Ensuring and subsequently maintaining sustainability standards come with an extra cost that neither brands nor buyers are willing to take on. Animesh Saxena takes up the issue, and suggests a number of ways in which to tackle this challenge.
Sustainability remains a big challenge for industry in its commitment to labour welfare, human rights and environmental standards. While collaboration and commitment among all participants in the value chain are extremely important, the onus of following sustainability standards, unfortunately, are the maximum with apparel manufacturers.
Sustainable standards come with a cost which unfortunately neither brands nor consumers are willing to share. Manufacturers are required to put in huge investments in land, environment-friendly plant and machinery, adopt best labour and manufacturing practices, but no commitment is available from brands or buyers to support and sustain the business in the long run.
As long as it is a best price sourcing-driven business, it will always be a challenge to sustain it. We have everyday examples of buyers moving the orders to other vendors or other countries just for a few cents. Every country has different living standards and the cost of living which impacts the production cost. But, buyers compare the FOB cost and place the order at the cheapest source - which is unfair.
In order to sustain business operations, manufacturers get into unhealthy cost-cutting measures to grab the orders by quoting lower prices. Sustainability of standards become the obvious casualty in this process. Bigger buyers / brands these days follow an open cost system which does not give any weightage to the level of best standards being followed by any particular manufacturer which, in turn, works as a disincentive in the long run.
Suggestions and remedial measures
A long-term commitment from buyers/brands for assured business is required to build a sustainable business model by the manufacturer. Transparent open costing with a mutually decided profit margin should be worked out. Second, brands should run advertisement campaigns in their stores showing the responsible sourcing of their products. Third, the media should be involved in creating general awareness in educating consumers about sustainability standards to change their mindsets in looking for the cheapest merchandise. This will discourage unhealthy price reductions in the market, and help in reducing the pressure on brands to source cheaper merchandise by compromising on standards. Moreover, good practices by vendors/manufacturers should be recognised and showcased by brands so as to encourage others.
Sustainability can be achieved only by a strong belief in self-compliance. So, a system of strong internal audit should be created at the manufacturer's end, which should work in tandem with brand's compliance/audit team for sustaining those standards. In any case, standards have to be common for all brands in order to avoid arbitrary requirements which puts unnecessary pressure and adds costs to the manufacturer.
The apparel industry should be recognised as an industry of special status since it is highly labourintensive and even has minimal education requirement for its workers. A worker needs to be trained in 6-8 weeks before joining a shop floor. Thus, the government should have a separate minimum wages schedule for this industry. While the increase in minimum wages is seemingly a good move, the effect might quite be the opposite. The labour cost in a garment costing is approximately 40-45 per cent, and any major change in minimum wages can impact the FOB price tremendously. This has happened recently when the Haryana government announced a massive increase in minimum wages across all industries by 30-48 per cent.
About the author
Animesh Saxena is Managing Director of Neetee Clothing Pvt Ltd, a government-recognised export house engaged in the manufacture and export of garments to leading fashion stores all over the world.