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European clothing chain C&A is making impressive efforts to clean up its supply chains and share its learning with rivals, but the journey is uphill and lonely
The clothing industry’s supply chain is under scrutiny. Concerns about working conditions are at last promising to counterbalance price pressures, but fires in garment factories in Bangladesh in 2012 and 2013 were a vicious reminder that problems persist. The industry’s disparate suppliers perceive that they need to compete on cost at every stage of production, but they have no universally agreed standards for safety or working conditions. Change here is hard.
C&A Foundation, the branch of European clothing retailer C&A that supports sustainability initiatives in the garment industry, has created a “Supplier Sustainability Programme” (SSP), aiming to improve both working conditions and productivity in supplier factories by creating a virtuous circle. The SSP’s first phase began in 2011 in factories that supply to C&A and others, ran for two years, and involved 18 garment factories and more than 22,000 workers in Bangladesh, China, Cambodia, India and Indonesia. Factories contributed to the programme costs.
The SSP instituted a variety of changes to existing factory operations, such as introducing “lean management” techniques, establishing internal communication channels, and qualification measures for employees. Change management teams, which included production managers, HR managers and – a departure for a number of factories – workers themselves, received intensive coaching over 18 months, covering job security, attendance, and productivity and quality management.
The programme is timely: empowering the workforce can improve working conditions. Though that might sound expensive, in fact costs can be cut, by reducing expensive staff turnover. Long working hours and low wages are inter-related and common in the garment industry. So too is lack of training, addressing which can improve productivity and reduce faults, benefiting both workers and factory owners.
Poor working conditions and staff turnover affect productivity as well as individual workers, but there is no industry-wide means of addressing them. Productivity-enhancing programmes such as SSP are generally run by buyers individually. Learnings are rarely shared between buyers, not least as productivity and efficiency data are usually considered commercially sensitive.
While the SSP is not an entirely new concept, what is new is the candour with which C&A is sharing its results. C&A Foundation executive director Leslie Johnston says: “We felt there was value in sharing our experience – what worked and what didn’t. We suspect that our work to improve conditions could be more rapid if we knew what others were learning. We’re sharing our results so that everybody can improve faster.”
Overall, the results of the SSP were positive. At the end of the programme, sewing efficiency across all factories improved by 20%, total take-home wages (excluding overtime) increased by 15%, and worker turnover reduced by 24%. In addition, the programme saved an estimated €450,000 for each factory. Through the training, the SSP empowered workers and reduced stressful working conditions, which enhanced worker loyalty. This lowered staff turnover and absenteeism, reducing labour disruption and further increasing production efficiencies.
Sumeet Bhatti, sustainable supply chain advisor at C&A Foundation, was closely involved in the SSP and witnessed a palpable change in workers’ confidence, particularly in India and Bangladesh. “If you approached any of the [factory] workers before the programme, they were very shy. Through SSP, change management teams were created which enabled workers to brainstorm changes in their working conditions, develop their skills and advocate for rights.”
However, the virtuous circle worked better in some factories than others. For example, changes in sewing efficiency ranged from -15% to +72%, and changes in worker turnover ranged from -71% to +64%. Of course, factories are affected by changes in their respective national economies as well as this programme. The quality of factory management varied substantially, and in several factories the SSP had to be managed intensively, which added cost.
The engagement of factory management was essential to the programme’s success, and initial recruitment proved difficult. While C&A Foundation had planned to run the pilot in 50 factories, owners were reticent, citing cost, disruption and time as barriers. Having just 18 factories instead limited the economies of scale, and prevented the pilot from producing statistically robust results.
Should sign-up have been mandatory for supplier factories? Bhatti is not convinced. “That might work in the short run. But over time, persuading reluctant factory owners to participate – by being clear about the parameters and economics of the programme and offering evidence from similar factories of increased return on investment – will be much more effective.’
But in a supply chain as fragmented as that of the garment industry, the work of one organisation inevitably has limited reach. C&A Foundation believes strongly that the entire garment industry needs to change, with more long-term, stable relationships between buyers and suppliers, fewer last-minute changes to orders and designs (which often precipitate overtime) and an agreed standard for working conditions.
Johnston believes that industry-wide improvements require what is effectively “competitor collaboration”. This has been effective in other industries, for example with the code of conduct agreed in the electronics industry. “Competition shouldn’t be at the cost of workers’ well-being,” she says. C&A Foundation believes it’s essential for the industry to act together where collaboration can improve safety and productivity across the board.
Are there any disadvantages to this kind of openness? Examples from elsewhere suggest that admitting to weaknesses can strongly enhance reputation and inspire respect. The Shell Foundation found this when in 2012 it launched a candid assessment of its first 10 years, as did Engineers Without Borders over its much-lauded annual Failure Report. They both hear much enthusiasm from peer organisations about how valuable more assessments like these would be.
The C&A Foundation is hoping to entice fellow businesses – competitors – to be more open, too. The Foundation will convene a roundtable to begin a conversation within the industry and will be reaching out to peers. If you wish to make contact, they would be delighted to hear from you.
“Frankly Speaking: C&A Foundation’s Sustainable Supplier Programme” What is this? A book, a paper? A report? Who is it written by? will be released in mid-September 2014.
Caroline Fiennes, director of Giving Evidence, partnered with The C&A Foundation to share the findings from its Sustainable Supplier Programme (SSP). Giving Evidence is an independent organisation working for better evidence across the social sector.
How C&A Foundation’s Sustainable Supplier Programme works:
C&A clothing cost clothing supply chain labour practices supplier factories