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Best Practices for Managing Ethical Sourcing & Vendor Compliance
Roger Mayerson Director of Business Solutions for NGC
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My Experience…
20 years Apparel Manufacturing and Textile experience in Industrial Engineering, Plant Management and Executive positions.
13 years Retail Product Development, Sourcing, Quality/Compliance Executive positions
3 ½ years Software Business Services developing software to address the needs of the industry
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Challenges…
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Evaluating Vendors is becoming more complex
Worker & Factory Safety remains a critical Issue for the industry
Making Ethical Sourcing decisions continues to be a challenge
Fashion Supply Chains are under intense scrutiny
Concerns after recent factory tragedies have emphasized the
need for more transparency
Bringing unwelcome publicity to Brands & Retailers
Managing Ethical Sourcing & Vendor Compliance
It’s Not Just About Cutting & Sewing
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Facilities with safe and healthy conditions Worker’s Health Worker’s Safety Workers free from forced or compulsory labor Workers free from physical or mental punishment Workers free from discrimination Minimum Wage Minimum Age Maximum Hours Fire Safety First Aid Clear Aisles Working Conditions Environmental Conditions U.S. and European Regulatory Requirements U.S. and European Environmental Requirements
Today’s Factories have to comply with a myriad of requirements by:
Agent
Vendor
Buyer
And Then There’s The US Gov.
Consumer Products Safety Improvement Act (CPSIA)
California Transparency in Supply Chains Act (SB657)
The Maine Toxic Chemicals in Children’s Products Law
The Washington Children’s Safe Product Act
C-TPAT (Customs Trade Partnership Against Terrorism)
Dodd-Frank Wall Street Reform and Consumer Protection Act
(DRC Conflict Minerals)
Proposition 65
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And Then There’s Us…
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Why does a Factory who ostensibly is in business to make money with a significant investment at risk - not comply with your requirements?
Vendor’s Culpability Buyer’s Culpability
Management shortcomings Over booking the Vendor
Lack of Ownership involvement Downward Pressure on Prices
Cultural Differences Increased Quality Demands
Price pressures Shorter lead-time pressures
Short term vision “Last minute” Order Changes
Lack of funding Cancellations
Corporate Culture Corporate Culture
So How to Proceed?
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Get a Good Dog!
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The Working Retrievers: The Training, Care, and Handling of Retrievers for Hunting and Field Trials by Tom Quinn
Confronting Challenges
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EVALUATE MANAGE
REPORT
EVALUATE
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Social Compliance
Manufacturing Capabilities
Manufacturing Capacity
Full transparency on the use of subcontractors
Regulatory Compliance
As well as the traditional metrics of price, quality, delivery record and compatibility with your corporate culture
Evaluating vendors has become much more complex. Vendors must now be evaluated on a complex matrix of factors that include:
MANAGE
Managing the:
The requirements from many SOVEs from different Customers
The requirements from conflicting cities/provinces/countries for Minimum Age, Minimum Wage, Maximum hours worked
The many CSR, CTPAT, Environmental, Quality Audit work flows for different Customers, 3rd parties & NGOs
Corrective Action Plans for those Audits
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REPORT
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You must build a solid foundation: Access & retrieval for all stakeholders
in the product development, sourcing & logistics cycle
Incorporate a supplier portal to facilitate information-gathering and to ensure transparency & partner confidence
Reporting should be: Real-time
Customer specific
Easy to access
With strong security at the company, role & individual user level
An Integrated Compliance System
Integrated Compliance
System
Vendor Compliance
Product Compliance
Regulatory Compliance
Environmental Compliance
Vendor Compliance
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Agent/Vendor/Factory Profiles
• Each supplier's capabilities
• Current Certifications
• Compliance and quality score carding
Capacity Planning
• Reduce Subcontracting
Proactive calendars
• Alert you to upcoming audits,
• Re-audits
• Certification dates,
• CAPs
.
Exception Dashboards
• Allows for alerts to be sent to your dashboard and emails auto sent to alert all parties when an event is late or due
Collaborative communications
• Tied to specific events,
• Audits
• Styles
• Purchase Orders
User Configurable report carding
• Shows on time %,
• Number of CAPs
• Time to compliance
• Pass/fail %
Key Performance Indicator Dashboard
• By Vendor
• Factory,
• Program,
• Compliance Category
Document Management
• Standards Of Vendor Engagement are housed & available on
• Reports, Audits & Communication
Visibility in to the whole process
• Web Based
• Mobility
• Dashboards
• Exception driven
Product Compliance
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Integrated
• A comprehensive testing and quality module that is integrated to your supply chain
Manage Testing Process
• The ability to issue test requests, manage the testing process, issue alerts when there are failures or tests not completed on time
Visibility
• The ability to have visibility into the timeline of testing by all parties
Collaboration
• The ability to have collaborative communications with all parties involved including the vendor, 3rd party testing labs, and your internal team
• All communications permanently tied to the style, PO, test report # for historical analysis
Report Card
Scores the factories adherence to:
• Pass/Fail %
• Regulatory Required tests vs. performance tests results
• Tests not performed on time
• Number of Retests
Regulatory Compliance
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One Truth • Consolidate information
about product testing and factory compliance from multiple systems into a single source
3rd Party Collaboration • Collaborate with external
parties (suppliers and 3rd party testing companies) for test execution and monitoring
Improve communication • Streamline communications
throughout all processes
Comprehensive Reporting
• Generate reports to monitor the processes, demonstrate due diligence and traceability
• User configurable reports
Business Intelligence Dashboard
• Providing real-time data management and decision support to ensure that senior management receive accurate information on causes, financial impact, and mitigating actions to control risk
Environmental Compliance
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The Sustainable Apparel Coalition is an industry-wide group of more than 80 apparel and footwear brands, retailers, suppliers, nonprofits and NGOs committed to reducing the environmental and social impacts of apparel and footwear products around the world
The coalition’s main focus is the Higg Index, a tool that measures the environmental performance of apparel products using three models of sustainability:
Brand, Product and Facility
A PLM system should be able to house and track the Higg Index score for your factories and products
Benefits of an Integrated System
Consolidate information about product testing and factory compliance from multiple systems into a single source
Collaborate with external parties (suppliers and 3rd party testing companies) for test execution and monitoring
Streamline communications throughout all processes
Generate reports to monitor the processes, demonstrate due diligence and traceability
NGC Confidential 2013©
Benefits of an Integrated System
Provide real-time data management and decision support to ensure that senior management receive accurate information on causes, financial impact, and mitigating actions to control risk – ONE TRUTH
Enforce control and Accountability for all suppliers/vendors and team players involved in the design, manufacture and delivery of the product
By ensuring compliance using PLM, retail and apparel companies can avoid costly litigation, reduce downstream risks and costs of non-compliance, and win market share by building and maintaining a positive public image
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Thank You
Supply Chain Transparency, Vendor Compliance and Factory Safety: What You Need to Know White Paper
Roger Mayerson
NGC Confidential 2013©
Thank You