Smart Money on Ethical Fashion Investments

Any successful apparel firm involved with sourcing production knows that endlessly chasing cheaper options is a dead end.  While low cost is still important, the entire ecosystem has vastly changed.  Whereas 15 to 20 years ago buyer/vendor relationships were tactical and local, and not very strategic – and product compliance was important but building codes and employee issues were typically the concerns of others – today relationships must be strategic and global, not to mention visible and traceable.

Those were some of the thoughts on the current sourcing shift as expressed by Bill McRaith, chief supply chain officer for PVH Corp., earlier this week at the Sourcing at MAGIC Show, in a session on "Cheaper Is Not Enough: Sourcing for an Accountable Future."

Overseeing the supply chain of PVH, the $8.2-billion umbrella brand of Calvin Klein, Tommy Hilfiger and its Heritage Brands, such as Phillips-Van Heusen, Izod, Olga and Speedo, gives McRaith a bird's eye view of how our business is changing, and how to prepare for a new future.

In the past, says McRaith, "Retailers often, if not always, lived in ignorant bliss" about the real conditions in which their products were being manufactured.  He likens it to "paint in the air," meaning any time prior to a factory being visited, major efforts had been at play to get things ship-shape, including a fresh coat of paint, so to speak, or even literally, if needed.

Whereas previously the cost question came first, followed by where to source and with whom, the equation now is "value with the right partner comes first," says McRaith.

PVH has made a commitment to only work with socially compliant partners, and while some might expect that to be costly, McRaith says, to the contrary, these types of companies are the ones also focused on lean manufacturing, sustainability, efficiency and the like, thus making it more affordable in the long term.

"You have to do all your audits, etc., of course," says McRaith. But the bigger picture is finding partners who have the "same commitment level" as you do.  He says PVH has taken this time in sourcing history to speak with country representatives about what they want their "brand" to be known for in five years.  "We say to Bangladesh, for example, ‘What will the Bangladesh brand mean to a sourcing executive five years from now?' The decisions you make today will determine that."

As we look to the immediate future of sourcing, social and environmental compliance will only continue to grow in priority, said another panelist at the Sourcing at MAGIC session, Clay Hickson, senior director of strategy and business development for WRAP (Worldwide Responsible Accredited Production).

Hickson says the drivers include company leadership, cultural values, stakeholder expectations, protecting brand integrity and simply wanting to do the right thing.  He sees compliance moving toward continuous improvement programs with factories.  And he reminds, "You can't have continuous improvement if you're only in a factory for one season."

Panelist Mary Cally, vice president of manufacturing and sourcing for Kahn Lucas, a family-owned business founded in 1889, says her company is in the middle of a major restructuring focused on ethical fashion.  It won't happen overnight – in fact, she expects it to be a 10- to 15-year process – but incremental steps are beneficial.  "We dropped non-compliant suppliers; we look for WRAP-certified factories; we are hiring more qualified QCs in our China office," she offered as a few examples.   

Like everyone else, Kahn Lucas, which currently is producing in China, Bangladesh and Vietnam, needs low-priced manufacturing and will work to continue to negotiate those prices, and also try to pre-negotiate fabric prices when possible.  But the company is also investing, in a PLM system for example, and in this strong focus on compliance, in order to fortify its competitive place in the market.

No one says ethical fashion and compliance are easy, fast or cheap. But for those making the commitment, the future is sure to be better for their brands, their shareholders and their customers.

Susan S. Nichols is publisher of Apparel and may be reached at [email protected]

Related Coverage: 
Sourcing Today: Upsides, Downsides and No Surprises

Editor's Note:  Look for coverage of Apparel's Sourcing Summit at MAGIC in the October issue.  And look for a new special report, "The State of Global Compliance in a New Era," authored by WRAP, in the December issue, to be followed by a series next year, "Apparel's 2015 Executive Guide to Responsible Apparel Production." 
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