maintaining a more rigorous schedule for newer or potentially problematic suppliers. “Automating many aspects of trading partner collaboration frees companies to manage by exception, not by emergency,” he said.

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