62

Supply Chain Performance

Improvement and
Brand Protection via
collaboration
By Dr. Rajesh Bheda, Director, Rajesh Bheda Consulting

ALTHOUGH THE INDIAN APPAREL MARKET IS POSITIONED AS ONE OF THE MOST

PROMISING ACROSS THE GLOBE, THERE IS AN UBIQUITOUS TENDENCY TO
OVERLOOK THE NEED TO ADDRESS THE CHALLENGES OF SUSTAINABILITY AND
SOCIAL STANDARDS IN SUPPLY CHAIN. CAN INDIAN BRANDS COLLABORATE WITH
THEIR SUPPLY CHAIN PARTNERS LIKE THEIR INTERNATIONAL COUNTERPARTS, TO
FIND SOLUTIONS TO THESE CHALLENGES?

194 IMAGES YEARBOOK 2016 presented by Exclusively.com Volume XIII No. 1

EMISPDF in-iimidrchand from 14.139.224.146 on 2017-01-18 12:52:04 GMT. DownloadPDF.
Downloaded by in-iimidrchand from 14.139.224.146 at 2017-01-18 12:52:04 GMT. EMIS. Unauthorized Distribution Prohibited.
 The Indian apparel retail growth story has attracted a lot of interest from entrepreneurs, business
houses with textile interests, non-textile players of the country as well as international brands.
Many have succeeded and many failed. However, the market continues to be one of the most
promising retail stories across the globe. As Indian apparel retail gets connected to the global
market, the concerns of the investors as well as the consumer groups also need to be addressed. These include
sustainability and social standards. While the retailers build their strategies to capture the mind space of value
conscious Indian consumers, they also have to address the supply chain efciency. While the brands try to get
the best price, quality and on-time delivery from their suppliers, added expectations on social standards are
seen as a burden and unviable by the manufacturers. There is a good case to learn from the experiences of
international retailers and their supply chain partners in addressing some of these challenges.

The challenge
When one hears discussions taking place among the apparel manufacturers in India and overseas, most
of them are talking about their inability to meet the growing demands of international customers for
lowering prices alongside improved product quality, faster deliveries, improved social compliance, etc.
Mistrust between buyers and apparel exporters about the transparency in pricing on one hand and
manufacturing costs on other hand seems to be creeping in. Similar feeling is also growing among
manufacturers of apparel for domestic consumption in India.
While buyers are demanding lower prices, the input costs are continually rising in India. This
has severely affected the cost competitiveness of apparel manufacturers in recent years and has
also led to large shift of supply base to low cost countries. This has further added to the trust
decit between the buyers and their long standing suppliers.

/// WHILE THE BRANDS TRY TO GET THE BEST

PRICE, QUALITY AND ON-TIME DELIVERY FROM
THEIR SUPPLIERS, ADDED EXPECTATIONS ON
SOCIAL STANDARDS ARE SEEN AS A BURDEN AND
UNVIABLE BY THE MANUFACTURERS. ///

IMAGES YEARBOOK 2016 presented by Exclusively.com Volume XIII No. 1 195

EMISPDF in-iimidrchand from 14.139.224.146 on 2017-01-18 12:52:04 GMT. DownloadPDF.
Downloaded by in-iimidrchand from 14.139.224.146 at 2017-01-18 12:52:04 GMT. EMIS. Unauthorized Distribution Prohibited.
62
As on one side the Indian brands mature, have global aspirations and
on the other side increasing number of international brands enter Indian
market, there will be focus on the social standards in supply chains of /// WHILE THE BRANDS TRY TO GET THE
brands operating in the Indian domestic market. Though several brands BEST PRICE, QUALITY AND ON-TIME
and retailers like ABLR, Arvind, Raymond, etc., have sustainability DELIVERY FROM THEIR SUPPLIERS, ADDED
initiatives, a lot needs to be done in this area by most brands. If the social
standards at the supply partner factories are not addressed, the brand
EXPECTATIONS ON SOCIAL STANDARDS
faces huge risk of being seen as promoter of unsafe and unfair working ARE SEEN AS A BURDEN AND UNVIABLE BY
conditions. This can be quite damaging for the brand equity. Most brands THE MANUFACTURERS. ///
in yesteryears had relied on setting Codes of Conduct for their supply
partners or adapted codes like Ethical Trading Initiative, WRAP, BSCI,
Fair Labour Association, etc. They used internal or third party audits Many international brands have taken several initiatives to collaborate
to check the compliance to these codes in the factories. However, the with supply chain partners for addressing certain challenges. Some of
effectiveness of these audits is being questioned and policing has its the examples are:
limitations. Some of the international brands and retailers have tried
innovative approaches to address the situation through collaboration. Benets for Business and Workers by Impactt and
There is learning to be drawn from these experiences of global brands RBC
and their supply partners in India and overseas.
Benets for Business and Workers program implemented by RBC
in partnership with Impactt Limited, UK has proven the value of this
Collaborative Approach collaborative approach for improving productivity and working conditions.
Till now, over 160 apparel manufacturing factories supplying to over 12
Rajesh Bheda Consulting (RBC) has been advocating a collaborative leading international brands have beneted from this program in India
approach for improving the competitiveness of supply chain where and Bangladesh.
apparel brands, sourcing rms and apparel manufacturers work
together for a common goal of overall performance improvement.
This needs long term collaboration and commitment to engage with
suppliers than just demanding lower prices and sending auditors to
check social standards. The message is very clear if the suppliers do
not feel it as a win-win strategy, the brands cannot expect true supplier
participation in the improvement process. This would lead to erosion of
the competitiveness of the entire supply chain and brands have as much
to lose as their suppliers.
One of the major challenges in the way of improving factory standards
is very low productivity levels in average Indian apparel factories. This
leads to downward spiral of low protability, low worker wages, low
employee morale and low service level. My productivity research has
established that an average apparel factory in India can improve its
labour productivity by almost 50 percent. If the factories were to unlock
this improvement potential, their protability can improve signicantly
and that in turn will be able to improve the working condition in factories.
However, most apparel factories in India as well as overseas are not
able to make signicant improvement in productivity on their own.
This is where, if the brands can partner with them to initiate factory
improvement programs and bring needed expertise, great progress
can be achieved. RBCs model Integrated Approach for Productivity,
Quality and Social Standards provided in Fig 1, shows how productivity
improvement can lead to improved quality, service levels, worker
satisfaction and happy customers. This creates positive cash ow that
can be used for improving social standards in the factory.

196 IMAGES YEARBOOK 2016 presented by Exclusively.com Volume XIII No. 1

EMISPDF in-iimidrchand from 14.139.224.146 on 2017-01-18 12:52:04 GMT. DownloadPDF.
Downloaded by in-iimidrchand from 14.139.224.146 at 2017-01-18 12:52:04 GMT. EMIS. Unauthorized Distribution Prohibited.
 SUPPLY CHAIN PERFORMANCE IMPROVEMENT AND BRAND PROTECTION VIA COL BORATION

In the year 2012-13 alone, twenty-two Indian apparel factories
benetted from the program sponsored by Arcadia, M&S, Mothercare,
New Look, Ralf Lauren, Sainsburys, Tesco and Varner Group and partly
supported by UK Government. The results are as follows:
The participating factories saved USD 40,000 in the rst 6 months of
the project per factory
USD 1 million more paid to workers in wages
The factory efciency improved by 26 percent, quality rejections
reduced by 31 percent, labour turnover reduced by 26 percent and
unplanned absenteeism went down by 27 percent.
The results clearly demonstrate that the factories as well as workers
benetted from the program. The initiave of the brands was well
appreciated by the supplier base that participated in the program.
HER project by Business for Social Responsibility
(BSR)
BSRs HER project is a global public-private partnership which aims
to empower low-income women working in global supply chains by
promoting health and nancial inclusion through workplace programs.
The HER project has been conducted in 13 countries with 40+
international companies including 15+ apparel brands/retailers and 20
civil society partners reaching out to more than 2,50,000 women.
Plan A initiative by Marks and Spencer
Marks and Spencers Plan A initiative undertakes a holistic approach
in maintaining a sustainable business through all stake holders
collaboration. It is a business plan to deliver products and services
in a world thats increasingly resource constrained and experiencing
profound social change. Started in 2007, the program is presently running
in its third phase with an aim of becoming the worlds most sustainable
major retailer by engaging customers, employees and suppliers.

PACE project by GAP
Personal Advancement & Career Enhancement (P.A.C.E.) was launched
in 2007, in partnership with vendors and global as well as local non-
governmental organizations (NGOs). The supply chain partners leverage
their resources and expertise to provide life skills, education, and technical
training to female garment workers through the program. More than
30,000 women across 10 countries have participated in P.A.C.E. so far.
H&M
H&M by policy rewards responsible partners with more business who are
willing to work transparently with the brand to improve their social and
environmental performance. The brand encourages long-term partnerships
with suppliers. The brand engages in providing training and support and
believes in rewarding good sustainability performance with better business.
Homeworker project under RAGS by Monsoon
The Homeworker project was funded under DFIDs RAGS Challenge
Fund. The project focussed on activities like supply chain mapping,
training for factory managers, contractors and homeworkers, looking at
approaches to setting piece rates, establishing record-keeping systems
to ensure transparency and accountability along the supply chain, and
linking homeworkers with government services.

CONCLUSION
The Indian apparel retail industry is poised for achieving greater heights. While the industry focuses on
growth and bottom line, there is need to address the challenges of sustainability and social standards
in the supply chain. There is a tendency to overlook these while pursuing sharper sourcing costs. Low
productivity levels in the garment factories have made factories less protable and hence they are less
inclined to invest in social standards. International examples suggest that there is great value in brands
and their supply chain partners collaborating in nding solutions to these challenges. This will
bring trust between the partners and cohesive efforts will help improve overall efciency, improve
protability and free resources that can be invested in improving social standards and create
better buy-in to promote sustainability. Proactive initiatives by the players in the Indian fashion
retail will go a long way in building the brand equity and hedging risks. The good news is that
there is enough improvement potential and a strong business case for win-win collaboration.

IMAGES YEARBOOK 2016 presented by Exclusively.com Volume XIII No. 1 197

EMISPDF in-iimidrchand from 14.139.224.146 on 2017-01-18 12:52:04 GMT. DownloadPDF.
Downloaded by in-iimidrchand from 14.139.224.146 at 2017-01-18 12:52:04 GMT. EMIS. Unauthorized Distribution Prohibited.