Transparent profits: Can garment retailers see where money is made?

  • Written by Peter Needle
  • Published on 22 February 2018
  • Our Voice

Supply chain disasters come in many different forms. The latest to hit the news reveals a wide-scale use of brutal modern day slavery in the Thai fishing industry. Thanks to global sourcing and complex production lines, it’s incredibly difficult for retailers to ensure that their products and profits are ‘clean’, and no ethics gremlins are left lurking within their supply chain. Is it possible for today’s high street garment retailers to overcome this challenge and enjoy truly transparent profits?

Slavery at sea

Some of the world's largest supermarket chains have been implicated in supporting modern day slavery, as a six-month investigation by the Guardian reveals shocking and inhumane treatment endured by unpaid immigrant workers enslaved on Thai fishing boats. The world's largest prawn farmer and supplier to the top four global food retailers, CP Foods, has been found to purchase fish feed from suppliers that use such slave labour, thereby tarnishing a huge proportion of the frozen seafood market.

These slaves number in the thousands and it is thought the Thai government is well aware of the issue. Various agencies have recognised human trafficking as an issue in the industry, and the US’s latest Trafficking in Persons (TIP) report concluded that the country had failed to make any meaningful improvements for the fourth consecutive year. Thailand now risks being downgraded to the lowest rank of national human trafficking and slavery rights, which could trigger serious trading sanctions.

The apparent reluctance of Thai authorities to crack down on slavery within the fishing industry echoes the lethargic and sometimes aggressive attitudes of officials regarding workers' rights within the garment industry in Bangladesh, and also in Cambodia. Developing countries rely on their production industries to survive and hold little desire to risk their profits. It is becoming self-evident that retailers must take a stand and demand ethical supply chain standards themselves.

Transparent trading

Thailand’s fishing industry supply chain scandal highlights enormous problems within the food industry’s monitoring and auditing processes. CP Foods' UK managing director Bob Miller told the Guardian: "We know there's issues with regard to the [raw] material that comes in [to port], but to what extent that is, we just don't have visibility." In addition to the supplier’s ignorance, many of the supermarkets implicated in this scandal argue that they already carry out ethical audits within their supply chains. Clearly, the current measures are not sufficient.

Following Rana Plaza, supply chain ethics is also an essential talking point within the garment industry, and corporate social responsibility programmes have been promised by many high street garment retailers. But are they truly effective? Modern garment supply chains are often highly complex with global sourcing and fragmented production lines, making it difficult to maintain complete visibility.

Profits with principles

Supply chain transparency is vital to eliminate illegal, unethical and environmentally damaging activities in sourcing and production. Garment retailers have the right to demand that suppliers comply with certain standards, but monitoring and enforcing this across all subcontractors and secondary supply chains can be a tall order.

Global sourcing introduces the problem of wildly differing workplace laws, human rights codes and government corruption from country to country. The standards of living and working experienced by many fishermen and garment factory workers in South-East Asia may seem deplorable to us, but official regulations and inspections are necessary to achieve a better state of affairs, and it is largely becoming the retailer’s responsibility to oversee such protocol.

While primary suppliers are almost always audited, garment retailers must take a step back and survey the entire supply chain from top to bottom. This is no easy task, and in most cases supply chain management software, or enterprise resource planning (ERP), is a necessity to handle this complex duty.

Segura offers a solution

Systems that implement regular supplier audits and constant order monitoring can prevent supply chain disasters. Segura’s production tracking technologies allow garment retailers to build a supplier database tailored to their business needs, and track the entire sourcing process from order submission to delivery dates. All suppliers within the system are fully audited, and subcontracting is restricted within the database so that no unauthorised manufacturers are ever commissioned. Complete tracking visibility enables you to view your entire supply chain on an easy-to-use online platform, and spot any broken links.

Garment retailers and frozen seafood suppliers alike must work hard to remove modern day slavery from their supply chains entirely, but this is the only way in which they can avoid ethical supply chain disasters and count their profits with a clean conscience.

Originally published 13/06/2014

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