At Sourcing Journal’s Hong Kong Summit earlier this month, sourcing experts weighed in on the biggest takeaways from a year of turmoil.
According to Miran Ali, vice president of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) and spokesperson for STAR Network, a network of Asian producer networks, the world’s second largest exporter was among the countries worst impacted by the crisis. Bangladesh faced an “almost existential crisis” as a large number of brands had a “panicked, knee-jerk reaction whereby they canceled everything.” The liability for in-progress orders was “dumped straight on the shoulders of the factories without regard for their survival,” he said.
A small cadre of brands stuck to their commitments, and others, sensing the error of their ways, followed suit, Ali continued. While brands have ultimately walked away with the learning that shirking responsibility is a bad PR move at the very least, Ali said that some relationships between labels and their suppliers have completely broken down—for good.
Suppliers, for their part, learned to mobilize, Ali said, describing the mission of the STAR Network, which brings together the manufacturing associations of Pakistan, Bangladesh, Myanmar, Vietnam, Cambodia and China. When Covid hit, the network “realized that there was this whole new area of cooperation that we really need to start looking at,” Ali said. “The problems that Bangladesh was facing were identical to the problems that Cambodia, Vietnam and Pakistan were facing.”
Alongside its German government backers and the International Apparel Federation, the STAR Network worked to scale up the network and set up fair purchasing practices. Indonesia, Turkey, Morocco, and Egypt are joining the group, Ali said, which will now cover 70 percent of the global apparel export market. “We are working towards a common document, which is going to be hopefully accepted among the manufacturing associations representing thousands of factories throughout these countries,” he added.
While Israel’s Delta Galil, which operates factories within the country as well as in Bulgaria, Turkey, Thailand and Egypt, did not experience widespread order cancellations, the company did face other pandemic-induced interruptions to its business, Ali Poling, director of compliance and sustainability, said.
“There were a lot of larger brands that made a formal commitment not to cancel orders and so we were able to manage through that period without any very large cancellations,” she said, noting that Delta Galil’s two owned brands, 7 for All Mankind and Splendid “were not quite as fortunate.”
“When we look at the product categories that didn’t do so well during Covid, it was denim and clothes that you’re going to wear when you’re going out,” she said. Delta Galil realized “early on” that it needed to partner with its upstream suppliers and contractors to mitigate risk across the board rather than outright halting production. “We could not shift the burden of Covid solely to our suppliers,” she said, adding that the company was able to strengthen those relationships through leveraging sourcing relationships, helping with compliance issues or “even offering some financial support to our more strategic suppliers to just make sure they could get through the period.”
Amid the struggle for survival, many industry insiders questioned whether sustainability efforts might fall by the wayside. Not so, according to Kurt Kipka, vice president of the Apparel Impact Institute, though the sector did see “a pretty significant pause as the world recalibrated” and began to come to terms with the scale of the pandemic.
“A lot of the work that we do is physically on the ground, so it really became a bit of a concern for us that it would be an issue during the pandemic to get our staff and our partners into facilities,” Kipka said. “We were pleasantly surprised as the dust began to settle, so to speak, that many brands within the industry have essentially doubled down on their sustainability efforts and environmental commitments.”
One of the organization’s biggest benefits is that it brings together cooperatives of brands for mutually beneficial programs, he said. “That becomes an even bigger selling point in a post pandemic world,” he added, as brands are digging into how to drive efficiency and share costs with partners with the same interests.
Still, Ali said, transparency between brands and their suppliers is “something that is really lacking in the industry.” Many brands still don’t intimately know their suppliers, he said, instead relying on intermediaries like sourcing agents to conduct business. “We are actually working on a code of practice to try to address this full transparency issue,” he added, “because we believe that the only way that we’re going to have a fairer sourcing industry is if brands know who their suppliers are, and suppliers are actually able to communicate with brands directly.”
Delta Galil’s Poling said that brands are increasingly requesting that their suppliers pursue environmental certifications from organizations like Global Organic Textile Standard (GOTS) and Global Recycled Standard (GRS), but those badges of honor don’t come cheap. While the company will be seeking GOTS and GRS accreditations for itself this year, it is actively working with its suppliers to help them understand the benefits of the process.
Pursuing these certifications can help brands feel more confident in their supply chains, but the experts agreed that suppliers may also face audit fatigue if the industry can’t coalesce around a specific set of standards. Poling pointed to the Higg FEM as the industry’s leading tool for measuring environmental impact, allowing companies to develop their own standards and code of conduct around the framework.
Meanwhile, Jenny Chung, director of customer relations for sustainable textile manufacturing organization Bluesign, said that sustainability isn’t a trend—or even a choice—for brands and factories anymore. These players must share information and set priorities together and commit to long term goals over short-term gains, she said.
Brands and their suppliers have learned, for example, that using smaller amounts of higher-quality chemicals to dye their fabrics can yield better results for the environment, as well as their bottom lines. Investing in these advancements can curb water and energy usage, as well as drive efficiency, and changing to Bluesign-approved chemicals has earned some brands a total cost saving of up to 5 percent in some cases, she said. The organization boasts a list of nearly 60,000 approved chemicals for textile manufacturing use, she added.
While there is an investment up front, Chung believes the commitment will pay off in the long term. “We will work with brands together to build and bring up the supply chain,” she said.
In Case You Missed It: All of the sessions from this year’s Sourcing Journal Hong Kong Summit: “Recovery & Reinvention” are available to purchase and view on-demand. Click here for access.