A global concern

December 20th, 2017 / By: / Featured

A truly “green” supply chain addresses sustainability for every participant and process in the product’s life cycle. Photo: Darden School of Business, University of Virginia.

Supplier compliance is a complex issue for sustainable textile companies.

The issue of compliance can be complicated for textile companies, which have to comply with various regulatory and voluntary company standards for product safety and restriction of substances. In the U.S., for example, the Consumer Product Safety Improvement Act (CPSIA) contains provisions that aim to improve the safety of children’s products. The EU has the General Product Safety Directive (GPSD), which ensures the safety of products such as electronics, toys, textiles, cosmetics and chemicals.

Clothing brands also have their own requirements and standards for their suppliers. Levi Strauss & Co. has a Sustainability Guidebook that specifies its labor, health and safety and environmental requirements for its manufacturing suppliers.

Textile supply chains are extensive, complex and global. A textile manufacturing supply chain is composed of sourcing for raw materials, ginning, spinning, weaving, knitting, fabric processing and finishing. Supplying textiles to multiple brands and retailers all over the world, they need to produce textiles as quickly and as cost-effectively as possible.

The challenges

To minimize expenses, textile manufacturers may outsource supply chain operations to locations such as Asia, where both raw materials and labor are more cost-effective. However, the countries to which they outsource their supply chain operations have varying regulations, leaving open the possibility that textile manufacturers could do business with suppliers with questionable environmental records and labor practices.

For example, manufacturers may buy cotton from a country where cotton is inexpensive but is grown through unsustainable methods, such as using toxic fertilizers and pesticides. The cotton may then be sent to various smaller factories across the globe for ginning, spinning, weaving, knitting, and fabric processing and finishing. A factory that gins cotton may force its workers to work for 12 or more hours per day, seven days per week, for low wages. Similarly, factories that spin, weave and knit the ginned cotton may subject their workers to unethical treatment. Child labor is also a particular concern in the textile supply chain.

A factory that processes woven cloth may use dyes and other chemicals that are hazardous to human health and the environment. Demonstrating and tracking compliance can be challenging, costly and time-consuming, especially given the disparate global presence of textile supply chains. A textile finishing chemical that is prohibited in one country may be considered legal in another.

In addition, the factories to which textile manufacturers are subcontracting their supply chain operations may circumvent existing laws and regulations. These factories may be unregistered, which means that they do not pay taxes or undergo government inspections. In some cases, factories may be registered, but hire temporary workers during peak season, and temporary workers are often subjected to labor violations, such as low pay, job insecurity and unsafe working conditions. Once peak season is over, these workers are dismissed, enabling factories to pass safety inspections. In some instances, factories may bribe safety inspectors to overlook unsafe or illegal operations.

Tracking supplier compliance

There are different ways for textile companies to effectively track compliance of their suppliers, which can be used separately or in conjunction with one another. One way is through third-party certifications, such as the Global Organic Textile Standard (GOTS), the bluesign® standard and the OEKO-TEX® Standard 100.

As their names suggest, these certifications are obtained through verification by an independent third party, and bring a high level of confidence in the inputs and manufacturing process to suppliers’ customers—brands and retailers, as well as consumers. This degree of assurance is usually expensive and time-consuming for suppliers, involving testing products and onsite audits of facilities, requiring effective document management systems, which may require annual renewals.

A second way to track compliance is through testing. This method likely entails the implementation of several regular tests and quality checks to determine whether a product meets the standards and regulations of its destination country, and could include tests on the product itself, its inputs, wastewater, or other parameters.

Testing provides a high level of confidence. On its own, though, testing often does not provide as high a degree of assurance as third-party certification. Testing is costly as well; a supplier may need to conduct many different tests for their customers, and corrective actions from failed tests also add expense. It is important that reputable, experienced laboratories are used, such as those that are ISO/IEC 17025 accredited.

A third way to track compliance is through audits. A supplier may perform an audit for their own facility and operations (first party), or the audit may be conducted by the brand who purchases from the supplier (second party). An audit can help identify problem areas in supply chains. Once these are identified, the brand or supplier can develop a corrective and preventive action (CAPA) plan to address them.

An audit on its own is a cheaper option than third-party certification, although resources do need to be allocated to develop an audit protocol and ensure that employees are properly trained to carry out the audit. There is concern that consumers may not readily trust the results of a self-performed audit, though, and may suspect the company of falsifying the results to avoid sanctions and negative publicity.

A fourth way to track compliance is through chemical and product management systems. Examples include software systems that track certain aspects of a supply chain, such as chemical usage and wastewater discharge. Chemical and product management systems are convenient as they can be installed in computers, tablets and smartphones, which allows suppliers, formulators and brands to access them anytime and anywhere.

Chemical and product management systems can also make audits and certification processes faster and more accurate. Instead of manually tabulating supply chain information on spreadsheets, suppliers, formulators and brands can upload this information directly into the system. The system then computes and consolidates the information, resulting in faster processing and more accurate data.

While chemical and product management systems may come with high license fees and employees need to learn how to use them, when used properly, they can be invaluable in tracking supplier compliance.

The right compliance tracking tool

Sustainable suppliers are crucial to a sustainable textile company. It only takes one scandal or disaster involving a textile company’s suppliers to put its sustainability efforts to waste. Brands and retailers may wonder why the company did not vet the sustainability of its suppliers, and may decide to look for another textile company to maintain their own corporate reputation.

Ensuring supplier compliance can be effective and simpler with the right system and/or standards. Textile companies must understand the advantages and disadvantages of existing supplier compliance tracking tools. The right supplier compliance tracking tool helps companies make their suppliers more sustainable. More sustainable suppliers, in turn, help textile manufacturers earn a good reputation and the enduring trust of their clients.

Alicia Godlove is senior manager, ESG Solutions at ADEC Innovations, a company that designs and develops a diverse technology portfolio of sustainable business solutions. She has expertise in green auditing, carbon accounting, supply chain management and responsible sourcing. (alicia.godlove@adec-innovation)

References used in this article are available upon request: jlpreus@ifai.com.