apparel industry – The OM Blog by Heizer, Render, & Munson

OM in the News: Clothes and EU Recycling Regulations

The EU imports 3/4 of its textiles. Above, garment workers cut fabric to make shirts at a textile factory in India

Clothing companies will start selling more garments made from a single material this coming decade, a major shift in response to a European Union plan to require apparel to be longer lasting and recyclable.

Clothes often contain a mix of fibers, including organics, such as cotton grown on farms, and synthetics, such as polyester refined usually from petroleum. Garments with multiple materials—such as a T-shirt made from 99% cotton and 1% spandex—are difficult to recycle because separating the fibers is tricky.

Currently, less than 1% of the world’s textile waste is recycled into new clothes, with the bulk ending up in trash heaps, writes The Wall Street Journal (Sept. 7, 2022). The EU wants to change this. But the relatively short time frame promises to challenge the big players in fast-fashion, which may have to retool their design processes and rethink their sourcing, a topic we note in Supplement 5.

The EU recently published a plan that aims to put “fast fashion out of fashion” by 2030, referring to the trend of people buying clothes and throwing them out in less than a year. Clothing should be “long-lived and recyclable, to a great extent made of recycled fibers,” the EU said. Sustainability experts say that single-fiber, or monofiber, clothes present one of the best solutions.

The plan will affect not only Europe’s homegrown brands, but also American Nike and Levi Strauss and Japan’s Uniqlo or China’s Shein. EU nations have already agreed to collect discarded textiles separately from other waste by 2025.

German sportswear maker Adidas, for example, launched a line of single-fiber clothes last year including shoes, coats, T-shirts and pants under its “Made to be Remade” label. “These products are created with just one material and once they reach the end of their useful life, they can be cleaned, shredded and recycled for use in new products,” said the firm. Swedish fashion retailer H&M is stepping up repair services and offering rental and secondhand clothing as part of its push to cut waste and its associated greenhouse-gas emissions.

Classroom discussion questions:

Are you concerned/aware of this issue?
How does the proposed change impact the 10 operations decisions discussed in Table 1.2 of your Heizer/Render/Munson text?

OM in the News: Using Blockchain to Trace Your Clothes

Labor exploitation, like environmental degradation, is baked into fashion supply chains around the world, writes The Financial Times (March 13, 2021). One contributory factor underlying these issues is a lack of traceability: most brands work with so many layers of middlemen that they don’t actually know who is sewing their garments, much less who’s dyeing the fabric or picking the cotton. Researchers at the Transparency Index (which ranks clothing brands based on how much they know and disclose about their own supply chains), say companies have a “total lack of knowledge about where the components of their products are being made, and at what cost to people and the environment”.

Hence a more technological approach to trace apparel supply chains: block-chain. U.K.-based Fibretrace is offering something unprecedented: a way to store supply chain information within the very fibres of a garment.

Here’s how it works: a bioluminescent ceramic pigment as fine as dust is added to the fibres at the beginning of the supply chain (for cotton, it’s added in the ginning stage, when the cotton fibres are separated from their seeds; for synthetics, it’s added at the fibre production stage). Each batch of pigment is created according to a unique “recipe”, which acts almost like a serial code.

Then, at each stop in the supply chain — dyeing, weaving or sewing — the fibre is scanned and that facility then adds new information about what they did to the fibre to a secure blockchain. The pigment is so safe for humans that it’s classified as an “edible product.” The cost: roughly 3 cents for a T-shirt.

Although being able to track a supply chain doesn’t necessarily ensure it will be free of forced labor or manufacturing practices that are bad for the planet, traceability is a very useful first step.

Classroom discussion questions:

Describe how blockchain works in general, and in this industry in particular. (Hint: see page 453 in your Heizer/Render/Munson text)
What other tools do brand name garment firms have to control supply chain sourcing ethics?

OM in the News: Wrestling With Unsold Clothing Inventory

A new French law is forcing industry giants to donate or recycle unsold goods that they would have otherwise destroyed.

Apparel companies, from elite fashion houses to mass-market chains, are saddled with an inventory glut following months long closures during the pandemic. Now, they are trying to get rid of the excess without angering waste-conscious consumers—or harming their brands, reports The Wall Street Journal (Aug. 14. 2020). In the U.S., brands and retailers locked out of an entire fashion season are flooding charities with unsold products, in addition to sending goods to discount stores and liquidators.

Good360, a nonprofit that collects excess merchandise and distributes it to charities, expects more than $660 million in donations for the entire year, double what it received last year. “Brands don’t want their unsold products winding up at flea markets or on Craigslist,” said the CEO of Good360.

LVMH—which owns Louis Vuitton, Dior and other brands—booked a $200 million write-down on its inventories for the first half of the year, because many products destined for the spring/summer fashion season were ordered just before much of the West went into lockdown.

Big retailers sometimes destroy returned products rather than deal with the cost of trying to resell or even give them away. Brands that destroy unsold goods have sparked outrage from consumers, politicians and environmental groups. French businesses destroyed $700 million in unsold goods in the most recent year with available data– six times more than they donated. But high-end fashion companies fear angering clientele who would spend thousands on a designer dress or bag, only to see the same item a year later at a discount store selling for a fraction of the price.

Classroom discussion questions:

Why does French policy differ from that in the U.S?
How is the EOQ model (see Ch. 12 in your Heizer/Render/Munson OM text) impacted by the coronavirus?

OM in the News: “Slave Wages” Haunt England’s Online Retailer Boohoo

“I’d rather manufacture in Bangladesh than in Leicester, because they’re far further advanced in terms of labor protection,” says the CEO of the retailer Esprit in Financial Times (July 10, 2020). Adds the former CEO of New Look, “In Leicester . . . it’s slave-like conditions. Everybody knows about it and some firms are clearly ignoring it.” They are referring to the $5 billion fast-fashion business Boohoo, located in Leicester, England. Boohoo is the biggest buyer from garment workshops (over 75%) in a city battling claims over poor working conditions.

“We’re kind of put into a cage and we have to run around like rats,” said the GM at Top Fashion, a local clothing manufacturer. Leicester’s problem of illegal factories has been an open secret for almost a decade, with police this week walking the dilapidated factory corridors looking for evidence of modern slavery.

Over the past 15 years, the revival of Leicester’s textile trade has been the story of Boohoo’s rise. Abandoned by big retailers 3 decades ago, Leicester’s industry splintered into 1,500 mini-factories, typically employing fewer than 10 people. This flotilla of small workshops competed with rivals in Bangladesh and Turkey by offering an ultra-flexible service, handling small orders in quick time. It helps Boohoo test almost 3,000 lines of clothes every week and ramp up production of trends that catch on.

One study found below minimum wage employment to be “endemic”. More than 3/4 of garment workers earned $4.40 an hour–half the minimum wage. So cheap were rates that agents directed work to Leicester that was supposed to be completed in Romania. Some employers preyed on the vulnerability of local workers who are often South Asian immigrants with poor English and few options. And to make matters worse, the pandemic has Leicester under lockdown because of the virus’ spread in the garment industry.

Boohoo’s practice of throwing new clothes out (at low prices) to see what sticks is a great OM story of speed and flexibility, tying to our discussion of achieving competitive advantage in Chapter 2.

Classroom discussion questions:

How is Boohoo able to adjust its offerings so quickly?
What is the ethical dilemma that Boohoo competitors in Leicester face?

OM in the News: Setting Inventory on Fire

Every winter the Tuscan workshops of Stefano Ricci, a high-end menswear label, box up the year’s unsold products—from cashmere suits and silk ties to finely woven cotton shirts—and send them off on trucks to be burned. “Destroying unsold inventory is a widely used but rarely discussed technique that luxury companies perform to maintain the scarcity of their goods and the exclusivity of their brands,” reports The Wall Street Journal (Sept. 7, 2018). In Italy and many other countries, they can also claim a tax credit for destroying the inventory.

Last week, British fashion label Burberry thrust the technique into the spotlight by announcing it would immediately stop destroying unsold stock, bowing to pressure from environmental groups who say it is wasteful. The amount of stock Burberry destroys had risen sharply in recent years, from £5.5 million in 2013 to £28.6 million last year. Other high-end brands, however, say destroying inventory is a necessary evil. Goods that end up in outlet stores or in the gray market, priced at a steep discount, contradict the industry’s main sales pitch: that luxury goods command higher prices because they are inherently more valuable. Executives see the destruction of inventory as a service to the customer. Clients don’t want to spend thousands of dollars on a suit, only to see the same item a few months later selling at an outlet store for half the price.

Burberry’s announcement was aimed at younger shoppers who are environmentally conscious and, increasingly, a core demographic for the luxury-goods business. Brands across the industry are abandoning fur; imposing animal-welfare standards on their suppliers; and touting their policies for recycling and reducing waste. Burberry said it was also ditching the use of fur.

Classroom discussion questions:

What should Burberry do with unsold inventory?
Why do apparel makers burn their stock?

OM in the News: Levi’s Move to Sustainability

Levi’s first tier of its supply chain, such as this supplier facility in Mexico, will see a new sustainability drive.

Levi Strauss is launching an effort to slash the environmental impact of the factories world-wide that make its apparel, reports The Wall Street Journal (Aug. 1, 2018). By 2025, the denim brand wants to cut greenhouse gas emissions by 40% in its supply chain, a sprawling set of 580 third-party factories and mills in 39 countries. The company will start by implementing energy-efficiency programs at 60 of the factories and mills that represent the biggest share of both production volume and carbon footprint.

Many of those factories also produce apparel for other retailers, and Levi’s wants to set an example for its peers. “We want to have an outsize impact beyond our own footprint,” says Levi’s VP-Sustainability. Across many industries, support has been growing for broader, collective efforts to address sustainability in supply chains. Common standards across supplier networks are more likely to stick than varying targets for different vendors. (The British research journal Nature says apparel production is “one of the world’s most polluting industries,” producing about 1.2 billion metric tons of carbon dioxide annually).

As part of the new sustainability push, Levi is also committing to use 100% renewable energy and reduce emissions by 90% in its own facilities. But changing practices at its supplier factories will have more of an impact. Stand.earth, an environmental group that launched a campaign against the denim-maker last year called “Too Dirty to Wear,” applauded the Levi’s move. But it said it also wants to see the company commit to reduce its greenhouse gas emissions by 60% to 70% by 2050.

It can be extremely difficult for companies to calculate their total carbon emissions because the true impact stretches beyond the factories to raw materials providers and transport operations. The basic production of denim material also uses large amounts of water and produces chemical runoff. “When they say supply chain,” says an MIT prof, I’d ask, ‘How deep? If it’s tier 1, do you even know your tier 2, 3, 4, or 5 suppliers?”

Classroom discussion questions:

Discuss the impact of blue jeans on sustainability (See the OM in Action box in Supplement 5).
Why is sustainability such a difficult issue in the apparel industry?

OM in the News: Tech + Fast Fashion = Mass Customization

A computer screen showing a 3-D body scan with body measurements in custom software

Style trends are moving faster than ever in an age when a shopper can spot an outfit on Instagram and buy it with just a few clicks, writes The Wall Street Journal (April 10, 2018). That immediacy is prompting the fashion industry to experiment with a business model called “click, buy and make.”

Today, Hong Kong clothing maker Bespokify’s customers, anywhere in the world, can order professional women’s clothing. Customers input their measurements, generating a digital pattern for clothes manufactured in China, and receive their orders within 2 weeks of purchase.

“Consumers are now shopping 24 hours a day and are being trained to expect new styles all the time,” says an industry analyst. Big retailers also are looking into the click-buy-and-make model. A year ago, Amazon won a patent with which it could take a customer’s order, print a pattern on fabric and send it to be cut by a robot before being assembled by another robot.

Hong Kong’s Li & Fung Ltd., one of the largest supply chain managers in the global garment industry, thinks new technologies could ultimately mean that more companies would be able to place small orders and avoid being stuck with extra inventory. “Just look at the average size of orders—it’s been going down for years,” its CEO said. “It went from hundreds of thousands to tens of thousands. And it will keep going down until it approaches a unit of 1.”

Software and robotics have been in use in fashion for some years. Companies like Proper Cloth use technology to predict a customer’s ideal shirt measurements without having to measure them in person.

Classroom discussion questions:

What is keeping this technology from wider use?
Name some other industries moving toward mass customization.

Video Tip: Product Design at Levi Strauss

Levi Strauss’ new design lab has created video game-like software that allows designers to build new styles on an iPad, reports Fast Company (Feb. 28, 2018). This allows them to take one of Levi’s styles like the 501 in one of a few basic colors, then use buttons and levers to distress the jeans, add studs, rips, or other design elements. The lab makes the 3D graphics more realistic than other tech on the market. The digital file that the designers produce can be immediately sent to a laser machine, which will produce the design on a prototype of real jeans.

This is very different from how jeans are typically prototyped, which involves taking an image and having people manually re-create it on a pair of jeans using sanding and chemical treatments. With this new system, the images are realistic, and the laser turns that vision into reality within 90 seconds, reducing the prototype process to just 3 steps. Previously, with all the drawing, reiterating, and then manually creating prototypes, it took 12-18 steps.

That digital file can also be sent to a manufacturing facility, where an entire season’s worth of jeans can be made using automated lasers rather than manual labor. This creates a much safer environment for workers and reduces the number of harsh chemicals used. Levi’s is trying to phase out, for example, potassium permanganate, which has terrible side effects when inhaled, including sore throat, burning sensations, and labored breathing.

The process could radically speed up the time it takes to bring a new design to market. If a new trend emerges, a designer could whip up a prototype within hours, which could then be produced at scale within months. This is important because there is a lot of waste in the fashion industry, a sizable chunk of which comes from new clothes that were never sold. Between 80 and 100 billion never-worn garments are sent to landfills globally every year!

The Fast Company article includes a very interesting 5-minute video describing the design process. (Click on the photo called Lasers! Gas!)

OM in the News: China Is Turning Ethiopia Into a Giant Fashion Factory

“We’ve arrived at a new moment for the global apparel industry,” writes Businessweek (March 5, 2018). Ethiopia, a drought-afflicted, landlocked country of 100 million on the Horn of Africa is transforming itself into the lowest rung on the supply chain that pours out fast fashion and five-for-$12.99 tube socks. Lured by tax incentives, promises of infrastructure investment, and ultracheap labor, countries the Western world once outsourced production to, particularly China and Sri Lanka, are now the middlemen ramping up production here for Guess, Levi’s, H&M, and other labels. These industrialists like Ethiopia because the government wants them as much as they want cheap labor and tax breaks. Since 2014, Ethiopia has opened 4 giant, publicly owned industrial parks; it plans 8 more by 2020.

“The plan is to create a total of 2 million jobs in manufacturing by the end of 2025,” says a government official. “We are an agrarian nation now, but that will change.” The regimented days in factories are unfamiliar to most Ethiopians, though. “They get only 30 minutes for lunch,” one politician says. “Their backs hurt. They are exhausted. Those jobs, they make everyone sick.” Managers, primarily Sri Lankans brought in to impart the efficiencies achieved in their country’s sweatshops, would view this comment as epitomizing one of their main complaints: Ethiopia hasn’t equipped its citizens for the rigors of industry.

Outsourcing to the developing world has allowed Western consumers to ignore or remain oblivious to the environmental damage and working conditions behind the rising sea of inexpensive clothes. PVH, the parent company of Tommy Hilfiger and Calvin Klein, is the sole American manufacturer here. PVH views itself as a “supply chain pioneer,” because it sets out to develop the production capacity it needs and to directly oversee it. “If you believe industrialization is a good thing and raises people up, out of poverty,” says PVH’s Supply Chain Officer, “then the apparel industry has been the trigger in most developing countries.” As to doing business in Ethiopia: “This is no different from China in the late 1980s to 1990s.”

Classroom discussion questions:

What are the advantages and disadvantages of manufacturing in Ethiopia?
What are the main OM issues for a company opening a plant there?

OM in the News: Apparel 2.0: Here Comes On-Demand Manufacturing

Amazon continues to cast a shadow over the apparel industry. Not only does the e-commerce giant create pricing headaches for major clothing manufacturers, but the company’s supply chain efficiencies and trove of consumer data are exceedingly hard to match.

The next shot from Seattle could be even more disruptive. Amazon has a patent for a process covering the on-demand manufacturing of clothing and other products in a computerized method, writes SeekingAlpha.com (April 29, 2017). (See the graphic below). The patent says the technology can be applied to a broad range of items, “including clothing or fabric products, accessories, footwear, bedding, curtains, towels, etc., in a wide variety of materials including, but not limited to paper, plastic, leather, rubber, and other materials.”

“By aggregating orders from various geographic locations and coordinating apparel assembly processes on a large-scale, the embodiments provide new ways to increase efficiency in apparel manufacturing,” reads the patent. The implication is that excess inventory would be no longer be a problem.

Amazon, which already has it own brands of shoes, dresses and suits, is also planning to develop a line of activewear. While it’s unclear in what direction Amazon’s apparel push will go, on-demand apparel manufacturing could create a broad reset in the textile industry.

The Amazon patent shows the process starts when customers submit their online orders. Patterns are printed onto rolls of fabric.

Classroom discussion questions:

Why is Amazon moving in this direction?
What is “on-demand manufacturing”?

OM in the News: Zara’s Fast Fashion

Zara's identifies trends and quickly moves garments from sketch pads to stores — Zara’s identifies trends and quickly moves garments from sketch pads to stores

A black, high-collar women’s wrap coat, fastened with a metal ring, was just hung out for sale at Zara’s flagship store in NYC. “Customers asked for hardware this season,” the manager said. That kind of feedback can inspire a new style that reaches a Zara store within weeks. This coat took 25 days. The garment’s journey from design workshop in Spain to retail display rack in Manhattan offers an inside look at the fast-fashion model that has made Zara’s parent company the world’s biggest fashion retailer, writes The Wall Street Journal (Dec.7, 2016).

A designer and pattern maker at the Spanish company’s HQ took 5 days to fashion a prototype of the coat, based on discussions with Zara store managers of what women were seeking. Cutters and seamstresses then worked 13 days to produce 8,000 of the coats. Over the next 6 days they were ironed, labeled, tagged, checked for quality, then trucked to Barcelona’s airport. The next day coats were on a truck to the Fifth Avenue store, to sell for $189.

The company’s ability to respond quickly to customer taste has long been the subject of industry study. One way that Zara’s speeds production is by making most of its garments in Spain. Every creative decision about all Zara garments flows quickly from impromptu discussions at HQ, in a huge open workspace. Designers and commercial staff sit side by side, in contact with Zara store managers around the world. Often, managers fly in, view a mock-up, and help shape product design.

As a result of Zara’s speedy conception and nearby production, it can get new clothes to stores in as fast as 2 weeks, while competitors take several months. “Since the beginning, the idea has been to understand what the customer wants first and then have an integrated manufacturing and logistics system to be able to deliver it to them quickly,” says the CEO.

Classroom discussion questions:

What are Zara’s core competencies?
Why do other firms take longer to go from design to delivery?

OM in the News: The Toll of Cheap Clothing

Relatives hold photos of workers missing in the Rana Plaza collapse

In April 2013, when the Rana Plaza building in Bangladesh crumbled and killed more than a thousand garment workers, Western clothing executives were chastened. They were the ones, after all, who’d been pressuring Bangladesh’s apparel factories to cheaply reproduce runway trends for consumers in the U.S. and Europe who’d grown used to $10 dresses. Following the accident, H&M, Zara, Walmart, Gap, and other major brands announced they’d fund and oversee factory inspections in Bangladesh, demanding improvements from facilities that fell short and cutting off business with those that didn’t get better.

“Three years have passed, and an uncomfortable truth is emerging,” reports BusinessWeek (Oct. 31-Nov.6, 2016). Of some 1,600 factories, more than 80% are behind schedule on improvements. The government, too, has made limited progress: It’s shut down just 39 facilities that posed an “immediate” danger to workers. Meanwhile, investigators keep finding defects: faulty sprinklers, exit stairwells used for storage, missing fire doors.

Surprising? The craze for cheap, on-trend clothing that helped turn Bangladesh into the world’s second-biggest apparel exporter, after China, has actually intensified since the disaster. Low-priced brands keep undercutting one another, and that keeps squeezing the factories that produce their clothes. This is the backdrop against which factory owners are expected to make time-consuming, expensive improvements.

So far, the government has shut down only those factories that posed an imminent risk to employees. If it lets imperfect, if not immediately dangerous, factories continue to operate, that could endanger garment workers. At the same time, the garment industry is a major employer, credited with helping to cut the country’s poverty rate almost in half since the 1990s, to just over 31%. Also, Bangladesh’s garment industry is facing serious competition from other countries, and if it becomes costlier to source clothing from Bangladesh, Western brands could migrate to Cambodia, Vietnam, Burma, or Ethiopia.

Classroom discussion questions:

What is the ethical dilemma facing both U.S. brands and the Bangladesh government?
Why are the safety fixes not corrected more quickly?

Good OM Reading: The Myth of the Ethical Supply Chain

Inside the Tazreen garment factory after the fire

The anti-sweatshop mania burst into the mainstream in the mid-90’s. Naked people chanted outside the opening of an Old Navy, Jennifer Love Hewitt led an anti-sweatshop protest, Kathie Lee Gifford cried in front of Congress. Nearly every major apparel brand was the target of a boycott campaign. In response, the companies adopted codes of conduct, banning workers under 16 and forced overtime—then expanding to health, safety, and environmental protection. Since 1998, Nike has followed U.S. clean air standards in all of its factories worldwide, while Levi’s gives financial literacy classes to some of its seamstresses. An entire ecosystem of independent inspectors sprung up.

However, it’s not the largest companies that are the issue. In the last 25 years, as the big brands were getting better at monitoring their supply chains, the entire global apparatus of manufacturing shifted. In the fast-fashion era, Western brands couldn’t afford the luxury of working with the same suppliers and ensuring that they meet the company’s standards. Most of them outsourced this coordination to megasuppliers: huge conglomerates that can take a design sketch, split the production between 1,000’s of factories, box up the goods and ship them to stores.

Recall that in 2012, as the fire alarm went off in a Tazreen garment factory in Bangladesh, over 1,200 workers were scrambling to complete orders for Western brands: Dickies, Wal-Mart, Disney. After 100 workers died, NGOs focused on how Wal-Mart was responsible for 60% of the clothing being produced there. But Wal-Mart never actually placed an order with Tazreen. A year before the fire, Wal-Mart inspected the factory and discovered that it was unsafe. By the time of the fire, it had banned its suppliers from using it. So how did its products end up at Tazreen anyway? Wal-Mart had hired a megasupplier called Success Apparel to fill an order. Success hired another company, Simco, to carry out the work. Simco—without telling Success, much less Wal-Mart—sub-contracted the order to Tazreen’s parent company, the Tuba Group, which then assigned it to Tazreen. Two other 4th and 5th tier contractors also placed Wal-Mart orders at Tazreen, again without telling the company.

This lengthy, but highly readable, article in The Huffington Post, is a perfect supplement to your discussion of SCM in Chapter 11.

OM in the News: The Search for Cheaper Labor Leads to Ethiopia

Women at work in Addis Ababa at the GG Super Garment factory

For more than a decade, Asia has dominated clothing manufacturing, churning out cheap clothes on inexpensive labor that are shipped to malls world-wide. But over the past few years, rising production costs in China and several deadly factory accidents like the collapse of Rana Plaza 2 years ago in Bangladesh, have forced apparel companies to hunt for alternatives from Myanmar to Colombia to Ethiopia. Ethiopia was recently identified as a top sourcing destination by apparel companies.

Africa, reports The Wall Street Journal (July 13, 2015), is the final frontier in the global rag trade—the last untapped continent with cheap and plentiful labor. Ethiopia’s garment sector has no minimum wage, compared with Bangladesh, where workers earn at least $67 a month. Garment workers in Ethiopia start at $21 a month. (Chinese garment workers earn $155- $297 a month.) Most countries in Africa benefit from a free-trade agreement with the U.S. And, unlike other emerging economies such as Vietnam and Cambodia, many African countries can grow their own cotton, which shortens production time.

Big apparel makers are willing to go to great lengths to find new, low-cost sources of production. Consumers have been conditioned to expect a plentiful supply of cheap clothing, which has pressured the margins of companies like Wrangler, Lee, and Calvin Klein. Ethiopia holds the most promise for developing garment production in Africa, factory owners and brands say. “Ethiopia seems to be the best location from a government, labor and power point of view,” says one CEO.

Many African countries lack roads to transport finished clothing, and landlocked Ethiopia doesn’t have a port. The workforce is untrained in sewing clothes. But apparel companies remain interested despite those hurdles. They are drawn to not only the cheap labor, but to the inexpensive power, which is the 2nd-biggest factory cost after workers. The Ethiopian government is building a railway to the port in neighboring Djibouti to help exports leave the country more quickly.

Classroom discussion questions:

1. What are the advantages and disadvantages of locating a new plant in Ethiopia?

2. Will Africa be the next China?

OM in the News: All Your Clothes Are Made With Exploited Labor

Yes, this is the somewhat shocking title of The Atlantic’s (June 3, 2015) article featuring Patagonia, which has become a symbol of well-heeled outdoor adventure. But the apparel and sporting company thinks of itself as more than just a retail company. Says Patagonia’s founder: “We aim to make the best product, cause no unnecessary harm, and perhaps most important, inspire solutions to the environmental crisis.” And yet, despite these aspirations, internal audits turned up multiple instances of human trafficking, forced labor, and exploitation in Patagonia’s supply chain.

The audits examined not Patagonia’s first-tier suppliers—the factories that cut, sew, and assemble Patagonia’s products—but the mills that take raw materials and produce the fabrics and other parts that later become jackets and backpacks. About 1/4 of those mills are based in Taiwan, and the majority were found to have instances of trafficking and exploitation. Those mills didn’t hire workers themselves and instead turned to so-called labor brokers. These labor brokers charged migrants exorbitant, often illegally high fees in exchange for jobs.

Though it may seem shocking that a company so publicly committed to fair labor practices could have such violations in its production chain, the news is less surprising when taking into account how the apparel industry operates: with unwieldy, complicated supply chains that reach around the globe. So the findings of Patagonia’s audits show the near impossibility of treating workers well at every step in the production process.

Labor violations are more rampant at the mills and parts manufacturers, which are often subcontracted to provide the materials for the first-tier factories. Traditional factory audits by both brands and NGOs often miss instances of trafficking deeper down the supply chain. Auditors often don’t even have the proper language skills to communicate with the multi-national population of workers that make up the workforce. To complicate the situation further, supply chains are massive and far-flung; relationships among brands, factories, and employees are often informal; and corporate social-responsibility programs tend to be relatively unestablished and toothless.

Classroom discussion questions:

1. What is the solution?

2. If Patagonia is a global leader in ethical manufacturing, what is the status of the rest of the apparel industry?