The Label or the Truth: Your Choice

7/30/2013
On 17 July 2013, Petah Marian of just-style.com published, "Could labels identify a garment's ethical credentials?"

She wrote: "Putting a stamp on clothing to identify a garment's ethical credentials ... pops up every couple of years. ... There is 'Garments Without Guilt' - the hang tags introduced by the Sri Lankan apparel industry that have struggled to make a mark. … While the move helped improve the country's position in the industry, retailers were reluctant to use the label because of fears consumers might assume anything without the tag was 'guilty' by implication."

This is the real takeaway from Petah's article: "...assume anything without the tag was 'guilty' by implication." This means the noteworthy participating factories of Sri Lanka cannot be singled out as they deserve, even though they invested in doing the right thing from the very start of their businesses.

You see, if you're a factory, it doesn't matter if you are your customers' All Star, because they can't promote it. They know you do things "right." But can they vouch or "score" their other suppliers as they do you – or their suppliers' suppliers for those factories that use relationships to balance production? That's the whole deal: We are an industry driven by the lowest common denominator, the fear of the discovery of the worst factory, or the least compliant supplier or worse, and increasingly likely, the accusatory tweet from hell.

First, about the label
Petah argues for use of a tag that promotes compliance. There is a difference between any tag/label and the truth people really want.

Case in point. In a July 2013 article, we read, "The [apparel brand CEO] doesn't mince words when he talks about his brand's relationship with where it's manufactured ... 'Our values: I don't believe in selling out my neighbor's job to make more profit. ... Our customers demand 'Made in the USA.'"

The fabric for the brand referenced above actually comes from Asia. That Asia is the only source in the world for this specific fabric is beside the point. Do we want a Made in USA legal label when it's not really "made" but is assembled here, or do we just want a narrative on a tag that tells us the real deal, as Petah's article suggests?

Generalizations about the "good" and the "other" factories
As for Sri Lanka, which has every reason to add a tag, I have a disclaimer. I have been there once each of the past three years to run the annual Apparel Industry Forum. In our industry forums there, we discussed how Sri Lanka's factories were award-winning best- in-class factories.

But far be it for their customers to ever broadcast or promote that fact because their customers would wonder about the factories that weren't so recognized and promoted. One-hundred forty of us debated about the very topic of Petah's article.

Ironically, some of the investment in Bangladesh is by these same Sri Lankan apparel executives and the factories they own and operate there are just as good as the ones they operate in Sri Lanka. But you don't hear about that. We collectively and righteously cry about Bangladesh, but as one very wise senior executive member of the AAPN wrote me recently, "Bangladesh is like Hotel California … you can come anytime you like but you can never leave."

As long as the needle is there and cheap, sourcing will be there. The next phase of Bangladesh's industry will almost certainly be consolidation, where the biggest and best get bigger and better.

Flexibility is the new quality
So, if we were able to read all of those great stories on hangtags, what would it mean? The challenge is in quantifying a not-so-obvious ROI on true social responsibility.

Scott Vaughn of Rocedes in Nicaragua makes bottoms. He has 2,500 employees. His social programs can be seen on YouTube. He showed a video at our 2010 annual meeting. We asked the 17 brands who saw it with us if they'd pay more for such a happy factory as Vaughn's, one that would make them "guilt" free. They said no.

The ROI? It wasn't the pull of "guilt-free," but these four things that, to an informed sourcing executive, are the true differentiators:
  • Lower turnover, less absenteeism
  • Dramatic cost reductions in training and more
  • Operator earnings increase by double digits
  • A high double-digit improvement in productivity/efficiency
What's the point? Flexibility doesn't happen because some audit mandates it. It happens because for years, workers were given the safety, security, stability and support that made them work hard. Is a factory where flexibility means its workers can work on 150+ styles a day versus 10 in a normal place worth $0.25 more a pair?

The truth means having nothing to hide
Alfredo Frech of Grupo Merlet in El Salvador best described the progress factories can make when he said, "Ten years ago we were sewing shirts. Today we're selling services." He shared the four cornerstones of this evolution, these 10 years of steady investment:
  • Verticality: speed
  • Design: understand the market
  • Replenishment : quick response
  • Sustainability: "you're not guilty"
Hey, I'm all for labels and hangtags. On a tour of Finotex's label factory in Barranquilla, Colombia, earlier this year, there lay a nameless knit top.  But when Finotex added its neck tape, heat transfer label, joker label, size sticker, UPC code and three hangtags, this piece of knit goods turned into fashion, a brand, a story.

Our industry is like layers of an onion. Everyone inside depends upon each other and knows the truth. The supply chain knows about Rocedes, Merlet and Finotex. It's the outside layer, the part that one discards, which seems to drive most of the criticism toward our industry, making demands that cost much and add little – and for the good guys, makes no difference anyway.

Those of us inside the onion know the truth, the story, and we love it. We know sourcing and operations; we know how to pick the right producers because we know that the supply chain collectively knows which are the best factories in the first place; and at least here in the AAPNetwork, we know and trust one another personally.

That's why the best are always so full and transparent (and often members of the AAPNetwork). They have nothing to hide. They show up. You meet them. You learn from them and one another. Maybe I need to get to work on my own hangtag. It would say, Meet the Garment Industry's Most Ethical People. They're in here.

Mike Todaro is managing director for the AAPNetwork.
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