The Impact Of Ethical Sourcing Essay Example

The Impact Of Ethical Sourcing Essay The sourcing companies are preferred to source products at the lowest possible price, while at the same time ensure he suppliers produce the products With social and environmental considerations. The purpose of this policy is to ensure that products and raw materials purchase by or on behalf of a company consistent with the mission to develop and promote ethical responsibility at every stage in a fashion supply chain. In 1 9905, fashion retailers mainly focused on the economical aspect i. E. Sweet cost with reasonable quality, of achieving the products. While ethical issues are increasingly concerned recently in supply chain management. Globalization is likely one of the factors that contribute to the ransom, which many companies move the production lines offshore to those developing counties for the reason of lower production costs. Concerns on the human right of the workers and the environment protection have been raise in these countries. Change in consumer purchasing behavior may be another factor. This change may possibly increase pressure on fashion retailers or producers to sell or use products that are produced environmentally friendly and respecting human rights. Any failure would probably destroy the companies trustworthiness and even threaten corporate survival. International brands Gap and Nikkei are examples that suffered negative publicity as a result of failing to maintain the ethical issues in their production process. This appears to force fashion companies to adopt ethical sourcing and ensure their suppliers in all stages of supply chain act accordingly. 2. Finding and Discussion The impact of ethical souring on the selection of production sources can be divided into two aspects: the selection of suppliers and the selection of production materials. 2. 1 . Selection of suppliers Traditionally, under limited information about the suppliers, fashion buyers end to use price as a standard for selection Of suppliers in which the lower the price a supplier offered, the more likely the supplier will obtain the business in a pool of potential suppliers. In addition to price, quality, delivery time and services provided may also affect their choices. We will write a custom essay sample on The Impact Of Ethical Sourcing specifically for you for only $16.38 $13.9/page Order now We will write a custom essay sample on The Impact Of Ethical Sourcing specifically for you FOR ONLY $16.38 $13.9/page Hire Writer We will write a custom essay sample on The Impact Of Ethical Sourcing specifically for you FOR ONLY $16.38 $13.9/page Hire Writer Today, however, fashion companies take into account two additional concerns, i. E. Social responsibility and environmental sustainability, when selecting new suppliers. Price used to be considered as a critical factor in evaluating and determining suppliers as the price of raw materials contribute most in the production sots. Therefore to cut the production costs, fashion companies may choose the suppliers with the lower price. This low price, however, may reflect lower standards in response to the workers treatment and environmental protection. As to keep costs low, suppliers may pay low wages, require the workers to work long hours, provide poor working environment for their workers and employ child labors in order to gain the business and undercut other potential suppliers. These unethical social problems are now widely criticized by public and therefore trigger a change in supply chain management. Cooperate with those unethical suppliers may have a risk of reputation damage , and consequently many companies start to consider ethical issues when they are choosing suppliers. The main barrier for ethical souring On selection Of suppliers may possibly be the Costs. It seems difficult for the suppliers to produce products as cheap as before and at the same time adherence to ethical production, because they may have to increase the wage rate, improve working environment, and use safe and environmental friendly raw materials. This apparently lowers the opportunities for suppliers o gain the business unless they undercut other potential suppliers on cost. Also, the costs of sourcing ethical clothing, inevitably, will increase accordingly. A fashion buyer may face a tradeoff when selecting suppliers between lower costs and concerning ethical issues. When adopting ethical souring, fashion buyers may not be able to access to the interior of the suppliers and evaluate whether the products are produced according to code Of ethics and environmental standards. Evidence from third parties, therefore, may be required to provide advice for the companies. For example, United Nation Global Compact (UNC), requires companies to follow universal teeth kcal principles, is a standard to encourage companies worldwide to adopt sustainable social and environmental policies. Also, several non- government organizations (NAG) were established to encourage fashion companies to sourcing materials or clothing produced by manufacturers with ethical concerns. The Clean Clothes Campaign, the Ethical Trading Initiative (IT) and Fair Labor Association are the examples of NAG to promote ethical standards in clothing production. However, these organizations that help in ethical sourcing may be criticized as not reliable. For example, one of the members in the IT, Gap, had been found inconsistent with the ethical standards by employing child labors. Consumers, therefore, may need self- adjustment on the companies performance and the information on the companies official website may provide a way. Some of the fashion companies, such as Patagonia and People Tree, provide transparency of information about where the raw materials come from and where the production is carried out on their websites. This is because these companies recognize that any inappropriate and unethical corporate actions in supply chains may affect the companies image and reputations in the market. 2. 2. Selection of production materials Selecting appropriate raw materials would be very important as the features of raw materials could have a great influence on the finished products. There is trend for fashion buyers to source clothing made from sustainable cottons and produced by Fair Trade manufacturers. For instance, Marks Spencer had sold clothing made from Fair Trade cotton since 2006; Monsoon sold Fair Trade clothing; New Look sold t-shirts made from organic cotton; Houses sold clothing made from recycled cotton fabric. Sustainable cottons refer to the cottons that are produced in response to social ethics and environmental protection. Examples are organic cotton, better cotton and recycled cotton. Organic cotton takes an important role in ethical souring and there are a growing number Of fast ion companies that start to take step towards using organic cotton. Timberland could be a typical example that does a lot to reduce damage to the environment in which 80% of the shoes are manufactured from organic cotton or recycled materials. HM, another example, is one of the leading users of organic cotton in the world. Cotton is regarded as the most popular fiber used in garment. Standard cotton farming is criticized for produce significant environmental problems as it is accounted for 1 1 % of the worlds pesticide consumption. Organic cotton, which is grown without pesticides and fertilizers, is therefore used to improve farmers health and reduce considerable environmental pollution. This kind of farming may possibly minimize the adverse effect on rivers or water source nearby. Better cotton, which is introduced by Better Cotton Initiative to promote good farming behavior, also growth with less irrigate water, chemical, and with more concern to the soil, natural environment and working condition for farmers. Recycled cotton, which is made from the scraps produced by textile mills or post-consumer cotton waste, is important to minimize unnecessary wastage and environmental impacts. Recycle cotton reduce waste to landfill and the use of virgin cotton, chemicals, water and land. Although it is environmental friendly to use sustainable cottons, there are several imitations regarding the usage of these cottons. There seems to be physical limitation for organic cotton and better cotton of having less output because of the absence of chemical pesticide and fertilizers. Apart from physical limitation, there is also economical limitation in which using sustainable cottons is very expensive. Cost of farmers will be increase as the certified organic seed is expensive. Farmers may possibly transfer these extra cost to manufacturers for producing sustainable cotton fabrics. The cost of fashion companies will increase accordingly as extra expense is resulted from using expensive cotton fabric, getting organic cotton certification and paying a Fair Trade premium to farmers. A huge investment of money, time and effort may be required to develop and train farmers skills for producing sustainable cottons in order to meet the international standard. 3. Conclusion Ethical sourcing may conceivably be the critical souring strategy for every fashion companies worldwide in the nearest future as it brings a great deal of benefit to the society while at the same time minimizes the environmental impact. It mainly affects the supply chain in the selection of suppliers and production materials. Although the change in criteria of selection production source may discourage the economic aspect as higher purchase price, it does promote the companys reputation and good image to be an ethical corporate as consumers concern. This may actually reduce operation costs of a company as more recycled materials are used and less effort may be put on promoting brand image. Reputation is a key to maximum corporate benefit and there is no other choice than employing ethical sourcing to maintain or improve reputation in the long term. With increase in reputation, new marketing opportunities could be found.