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The Secret to Supply Chain Resilience? Ethical Supplier Relationships.

Fashion brands that maintained a long-term commitment to ethical trading practices across their Indian operations were, on average, more resilient to the pandemic’s slings and arrows, a new report revealed Thursday.

Funded and published by the Modern Slavery and Human Rights Policy and Evidence Centre, the study is the culmination of research conducted by the University of Leeds and the Goa Institute of Management into the management of modern-slavery risks in India’s garment supply chain both pre- and post-Covid-19.

Brands, suppliers and others who were interviewed by the researchers often blamed the unpredictability of the size and timing of orders for job losses, pay cuts and an increased likelihood of unauthorized—and therefore less regulated—subcontracting.

As lockdowns eased and orders ramped up again, especially for nimbler online brands, suppliers faced increased pressure to deliver, the study said. In cases of weak relationships between the brand and supply chain, workers were exposed to greater modern-slavery dangers.

But brands with better communication and supply chain awareness were able to allay some of these risks, it noted. Brands that had dedicated, often in-country ethical personnel were able to develop a shared “level of empathy” with their suppliers over the unprecedented situation. Suppliers, for instance, understood the need for brands to slash orders, and brands understood the need to support workers.

“Our interviews with participants from buyers and suppliers highlighted that the pandemic was different from previous global crises,” said Divya Singhal, the Goa Institute of Management professor who led the research in India. “Its impacts appeared similar on both buyers and suppliers, creating a sense of a joint experience. This joint experience resulted in empathy and resilience.”

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The level of empathy between brands and suppliers, the report said, was stronger for brands that had historically engaged in ethical trading practices with their suppliers and continued to do so after the outbreak. Brands and suppliers who built their relationships on a foundation of trust were able to collaboratively negotiate mutually beneficial solutions, it added.

“Our research shows that those brands which had expressed a stronger commitment to them prior to the pandemic were better equipped to deal with the crisis rippling through their supply chains,” said Mark Sumner, the University of Leeds fashion sustainability lecturer who led the research. “The brands that had stronger relationships with their suppliers found it easier to come up with solutions beneficial to both sides, and ultimately workers.”

The study found that engaged brands operated dedicated, often in-country ethical trade teams that not only fostered direct relationships with their supply bases but also keyed into important commercial decisions. This allowed them to report issues faster, giving them more time to respond and fortifying them against the pandemic’s biggest blows.

“It’s been clear from existing research that businesses with developed ethical trading mechanisms were better equipped to protect people across their supply chains from exploitation,” said Alex Balch, director of research at the Modern Slavery and Human Rights Policy and Evidence Centre, which commissioned the research. “But this research provides clear evidence that it’s also good for businesses themselves.”

Addressing modern slavery requires collaboration, the report said. Brands that have collaborated with each other, their suppliers and other stakeholders have benefitted from understanding the multi-faceted challenges of the problem.

“Covid-19 has worsened people’s vulnerability to forced labor in global supply chains and highlighted the fragility of many supply chains,” Balch said. “The pandemic showed us that more transparent and resilient supply chains are better for business and better for workers.”

The Better Buying Institute, an organization that promotes improved purchasing practices, lists five “principles” of responsible buying that dovetail with many of the findings: providing suppliers with enough visible information to act, giving suppliers “steady and predictable” business throughout the year, allowing suppliers sufficient time to complete processes, employing fair financial practices and maintaining a sense of shared responsibility for working conditions and environmental performance.

Brands looking to improve their supplier relationships, it wrote in a “deep dive” in March, should also consider improving cross-departmental collaboration within the company so that everyone is working toward the same goals.

The use of integrated scorecards that include both commercial and sustainability criteria could also support a “more holistic understanding” of supplier performance while driving better-informed sourcing decisions, the organization said.

Most of all, brands should be willing to share the financial cost of hitting sustainable targets. “Ask suppliers what support they need in order to make progress, and be prepared to shoulder some of the financial burden with your suppliers,” the Better Buying Institute said.