By Keerti Krishnan
If you’ve taken a minute at a clothing retail store and browsed through a label, chances are that you’ve seen ‘Made in India’ or ‘Made in China’ regardless of where you are in the world! The Asian textile industry has reigned the WTO textile export chart for over a decade. Last year, India and China among other top Asian exporters accounted for 52.31% of the global market. While at the macro level the market position seems grounded, a closer examination would reveal a growing requirement for ethical and sustainably conscious garment suppliers – construing a vulnerability among second and third tier supply chains.
In the wake of the Rana Plaza building collapse in Bangladesh killing 1,129 garment workers, thousands were exposed to ‘unsafe conditions.’ Multinational apparel brands sourcing materials from these suppliers have had their reputation bruised, drawing questions on unethical sourcing and trading. Unfortunately this isn’t the first time a textile sourcing firm has been exposed. Several multinational clothing brands have experienced issues with labour practices and environmental non-compliances. Usually at this juncture, a retailer would mitigate short-term reputational risks by publicising an intended agenda addressing the matter; in the long-term, they may choose to work with the supplier in bettering their standards or replace them all together. The latter has had deeper socio-economic repercussions evident in India.
The competitive micro, small medium enterprises (MSMEs) accounts for 5.33 million producers-suppliers of apparel and textile. Two thirds of Indian textiles (handlooms, hand-made textiles, cotton, wool, jute) are exported primarily to the EU and USA. The Asian market has been lucrative in most ways, cutting manufacturing costs. However for a retailer there are several hidden liabilities. These risks are addressed by sizing potential suppliers against a set criterion designed by the retailer’s ‘Code of Conduct’. Most suppliers are filtered out, usually missing the opportunity to export.
A textile supplier is exposed to several risks including economic turbulence, non-compliance and stiff market competition. Consider Tirupur in Tamil Nadu, a primary textile hub with 750 direct exporters and thousands more as sub-contractors. In a span of just five years the city’s previously bustling streets have several factories shut, owing to a sharp decline in demand during the economic slowdown; non-compliance of zero waste discharge on-site shutting 700 units in 2011 and competitive pricing in Bangladesh. However the price hikes maybe due to a number of factors. Inefficiencies within the factory, is one of them. The Hindu quoted a manufacturer who hiked unit price by Rs.10 owing to high fuel costs to run generator sets during power shortages. Garment factories need to meet manufacturing expenses while sell at a competitive price. When manufacturing costs start to rise, saleability reduces and a shift in market interest re-route sourcing.
While it may seem that there are a plethora of external factors, suppliers need to pedal through, VNV would recommend taking charge of measures within the operation first. Costs could be trimmed when energy deficits, water consumption and waste generation are examined. Leverage on business efficiency by reducing resource ‘leakages’ within the operations to improve company’s sustainable performance and heighten export appeal. Consider acquiring an eco-label for a certain fabric or even an ethical sourcing label to prove credibility in fair labour practices. FairTrade reported a 10-12% rise in products in USA and EU, suggesting a rising sustainable consumer trend. Moreover with the introduction of the Higg index for sustainable apparel and footwear, retailers will rely on their suppliers to ‘do the right thing’.
The sooner you start to review operations, the better you gain competitively. After all, a stitch in time saves nine!