How Companies Can Refine the Ethical Sourcing Model

garment factory cloud

As 2017 looms on the horizon, the apparel industry is coming to terms with the current state of ethical sourcing.

Although the ethical sourcing model has remained static, there is an enlightenment occurring among apparel companies. Factories may still be full of child labor, long hours and weak wages, but there is room for improvement beyond cracking down on unethical practices.

Elevate Global CEO Ian Spaulding said there are better ways to handle the ongoing issues of ethical sourcing. At CBX’s Global Sourcing Day on Nov. 17, Spaulding proposed two different models for ethical sourcing and encouraged industry members to take advantage of new technologies to improve their supply chain processes.

“The current model hasn’t really changed much in the last 20 years,” Spaulding said. “It is really about getting visibility of your factories, registering them, doing some risk mitigation, sending firms to conduct audit and then finding actual problems.”

After factory tragedies in recent years, like Tazreen Fashions in 2012 and Rana Plaza in 2013, retailers are calling for better ethical sourcing initiatives. Although many apparel businesses have negotiated contracts among trade unions and some progress has been made, industry members still have doubts about the current ethical sourcing model.

In his first ethical sourcing model, which is based solely on auditing and capacity building, Spaulding addresses transparency. Instead of focusing only on the factories, other supply chain agents, including suppliers and trading companies, would be held accountable for unethical sourcing conduct. Teir-1 and Tier 2 supplier information would be accessible, factories would receive proper evaluation and auditors would develop a plan to tackle lingering compliance issues with all parties involved.

“We put so much emphasis on the factory, but we haven’t put enough emphasis on the vendor, the supplier, the trading company and the agent,” Spaulding said. “We need to engage the actual vendor in the middle because they are part of the equation as well.”

Management is the foundation of Spaulding’s second ethical sourcing model. Instead of only policing factories for child labor or unfair wages, apparel companies would also work with factory management to create an improvement plan. This collaboration would involve increasing hiring resources and implementing seminars on living wage standards.  Once apparel companies work with factory management, unethical practices could be minimized and prevented in the future.

“We have to go in and understand their recruitment practices, their HR department and if they have the current system, people and process to really manage things more efficiently,” Spaulding said.

Although the ethical sourcing model has plateaued, Spaulding suggests that technology could be a big driver for better auditing, management and supply chain practices. With the assistance of computerized systems, apparel companies now have access to data at their fingertips. With data from every step of the supply chain, apparel companies can measure audits more efficiently and remain on the lookout for labor violations.

“Recognizing that the metrics we used for the last 20 years may not be the right metrics we use for the next 20 years,” Spaulding said. “We need to get data through better audit programs, correlate data from production and compliance and pull that data together as much as possible.”


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