GAFTI gets tough on audit fatigue
An estimated $2bn is spent by the apparel and footwear industry each year on factory audits
With increasing numbers of apparel and footwear brands, retailers and manufacturers weighed down by so-called "audit fatigue" - an estimated $2bn is spent by the industry each year on audits - it is no wonder that steps are being taken to work towards a common platform that will enable firms to share data and reduce the number of audits carried out across the supply chain.
The Global Apparel, Footwear and Textile Initiative (GAFTI) brings together retailers, brands, mills and factories to try to reduce this compliance complexity.
"It sounds great - and a little futuristic - for everybody to have the same standard," explains Veit Geise, VP of Asia sourcing at VF Asia Ltd. "Our approach isn't so new - but we think it's time to be proactive," he told delegates at an annual review of the initiative at Prime Source Forum in Hong Kong. "A massive industry has evolved around auditing...we would like to redirect this spend to training, education and factory infrastructure."
Because there is no single source of standards - or standardisation - in the apparel, textile, and footwear industry, brands and retailers have ended up with conflicting requirements. Not only does this lead to a huge amount of extra but non value-added work for suppliers, it also reduces transparency and leaves the industry vulnerable to increased scrutiny from governments and the media.
Instead, the industry should be driving change, believes Bill Foudy, head of strategy and brand sourcing at Adidas Group. "We want to be able to get out in front of these discussions and help guide regulations before they're placed upon us. We want to make sure we are leading and not being led."
Sourcing consultant Peter Kaminsky adds: "One of our members said they have people spending roughly five months out of the year just dealing with auditors of different companies that use a supplier of labels and hangtags and printed goods. It's crazy to waste all that energy when we could have just one audit [and] auditors that can be relied upon. As an industry we've been going our own separate ways for too long; it's time to try and find a way to come together and agree on that common protocol."
There are now three GAFTI sub-committees to tackle product safety, social compliance and environmental sustainability.
In his update on product safety issues, Andrey Leroy, chairman of the Apparel & Footwear Committee at the American Chamber of Commerce in Hong Kong, and marketing director of Modern Testing Services (Global) Ltd, explained that there are currently 14 conflicting standards covering a range of chemicals including nickel, azo dyes, formaldehyde, lead, phthalates.
Yet the emergence of new consumer markets around the world is likely to lead to the creation of even more new regulations. In the US alone, 28 states are considering toxic legislation later this year, while other countries have multiple regulations, and different laboratories may provide different results for the same test.
Not only does all this regulation increase testing costs, he notes, but there is also an increased risk of litigation. "Are we prepared to test the same chemical three times when we are selling to different consumer markets?" he asks.
The GAFTI sub-committee proposes selecting only one test method for each chemical.
"We believe as an industry we have to control our destiny. If we don't do this, we're all in trouble," Leroy says.
Updating on other plans, Kaminsky says a working group is in the pipeline to establish an auditor training body and benchmark the best practices. "If we continue to police we'll never succeed," he explains, adding: "We need to empower the factories through a committee to make changes that work and have a bottom line impact."
"A common audit protocol would enable trained auditors to report on facilities, but not make decisions," Geise adds. "Data from the audit would be uploaded into a sharing tool from which different companies can download information from the audit report. There is no evaluation in there, it simply says this is what the auditor found in the facility. They draw their own conclusions."
Not only would this reduce the number of audits carried out in factories but it would still enable every company, retailer and brand to follow their own standards. GAFTI members are currently being surveyed to determine what they're using now and what organisations they already belong to.
While social compliance has "become big business" over the last 15 years, it is not yet the same for environmental sustainability.
To this end, GAFTI has aligned with Sustainable Apparel Coalition (SAC), which is working towards an industry-wide index that measures everything from water and energy use to greenhouse gas emissions, waste, and labour practices. It has also alingned with the group of apparel and footwear brands and retailers working towards a zero discharge of hazardous chemicals in their supply chains. These companies include Adidas Group, C&A,H&M, Li Ning, Nike Inc and Puma.
The SAC is set to deliver the first version of its index this summer, two years after its launch and nine months after a pilot tool was released in October 2011.The goals of the index are to "understand and quantify the sustainability impacts of apparel products" as well as "driving business value through reducing risk and understanding what sustainability risk lies within the supply chain," explains its executive director Jason Kibbey.
"We want to uncover efficiency; and we want to create a common platform to communicate sustainability to our stakeholders."
In terms of apparel suppliers, around one-third of the world's apparel dollars have committed to this sustainability index - including Marks & Spencer, Li & Fung, Esquel, and WL Gore. "If you look at the whole supply chain you can see where the impacts really occur; from the very beginning from the materials to make apparel and footwear products all the way through to end of life," Kibbey adds.
"They also tend to lead to different types of environmental impacts. What we're focused on right now are water, energy and waste."
Once the first version of its index is launched this summer, the SAC will be shifting into a new phase, focusing on implementation and training and working with its member companies to introduce the index to their supply chains.
All groups are urging more companies across the industry to get involved if they have not already done so. "I think we have an obligation to work towards it," Geise stresses.
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