Textile News, Apparel News, RMG News, Fashion Trends
Industry Insight

Covid-19 pandemic: New business model a must for the sustainable fashion industry

Covid-19 pandemic has shaken the global fashion industry by destabilizing the whole supply chain. But Covid-19 could not be an excuse to divert from ethical practice or to back off from sustainability, which needed to rebuild the sector after coronavirus crises are over.

RMG-workers-lost-job
Figure 1: Buyers delayed payment left RMG factory owners in trouble to pay workers salaries.

Unfortunately, this was seen in the global apparel supply chain during the Covid-19 pandemic and buyers, retailers, importers and brands have deviated from their purchasing practice raising questions about the sustainability and ethical ground.

It is always a hot topic for global buyers and retailers to talk about when negotiating with suppliers for placing work order and branding goods to consumers.

For the sake of the apparel industry, Bangladeshi manufacturers have shown their best performance in ensuring sustainability in manufacturing and other issues.

Brands-behavior-Bangladesh-apparel-Covid-19

As of now, Bangladesh has the highest number of certified green factories and the apparel makers have invested a lot in technology to make the industry sustainable in terms of environment and labor rights.

However, after the outbreak of Covid-19, sustainability from the buyers’ end came under questions as they have deviated from sustainable and ethical buying practices in sourcing goods from suppliers in Bangladesh as well as in other Asian countries.

In the wake of the pandemic, orders placed with different manufacturers in Bangladesh worth $3.17 billion have been canceled or put on hold by brands and retailers. While they delayed the payment leaving factory owners in trouble to pay workers.

Impact-buyers-unethical-behavior-COVID-19
Figure 2: Impact of buyers’ unethical behavior in the pandemic.

On top of that, after a certain period, the retailers and brands changed their voice and came up with a new offer with a proposal of accepting a great percentage of discounts on the agreed price of the orders or asking manufacturers to cancel goods.

This unethical purchasing practice has left tens of thousands of workers’ jobs in the sector at risk. So it is time to redefine sustainability in the fashion industry for the sake of business in the post-COVID-19 pandemic world.

Why sustainability needs to redefine

In the post-COVID-19 pandemic world, the consumers will spend less money to buy fashion goods and be more selective, the expectation for sustainability, fair working conditions, safeguarding workers’ rights and ethical action within supply chains will become absolute table stakes.

apparel-sustainability-should-redefined
Figure 3: In post-pandemic era expectations for the whole industry will be reset around greater collaboration, more equitable partnerships, and collective responsibility across all parts of the value chain.

After Covid-19, fashion leaders will reshape what it means to be a sustainable business, with a unified approach that integrates environmental, social, and purchasing considerations into core business practices, with the development of sustainable products as an area of innovation.

Also, it is very important, the manufacturers and buyers must protect the workers’ rights and their livelihoods.

On the other hand, expectations for the whole industry will be reset around greater collaboration, more equitable partnerships, and collective responsibility across all parts of the value chain.

So, in every business decision, the fashion brand owners and manufacturers, and sustainability professionals need practical and actionable guidance to avoid backsliding on progress and to actively prepare for a changing industry.

 

Fashion companies must safeguard workers, employees, capital, value chain partnerships, channels, and the trust and support of their customers. This moment is an opportunity to remove unnecessary complexity and costs, to prepare for reinvestment.

Fashion companies have to resolve immediate inventory challenges in partnership with suppliers as sustainability will be imperative for strong companies after the crisis.

Leaders will make sustainability central to post-pandemic decision- making, while laggards will view sustainability as an effort to resume once convenient.

Fashion brands and companies have to take advantage of digitalization, innovative business models, and end-to-end solutions – with transparency playing a central role – to assess and demonstrate positive environmental and social impact to stakeholders.

Post-COVID-19-redefined-APPAREL-sustainability

People, who would succeed in maintaining their sustainability programs and commitments, will gain many business benefits once it ends, and rebuild a more sustainable fashion industry after COVID-19.

The new business model is a must

According to the present system of placing work orders, a buyer doesn’t need to invest any money. Manufacturers need to finance all raw materials and bear all operational costs in advance before delivery of the goods.

As a result, clients can alter the order’s terms and conditions or leave the contract at any time without hesitation. Even, they also demand discounts in case of any failure or flaws.

New-APPAREL-business-model-ensure-Buyers-commitment
Figure 4: New business model proposal to ensure Buyers’ commitment to the manufacturers.

The buyer’s dominance was noticed during the COVID-19 pandemic as they canceled orders and later demanded discounts due to the lack of a proper system, which protects the supplier’s rights.

In the given context, Bangladeshi apparel makers need to develop a new business model, where both parties will hold similar responsibility for placing orders and buyers will contribute to purchasing raw materials.

“As a way to save bank charges, almost all brands/retailers have stopped working through irrevocable letters of credit which are usually called “Master LC.” Instead, they have started the practice of using sales contracts or purchase orders,” Mostafiz Uddin, Managing Director of Denim Expert Limited, an export-oriented denim maker.

An irrevocable letter of credit is a financial instrument used by banks to guarantee a buyer’s obligations to a manufacturer. It is irrevocable because the letter of credit cannot be modified unless all parties agree to the modifications.

“To come out from this unethical purchasing practice and unfair situation, partnership and trust between the clients and the manufacturers are vital. The current and existing business norms need a complete overhaul. Brands and retailers or clients need to engage in financial investment in the supply chain,” said Mostafiz Uddin.

A new system whereby buyers pay for raw materials at the time of placing orders would be a major step forward. The trade associations of the manufacturers as well as the buyers can play a vital role there, he added.

These associations can discuss and formulate a set of guidelines that both the buyers and manufacturers have to comply with. The guidelines will include clauses such as no orders without irrevocable LC, said Mostafiz, also Founder and CEO of Bangladesh Denim Expo, an exhibition dedicated to denim products.

Buyers-partnership-included-apparel-supply-chain
Figure 5: Partnership and trust between the clients and the manufacturers are vital.

Priorities for sustainability

In remaining sustainable in the business, fashion companies have to safeguard human capital, financial capital, and supply chain relationships.

On the other hand, they have to manage orders while preserving supply chain relationships by avoiding cancelation of completed orders to prevent factory closures and impacts to workers. Engage in collaborative conversations and respectful dialogue with suppliers on how to address issues together.

On top of that, maintaining key social and environmental programs is very crucial. The focus should be given on workforce protection, health and safety, and key environmental programs, as well as on collecting social and environmental data.

Role of manufacturers in sustainability

The outbreak of the Covid-19 pandemic brought rapid changes in people’s life and living standards. The fashion industry is not out of those changes. So, the manufacturers of apparel goods think out of the box for making the supply chain and business sustainable.

“We are in an extraordinary situation when the global fashion industry is going through a very turbulent time due to Covid-19 pandemic,” Bangladesh Garment Manufacturers and Exporters Association (BGMEA) president Dr. Rubana Huq told Textile Today.

In making the textile and apparel sector sustainable textile, we should focus on creating our virtual marketplace (business to consumers) like Amazon, eBay as the consumer’s behavior towards purchasing changes rapidly, said the business leader.

To this end, the government has to play a key role, she said.

On the other hand, product diversification and technology up-gradation is crucial for apparel industry as the demands of recycled, non-cotton based clothing goods and circular products items on the rise, said Rubana suggesting to move for producing meditex and healthtex including Personal Protective Equipment, facemask, medical gowns as the future of this products is bright.

Latest Publications

View All

Textile Today May 2020 Issue
3 Special Supplementary
Editorial on “Time to rewrite the fashion industry”
Cover Story on “Alternative marketing for increasing export”
Exclusive Interview- Dr. Rubana Huq, President, BGMEA
07- Industry Experts Opinion
08- Factory news
43- Total Articles
100- Total Pages
Download Now