Ensuring Social Compliance in Fashion Manufacturing

Sustainability has become a pressing concern for businesses across virtually all industries. The impact of environmental issues that include climate change, water scarcity/pollution, carbon emissions and many more has gone mainstream.

Sustainability, however, is not solely an environmental issue. When it comes to garment manufacturing, companies are also expected to maintain standards in how factories treat their workers. This Social component of ESG (Environmental, Social and Governance) includes matters like working hours, fair/equal wages, child labor and other policies and practices.

As the importance of sustainability becomes more apparent every day, what once was nice-to-have information is now being required by law. Regulations increasingly demand that organizations report and fully understand certain supplier information to comply and operate.

The Challenge

While the fashion industry has historically been one of the least regulated industries, there is no legitimate way around social compliance today. As some are learning, there are many unfavorable consequences to failing to meet social compliance standards, including penalties, fines, and even threats of jail time.

With many garment factories located in developing countries around the world, social compliance in the industry can be difficult and costly to achieve. So much so that it often is not being implemented in areas where cheap, forced, or child labor often goes undetected. It gets even more complex when rapidly intensifying reforms trickle down to the global supply chains and third-party suppliers that many fashion retailers and brands rely on for raw materials and manufacturing. The challenge is amplified in the fashion business, where the lowest possible costs with the fastest possible supply chains are required to survive.

So, do big businesses have an obligation to help suppliers improve their sustainability? In answering this question, a recent Forbes.com article states, “In practical terms, some high-profile companies who are currently under enormous pressure to provide full transparency on their sustainability-related risks could have their reputations – and their bottom lines – impacted by a single supplier operating in the fringes of good governance. This could be a big issue.”

Indeed, a growing number of federal and local regulations are pushing fashion brands and retailers to take a hard look at the sustainability of their supplier networks.

The Benefits

While simply doing the right thing remains a strong reason for companies to act, many brands and retailers don’t realize that complying with social regulations has significant benefits and can lead to higher revenue in the long run.

Providing safe and fair working conditions reduces factory turnover and improves morale. Manufacturers know that such improvements enable fast, reliable, and efficient production, leading to higher productivity and improved product quality. Companies that are recognized as socially compliant enjoy better brand reputation and customer loyalty.

Steps to Ensuring Compliance

So, what can fashion companies do to improve social compliance across their supply chain? Do they take a punitive approach by threatening suppliers, or should they take an active role in helping suppliers improve their operations and comply with social standards?

A common first step is to perform a social compliance audit. This audit is designed to measure a factory’s performance against standards. However, it is not a solution for ensuring compliance standards are met. Considered more of a punitive approach, supplier audits often produce wildly mixed results that fail to deliver the intended benefits.

Since the pandemic, brands and retailers are increasingly taking a more collaborative approach aimed at bringing suppliers along with them on the sustainability journey. This is often a part of their strategy to build more robust and transparent supplier relationships. While much has been done on this front, much remains to do. So far, collaboration on social compliance has taken a back seat to the financial and productivity aspects of improved supply chain relationships. 

As with many of today’s supply chain challenges, transparency and information are critical to conforming to recognized standards. Sourcing teams and their suppliers are realizing that achieving real-time communication and transparency is perhaps the most important step to ESG compliance. This is another strong reason supply chains are turning to technology for solutions.

Real-time Information for All

As discussed earlier, getting needed factory information has historically been challenging as suppliers are often not motivated to collect and share it with their customers regularly. The problem is amplified when suppliers produce for multiple brands, each with their own requirements, forms and collaboration portals, creating a complex and time-consuming process for these suppliers.

Recognizing this critical industry need, BlueCherry® recently retooled the industry’s most widely used Shop Floor Control (SFC) solution to streamline the collection and sharing of factory compliance, order tracking and productivity information. Perhaps most importantly, the BlueCherry® SFC Essential solution delivers significant visibility and control benefits to both manufacturing and sourcing teams, providing both with solid reasons to work together to achieve the productivity improvements and social compliance today’s supply chains need to sustain a competitive edge.

Even before social compliance became a requirement, thousands of apparel and sewn products manufacturers around the globe implemented the core components of the BlueCherry Shop Floor Control solution to increase productivity and efficiency, reduce costs, speed production, monitor performance, empower workers, improve quality and more. These benefits alone provide the return on investment and motivation producers need to embrace this technology.

However, contract and package manufacturers with SFC still had little motivation to share the real-time information they automatically generate with these systems. Legacy SFC systems also lacked the technology to make sharing information globally ideal. This left sourcing teams out of the information loop and without insight into basic factory metrics like capacity, productivity, downtime, defect rates, and social compliance. As a result, both parties failed to capitalize on opportunities for improvement.

Leveraging cloud technology, BlueCherry’s latest SFC Essential makes it practical to provide sourcing teams with real-time visibility to productivity, order tracking, quality and other factory performance information that they can use to improve sourcing operations and monitor social compliance.

Once considered only beneficial to supplier factories, BlueCherry SFC Essential has redefined supply chain transparency and changed how brands and manufacturers can work together to achieve social compliance. In fact, brands and retailers are increasingly supporting, even co-investing with valued suppliers, in deploying the SFC Essential solution. 

 Where does your supply chain stand with social compliance? Want to learn how technology is changing the ESG game? We invite you to a conversation with the BlueCherry experts. Call (315) 849-5491 or visit https://www.cgsinc.com/en/contact.