EuropeAid/157515/DH/ACT/Multi

Increasing Knowledge, Awareness, Transparency and Traceability for Responsible Value Chains in the Cotton and Garment sectors

Overview

• Amount: €625,000 from EU, €625,000 from other funders

• Timeline: 3 years

• Country: Bangladesh

• Issue: Transparency & Traceability in Supply Chains

• Industry: Cotton and Garment

• Project: Develop an online tool that incentivizes supply chain transparency and visibility and improves buyer-supplier dialogue and workflows

• Partners: Social Accountability International (Lead) Technology Firm, local NGO’s, Better Buying, European brands, Bangladesh factories

Photo by SAI

Setting the context

The growth of “fast fashion” has led to brands demanding quick, flexible

& cheap production…

To meet buyers demands, suppliers will sub-contract production (unauthorized) & require workers to work

excessive overtime…

…This leads to opaque multi-tiered supply chains,

unknown supply chain actors, unmonitored

workplaces & vulnerable workers.

Bangladesh• Ready-made (RMG) sector is instrumental for economic development of Bangladesh• Total garment export trade is estimated at USD25 billion (2017)• World’s second largest exporter• 60% of export contracts are with European brands • 50% of the 7,000 garment factories are small and medium-sized indirect sourcing factories, which

operate as subcontractors for larger export-oriented factories • Only 27% of factories benefitted from the USD100 million investment of the Accord and the Alliance –

all of which were direct exporters, and none of which were sub-contracted factories

Problems and Solutions

• Brands have no real-time visibility into suppliers production capacity. • Create a Supplier Capacity Platform, a booking site, whereby suppliers can report their

production capacity and buyers can book capacity for their orders.

• The process of sub-contracting is unmonitored, unregulated and lacks transparency• Provide suppliers with incentives to add their sub-contracted facilities into the

Supplier Capacity Platform. The goal is not to eliminate sub-contracting, but to increase transparency of the sub-contracting process.

• Brands have low visibility into working conditions at their suppliers and no visibility into working conditions of sub-contracted factories.• In addition to providing information about the location and production capacity of

factories, product quality and ability to deliver on time etc., the Supplier Capacity Platform will also provide information on the supplier’s environmental and social compliance

Problems and Solutions (cont)

• The buyer-supplier relationship is managed through top-down supplier code of conduct• Help companies operationalize a mutual buyer–supplier code of conduct into

their business practices, so that both buyers and suppliers are accountable to each other and mutually reinforce each others efforts

• The majority of financial & technical assistance projects are directed at large, export-oriented factories. • Suppliers and sub-contracted factories that register on the Supplier Capacity

Platform will be provided with targeted capacity building tools, resources, and training.

Objectives

• Overall Objective: Improve working conditions in the apparel industry and increase the competitive advantage of responsible buyers and suppliers

• Specific Objectives:• Improve transparency and traceability throughout the value chain, including

lower segments

• Enhance business due diligence efforts and promote responsible production

• Ongoing local dialogue and innovation around supply chain transparency, purchasing and production practices and the link to working conditions

Photo by SAI

Expected Results

• European clothing brands use the Supplier Capacity Platform to determine production capacity of suppliers and submit purchase orders only to factories that have the capacity to fulfil the order.

• A reduction of excessive working hours in apparel factories in Bangladesh and a general improvement in working conditions.

• Formal incorporation of sub-contracted factories in Bangladesh into the apparel supply chain, incl. improved monitoring, training and oversight of these facilities.