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Andrea Newell headshot

Best Practices in Purchasing for Fashion Brands

By Andrea Newell

Sustainable sourcing in the apparel industry is complicated. The supply chain runs from raw materials like cotton, through the textile design, manufacture, pattern-making and finishing involved in the final product. These players often include factories that work on contract with stressful deadlines and last-minute changes based on up-to-the-minute sales forecasts.

In 2015, the global fashion industry produced an estimated 400 billion meters of fabric — just for apparel. Holly McQuillan, senior lecturer at Ngā Pae Māhutonga – the School of Design, explained to TriplePundit last year that 15 percent, or 60 billion meters, of that fabric was wasted during the production phase (extra fabric, itself a finished product, that ends up on the cutting-room floor), before the garments even reach a consumer.

So, how can designers, retailers and brands source the most sustainable and ethical materials amid myriad issues? Organizations like the Natural Resources Defense Council (NRDC), As You Sow and the Responsible Sourcing Network have done studies and implemented programs like Clean by Design and the Responsible Sourcing Initiative to improve the textile supply chain. They seek not only to improve water and energy conservation, but also product timeframe, factory capacity and product lifecycle management, all of which combine to soften the environmental impact, increase efficiency and contribute to better purchasing decisions.

Choosing the right fiber

It all starts with the textile that will become a finished garment. Improvements in the apparel industry can start in the design phase by choosing fabric carefully. There is no one best choice for the environment, but a considered choice is the first step.

Historically, designers have paid little attention to sustainability -- focusing purely on style and price-point to set trends. A lot of the corrections to the industry are being made after a product’s design, "not during the design process where they could really have the most impact,” Tara St. James of the Brooklyn Fashion + Design Accelerator (BF+DA, part of the Pratt Institute), explained. BF+DA is going back to the drawing board, literally, showing designers the impact of their decisions from start to finish in the hopes that the next generation of designers will consider sustainability as a matter of course.

However, this shift can be difficult for major brands to implement since they are already operating at global scale in an environment with low profit margins and tight deadlines.

As You Sow reached out to name brands (Gap, Inc., Jones Apparel, Levi Strauss & Co., Nike, Nordstrom, Phillips-Van Heusen and Timberland) about their sourcing and purchasing practice. These were outlined in the 2010 Best Practices in Purchasing: The Apparel Industry report.

The organization found that “many of the compliance violations whose root causes were considered to be in the hands of the factories are now being traced back to corporate purchasing practices.” For example, tight timelines and last-minute changes limit suppliers' abilities to source textiles from reputable manufacturers. And the factories, at a competitive disadvantage, can't even charge the brands for late changes lest they risk losing a contract. "The retailers have the upper hand," the report explained.

As You Sow's research identified six practices by brands, retailers and designers that impacted supplier compliance the most:

  • unstable relationships

  • insistence on driving down prices

  • constant increase in quality demands

  • unrealistic turnaround times

  • changes to submitted orders

  • late cancellations

The report found that when brands improve purchasing practices on their end to address these factors, suppliers had fewer compliance violations and brands reduced their total costs of bringing their products to market, ushered the products to market faster, improved quality and reduced worker burn-out.

These benefits are moving all the way up the value chain to the design process.

Phillips-Van Heusen, an American clothing company which owns brands such as Tommy Hilfiger, Calvin Klein and Izod, trains new employees about the ripple effects of purchasing practices. Managers in all divisions, along with retailers, "need to understand the impact of late decision making and how the supply flows are affected," As You Sow determined. If a brand makes a last-minute change, factories need to pivot to find new textile sources, which means sustainability considerations fly out the window.

Gap's designers use simulations to see the downstream impact of their choices. This led the apparel company to further concentrate on vendor relationships in the next few years. It stated: "This is one of our reasons for fostering a sense of partnership in our strategic relationships with vendors – because it helps both of us to improve. We are emphasizing vendor partnerships even more under Gap Inc.’s new sourcing strategy, which we began implementing in 2012. This strategy calls for working with a smaller, consolidated vendor base to facilitate deeper relationships."

Levi’s also has an exercise through which new designers are trained in product management and sustainability that highlights how even the smallest decisions “can directly affect a factory’s ability to meet our terms of engagement," the company said.

Other companies, like Nordstrom, are realigning business operations to better spread sustainability throughout the company.

The time crunch

The apparel industry is impacted by peak-season rush as well as last-minute changes to design or order size. All of these factors can have a huge impact on a factory’s ability to complete an order on time. In 2007, a study by Oxfam U.K. found: “Until companies recognize that their own sourcing and purchasing practices are one of the root causes of poor labor standards, they will not resolve the problems in their supply chains.”

Gap holds designers to a strict calendar, so the supplier has more time to plan and products can be created in a reasonable timeframe.

The company's VP of social and environmental responsibility (SER), Kindley Walsh Lawlor, moved onto the SER team after several years in production and visits to factories that she said were "eye-opening." She described how the company's decisions impacted the workers, both positively (when decisions were made on time) and negatively (when decisions were made late and impacted overtime and resulted in loss of quality):

"We are clear with designers that they can't change details up until the last minute and the production team understands that there is a timeline that needs to be respected in regards to when things are or are not changed, then we do see suppliers that are better able to comply with our code," she explained.

Nike has gone with a lean manufacturing approach for apparel. Instead of reinventing the wheel for each shoe design, the company implemented 40 to 50 percent standardization, which increases efficiency in both the design phase and in construction. If designs reuse standard components and supplier lines can reuse the same cutting dies, for example, the company realizes huge cost-savings and the supplier saves time during manufacturing and can better meet deadlines.

Timberland is also looking to standardize by designing more classic styles and reusing fabrics that repeat every year. "Longevity of fabrics enables us to book raw materials in advance on 55 percent of our main line styles. Booking raw materials ahead of time gives us flexibility in the supply chain so that we aren’t pushing last minute and decreases risk to us and our vendors,” the company said. This means that sustainable versions of the chosen fabrics are easier to source at more affordable prices.

What buyers can do differently

There are two ways that brands' buyers impact the process: during initial material-sourcing decisions and by limiting last-minute changes.

When reviewing suppliers, brands are paying more attention to capacity. Nike found that looking at capacity and helping suppliers plan their production flows ironed out many problems. Gap realized that, in previous capacity screening efforts, it focused quantity, not capability, and it needed to take both into account.

Before working with a new supplier, Nordstrom sends engineers to ensure the factory has the equipment, staffing and capacity that they claim to have. The department store chain also focuses on planning. It initiated a pilot that allowed the company "to give the factories a capacity plan. We have time periods where we need to tell them by a certain date if we need to reduce the order, and if it is beyond that date, we will pay them for the lost time,” Nordstrom said.

Forecasting demand for designs, quantities, sizes and colors is a difficult metric. Inaccurate forecasts lead to late changes. Last-minute changes increase the risk that workers will have to work excessive overtime and possibly not receive adequate pay because brands insist on the lowest possible prices, leaving suppliers in a tough position. Gap is training employees on making better decisions that don't negatively impact supplier workers.

Driving a hard bargain

Fashion's constant chase after the lowest price is perhaps the biggest factor that upsets any improved process, when suppliers fall back onto meeting buyers' needs at the expense of worker health, safety, working conditions and wages. Nordstrom uses a country's wage rate as a baseline. If the wage varies from this point, the company investigates why. Other brands work toward lowering costs by making better design decisions, so there is room in the profit margin to pay fair supplier wages.

Paying fair wages despite a time crunch, last-minute change or cancellation is often a challenge. Poor wages and overtime are often results of poor purchasing practices, but can happen even when both sides make a good faith effort to follow new processes. Things happen, but it is still the responsibility of the brand to ensure that supply workers are getting the wages they deserve, no matter what disruptions threaten the process. Nike created an overtime-tracking tool, and Gap focuses on ensuring that it and the supplier comply with wage laws. This is still a work-in-progress for most brands.

But forward-thinking brands have made great progress improving purchasing practices and collaborating with suppliers. If other brands follow in their footsteps, there could be an even bigger impact.

Supplier feedback

Some brands are also expanding on the idea of getting feedback from suppliers as an important part of evaluating the success of the improved process, although it's difficult to get suppliers to report honestly about the brands they rely on for business.

Levi’s found supplier feedback invaluable.

“When we’ve asked for feedback from our suppliers, we’ve discovered that sometimes the best insights actually come from the people working in the factories,” Levi's stated. The company learned that, in some cases, “our expectations simply haven’t been realistic. But when suppliers are offered the chance to provide feedback, we’ve seen how our decisions play out at the factories, and from there, expectations begin to change.”

Timberland's code of conduct senior manager, Colleen Von Haden, said that one of the biggest factors she sees for significant improvements in the company's suppliers' factories is when "they see that the brand was willing to point the fingers at themselves, and to start to make changes and own up and take responsibility for their role in how excessive work hours can be difficult to address. That bought us a lot of trust and cooperation. Then we saw them be more willing to make changes, when they saw us willing to do the same."

Keeping score

Brands are using scorecards to rate each supplier on their pre-evaluation of facilities, technical capabilities, product quality, customer service, innovation, and adherence to codes of conduct and contracts.

And the idea has caught on. The Sustainable Apparel Coalition (SAC) began working on the Social and Labor Convergence Project in October 2015 with the goal of creating a standard, industry-wide metric for evaluating social and labor performance in apparel and footwear chains. With each brand performing its own audits, manufacturers are spending time, money and effort managing all the requirements for all their client brands, which increases their costs and consumes more resources. If there could be a standard metric that brands could agree on, then it could further streamline manufacturer processes and cut costs on both ends. So far, H&M, Nike, VF Corp, Levi Strauss & Co., PVH, Gap and Target have signed on and the first prototype is expected to be ready in mid-2016.

image credit: fabric image copyright-free from Pixabay.

Andrea Newell headshot

Andrea Newell has more than ten years of experience designing, developing and writing ERP e-learning materials for large corporations in several industries. She was a consultant for PricewaterhouseCoopers and a contract consultant for companies like IBM, BP, Marathon Oil, Pfizer, and Steelcase, among others. She is a writer and former editor at TriplePundit and a social media blog fellow at The Story of Stuff Project. She has contributed to In Good Company (Vault's CSR blog), Evolved Employer, The Glass Hammer, EcoLocalizer and CSRwire. She is a volunteer at the West Michigan Environmental Action Council and lives in Grand Rapids, Michigan. You can reach her at andrea.g.newell@gmail.com and @anewell3p on Twitter.

Read more stories by Andrea Newell