During 'The Sourcing Academy – Innovation and Best Practice for Sustainable Sourcing' session at Fashion SVP 2019, a panel asked buyers within the audience whether they would like to source sustainably but believed it would be more expensive. The majority of the room put their hand up. With KPI’s to meet and an increased pressure to drill down prices, whilst ensuring social responsibility, it’s becoming increasingly difficult for brands and retailers to manage. The question is, how can they strike the right balance?
Sustainable sourcing can help to cut costs
According to the Retailer Industry Leaders Association; over three-quarters of the total environmental impact from products on retail shelves occurs deep in the supply chain. Sustainable sourcing requires brands and retailers to know much more about their products and their suppliers, but this can only be achieved through greater visibility of supply. As an example; if a retailer has a target to only source sustainable components, they must uncover who their tier one suppliers are and then go further to understand where the raw materials are sourced from. This is impossible to know without full visibility of supply but can be achieved by mapping your suppliers. With increased insight into global supply chains you can identify opportunities to improve efficiencies and reduce costs.
Work with existing suppliers
In a previous blog we explored how retail buyers can use a criteria to ‘score’ their suppliers, because although price is important there are many other factors that should be considered when making sourcing decisions. If suppliers are chosen based solely on a price promise it could have a detrimental impact on sustainability and ethics. We believe that it’s important to work with suppliers, build long term, strong relationships, align business strategies, and set expectations from a sustainable and ethical front – whilst being honest when it comes to costs.
As Shaun McCarthy OBE Director, Action Sustainability Chair, Supply Chain Sustainability School said it all comes down to simple economics. If there are more sellers than there are buyers the price goes down, alternatively if there are fewer sellers than there are buyers the price goes up. Based on this rule, consider this; if the entire industry worked with their suppliers to be more sustainable wouldn’t this increase competition and decrease prices?
Streamline existing supplier lists
By identifying the most sustainable and ethical suppliers within the supply chain; streamlining and consolidating sourcing to these select suppliers can simplify processes and drive down costs. Not only can this improve efficiencies, having less suppliers puts more volume their way and therefore more favourable prices can be achieved. However, it’s imperative to monitor them on a regular basis, using actual data to ensure they continue to work in line with the retailers CSR policy.
Consider the retail price of sustainable products
Research by OnBuy, found that 57% of Londoners are willing to pay more for sustainable fashion if they believe the products represent good value for money. This statistic suggests that quality is a driver to spending more. For buyers this means that when looking at their criteria it’s important to consider the origin and processes that will go into supplying each component, and where they can charge a little more. The research also found that Londoners search for the term “sustainable fashion” online 1900 times per month. This statistic is no surprise with the rise of conscious consumerism; brands and retailers seen to be more sustainable could have an improved brand image and ultimately have increased lo gain more customers.
“How are my products made?” is a question many shoppers are beginning to ask and they’re choosing where to buy from based on the answer. It has become increasingly important that if brands and retailers claim to be sustainable and have clear and concise CSR policies, they need to ensure that their claims are backed up with positive actions. Brands and retailers that demonstrate an ethical and sustainable approach cannot afford to build supplier relationships on price and trust alone, they need to ensure that they work with suppliers whose values are closely aligned to theirs.
Ultimately if brands and retailers are able to uncover exactly who is supplying them and are transparent about the provenance of their products, they are able to maximise on this approach. By building trust and a loyal customer base, working directly with their suppliers to minimise inefficiencies and consolidating supply where possible, whilst ensuring ethical and sustainable approaches; this will be reflected in their cost savings and increased sales volumes.