How ethical supply chains can pay off for garment retailers

  • Written by Peter Needle
  • Published on 3 May 2018
  • Our Voice

While the fast fashion trend is making low prices a priority, garment retailers have other concerns to bear in mind to meet modern consumer expectations. Ethical supply chain management is a major concern in today’s fashion market, and endless cost-cutting is no longer a sustainable business plan.

Consumers put a price on ethical sourcing

Working with ethically compliant manufacturers and suppliers is not automatically costlier – in fact, these companies may operate more efficiently as a result of enhanced supply chain visibility. However, could changing consumer attitudes also mean that ethically-produced garments are valued more highly?

Software Advice, a company that compiles research and reviews of supply chain management software, recently examined key priorities for ethical supply chains, and found that efforts by companies to improve supply chain ethics can really pay off.

A survey was conducted in which consumers were asked how much more they would pay for a product normally priced at $100 if it were produced more ethically. Research found that surveyed individuals would be happy paying an average of $18.50 more if raw materials were obtained through ethical sourcing practices. Similarly, individuals stated that they would be prepared to pay as much as $27.60 more for a product made by workers who operated in ethical conditions.

Software Advice also asked survey respondents whether improved working conditions, reduced environmental impact or community involvement would make them most likely to purchase a company’s products, and results found an even split between the three ethical initiatives. Individuals cited fair wages and workplace safety as the most important aspects of ethical labour, while reduced water use and biodegradable packaging represented the most vital features of ethical sourcing. Opening factories in areas in need of jobs was the preferred effort towards community involvement.

Ethical and transparent supply chains therefore hold great potential to increase garment retailers’ profits, with public attitudes proven to affect people’s purchasing habits.

Ethical and transparent supply chains in vogue

Earlier this week at the Sourcing at MAGIC Show in Las Vegas, one seminar ‘Cheaper Is Not Enough: Sourcing for an Accountable Future’ focused on a steady ethical shift in the garment supply chain. Chief supply chain officer for PVH Corp. Bill McRaith, stated that in the past, "Retailers often, if not always, lived in ignorant bliss" about ethical supply chain standards. However, this has been brought to the fore in recent years, and brands are now aware that their reputation can rely on their ethics.

Most recently, the Rana Plaza collapse forced major retail brands to rethink their garment supply chain strategies. Retailers implicated in trade with the collapsed factory were pressured to provide financial compensation, and suffered a massive blow to their reputation. In response to the tragedy, the fashion industry embraced new ethical initiatives such as the Bangladesh Accord on Fire and Building Safety, stepping up corporate responsibility efforts.

Supply chain technologies ensure ethical accountability

With ethical transparency becoming a bigger priority than ever in the garment industry, supply chain technologies play an increasingly vital role for fashion retailers. Product lifecycle management (PLM) solutions enable visibility within garment supply chains by gathering product information and tracking all sourcing and production processes. Segura also enforces transparency and ethical compliance across all orders of garment packaging and trims, extending a retailer’s visibility even further across every aspect of their finished product.

Ethical supply chains are not always simple to achieve, but it has become increasingly clear that they are a necessity for modern fashion brands, as shareholders and customers demand transparency.

Original publish date 22/08/2014

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