How to Fix the Fashion Industry
Fixing the Industry
Indirect sourcing has become an essential feature of the garment sector in Bangladesh as a means of increasing margins and boosting production capacity while keeping costs low. In the absence of an effective regulatory framework, the prevalence of indirect sourcing strategies has resulted in a supply chain driven by the pursuit of lowest nominal costs. This has increased risks for business and workers by undermining wages and working conditions, as well as investment in technology and training, and improvements in productivity and quality.
There are two possible solutions:
Abolishing the practice of indirect sourcing: Brands/retailers establish stronger, direct relationships with the suppliers AND the sub-contractors.
Regulating the practice of indirect sourcing (meant are official state regulations, not guidelines issued by well-meaning institutions): Governments raise the minimum wage of the industry to meet living wages, for which the brands/retailers need to agree to an international minimum wage (otherwise the governments have to fear that by raising the minimum wage, they are driving the brands away). Yet, since in some places the living wages (calculated as the Asia Floor Wage) are as much as five times above the current minimum wages, it is unlikely that the governments could raise them that much at once.
The most actable, and probable, way to achieve the goal of a living minimum wage would be to combine both ways: First, the brands would have to agree on higher minimum wages, then the governments could raise them. Although they probably wouldn’t (be able to) raise them at once to meet living wages, this would be a good starting point for the brands/retailers to establish relationships with their suppliers and their suppliers’ subcontractors.
This is also postulated as conclusion of NYU Stern’s Report “Business as Usual is Not an Option – Supply Chains and Sourcing after Rana Plaza”: “Global brands should acknowledge the role of indirect sourcing in their supply chains and begin to build more transparent, trust-based, and long-term relationships with their primary suppliers. Beginning with their closest suppliers, they should work to identify the full scope of subcontracting in their supply chains. Brands should prioritize transparency, rather than continuing empty rhetoric about policies against ‘unauthorized’ subcontracting” (Labowitz & Baumann-Pauly, 2014).
In all cases, the brands/retailers’ activity is required, and they need (more) incentives to act with more determination and speed.
With your contributions and statements you encourage them to take action and use their power.