Strengthening the links in a supply chain

Mike Todaro

In early May 2010, 120 executives from 90 companies spanning all 40 steps in the apparel supply chain “from the dirt to the shirt” met to discuss “sustainability.”

Industries tend to meet with themselves, in the safety of their silos. But having an entire chain in the room is dangerous. Fingers are pointed, tempers rise. By disallowing sales pitches, powerpoints and self-promotion, we took aim at the issues.

Is sustainability water? Emissions? Economics? Fair Wages? Social Responsibility? What is it? Is compliance measured by how high your fire extinguishers should be, or whether you are extinguishing the problems your employees actually have where they live and work?

The answer we developed is that it’s accepting responsibility, being transparent, doing the right thing, telling your story, sharing best practices and working together. Ironically, with so much globalization, so much consolidation, so much outsourcing, at the very moment when working directly with a factory makes the most margin, the skills to do so have been lost.

At this point in time, when you must fight to protect your profit margins, brands are being caught for not promoting their sustainability actions, which are far more subjective than margins.  

Look no further than the University of Wisconsin students who got a major athletic brand kicked off campus on the alleged accusations of some labor violation. Was it true? It’s true if the Internet says it is.

So, in our meeting, we decided to focus on what no one wants to touch: “the social thing” or fair wages, living wages, minimum wages and local wages.

Since 90 percent of a retailer or brand’s sustainability actions are executed by vendors, the only way for them to make sense of sustainability is to identify this as a top-down program with a bottom-up action plan.  

Below are the top 5 ways to secure success with sustainability.

Going it as a company out; supply chain in  Too many companies believe if they can showcase flashy sustainability achievements like a plaque for a “green” store, they can distract from the other areas where they are not in compliance (such as labor law restrictions,  fair wage and social responsibility). They can’t. Sustainability can only be achieved when approached as an A to Z supply chain function and not one or two obvious or easy successes.

Outsourcing actions out; accepting responsibility in While it is necessary to outsource functions to protect your bottom line, you can not outsource sustainability.  You can delegate authority, but not responsibility. There is a fine balance between protecting your profits and promoting your proactivity. Do research, you’ll see programs by industry leaders extend far outside their enterprises to include those of their suppliers. These are in effect an entire supply chain of compliance.

Head in the sand out; full disclosure ‘or else’ in Even if your organization has taken every precaution to monitor the sustainability commitments of your suppliers, if you discover trouble in the chain, you ignore it at your own risk. Try to remedy it pre-product release. But if you are too late, be the first to announce it and your correction moving forward (preferably by jointly investing in the fix).  Your customers will admire you and your other suppliers will quickly be prepared for you.  

Individual trust out; verify the team in Once you have established a supply chain of companies who share your commitment to sustainability (as well as other relevant business factors from scheduling to employee relationships to product quality), it is time to trust them and listen to their ideas, but verify how they are doing. The axiom holds that, “Those closest to the action are furthest from the truth.” That’s why when you ask a chain, it answers as one. Suppliers up and down chains check one another. They are a very self-correcting business model.

Cynicism out; big picture in  Don’t fight the social change of increasing wages or enhancing employee conditions. The extra investment today will pay off tomorrow. The real ROI of sustainability is having happy committed employees which in turn raises quality and on time delivery, lowers turn over and reduces training costs. The great success stories today show “sustainability” is not a little box you check, but a big box you stand on to broadcast your competitive advantage: your people.

For a real life example of the ROI of investing in people, go to youtube and key in ‘Rocedes Apparel’, a two part, 10 minute video with enormous impact.