HOW WE SOURCE.
The global coronavirus outbreak has created unique challenges to businesses as well as individuals, families and communities globally. As most of us have never experienced a health crisis of this scale, navigating the disruption to our supply chain will be an evolving challenge.
Our suppliers in our sourcing countries, Bangladesh and China, are fundamental to our success. Not surprisingly however it is often the most vulnerable people who reap the worst effects in crises such as the world finds itself in today.
We had multiple orders across our supply chain at varying stages in production as this pandemic unfolded. AS Colour has upheld the commitments we had made to our suppliers during this time. As always we are accepting longer/delayed lead-times to our orders without penalty.
By keeping all our production agreements in place we are maintaining the incredibly important relationships with our suppliers and the continuous financial injections for the textile workforce in these compromised countries.
With the continued support and responsive training from Amfori we have raised our standard due-diligence to assess where and what risks have increased during this time to identify areas we could continue to help.
We select like
The key to our sourcing is finding the right people with the right values. Whilst auditing factories and developing our management systems and policies is important to providing an ethical sourcing framework, more important is to find and work with factory owners and management who share our values, operate a culture of dignity and respect, are in for the long term, and who like us we are willing to embrace change and continuous improvement.
We have a strict on-boarding process.
We seek out the best factories in each product specialty and may interview up to fifty factories before selecting one to make our products.
A factory visit is mandatory, during which expectations of our Code of Conduct are discussed including our requirement to cascade this through their supply chain. We do not at this early stage in the relationship expect the company to name all of their suppliers, but through raising the subject, we aim to gauge their level of future cooperation.
Available capacity is also key to this conversation. It is important that we gain insight into their production planning for us to understand how they can accommodate any new business without the need for overtime and subcontracting.
Their latest social compliance audit is requested and submitted to our ethical specialist to review. In most cases, this requires further discussion to understand their goals around continuous improvement as well as their ability and willingness to take on the BSCI expectations if they have not already.
Final approval for any new supplier must be signed off by our Managing Director, after which our Terms and Conditions and Code of Conduct our submitted for the supplier to sign and return.
Only after this process do we place orders. Initially, these would be considered trial orders with a longer than normal lead-time to accommodate the learnings which are inevitable in a new relationship.
We build leverage and long-term relationships.
As a relatively small player in a large global market we approach this in two ways:
- Firstly we target medium-sized factories who work with like-minded ethical brands with whom we can join forces to encourage change.
- Secondly, we strategically build our business with smaller factories to become the significant influencer - occupying the larger percentage of their business.
96% of all our clothing products are made by 9 factories, two of which have been working with us since we first started sourcing from overseas. One of these is in Bangladesh and one in China.
Within our factories, we fully occupy designated production lines taking responsibility for constantly feeding these lines ensuring stability and realistic targets for the workers. While this commitment helps to ensure better quality for our customers, it also enables factories to strategically plan their business growth with us.
However, we are transparent with our suppliers that business growth is not guaranteed. Continuous improvement in key performance criteria including social and environmental goals are taken into consideration, and we aim to manage their business growth to reflect this.
Over the last two years we have on-boarded 4 new suppliers. This is mostly a result of our substantial business growth, as well as the introduction of new product categories such as our organic cotton products, which require a licensed supply chain. The increase in volumes has also enabled us to approach larger manufacturing operations who are leaders in their fields and who we can potentially learn from.
We have only disengaged one factory due to non-performance issues. This reduction was monitored and transitioned over a two-year period.
We research to
Understanding the specific risks of sourcing countries is essential before entering new markets, whilst ongoing research is also essential to ensure continued awareness of these risks throughout the supply chain. We have developed our own risk matrix, taking advice and best practice tools from organisations such as Amfori.
We have strategically kept our sourcing very focused, operating from a small number of factories in only two countries - China and Bangladesh - where we have nine strategic partnerships over the two countries.
These long-term relationships have enabled us to gain a better understanding of each other’s business operations, challenges and risks, and importantly our different cultures, which have also evolved over time.
Regularly traveling to these countries has meant we have witnessed both the positive and negative impacts of our industry, which of course continue to make us mindful of our own impact. The Rama Plaza tragedy was a big wake up call for many, and naturally, our customers contacted us with their concerns. As a result, we immediately increased our due diligence, spent more time on the ground to build on our local knowledge of risks and solutions, and further reviewed our sourcing strategy. We are confident with our approach, assured that our suppliers meet Internationally accepted standards, and we are encouraged by the progress they are making to improve further. The majority of our factories are participants in the Bangladesh Accord and have completed or are on track with any remediation work. The one factory, which has not been involved with the Accord; recently moved to a new building, has all the necessary certificates and is awaiting an audit. None of our factories have had any critical Safety issues which would have required them to be terminated by the Accord programme or temporarily closed down.
Witnessing the shocking poverty in Bangladesh has made us more determined than ever to ensure a positive impact. To us, “doing the right thing,” means staying in this market which relies so heavily on the fashion industry. We are very much of the view that the best way to drive change is a balance of leverage and commitment, and believe that collaborating with like-minded brands working in the same factories will be the most effective course of action. For this reason, we have joined the Amfori BSCI initiative; which will open, up our International brand network, enabling us to discuss and share our experiences as well as collaborate on best practice.
We ensure clarity of expectations.
We have always been very clear of our expectations of suppliers through regular face to face meetings as well as through our written Code of Conduct and Policies.
- Suppliers must be able to meet our minimum expectations and have the mindset and capacity to continuously improve on our key performance areas as outlined in our Code of Conduct and our audit requirements.
We are committed to continuous improvement and expect the same of our suppliers.
- We expect Transparency of Supply Chain, and on signing our Code of Conduct, the factories are contractually agreeing to cascade our / BSCI responsible sourcing standards throughout their supply chain. For us, this means; their fabric suppliers, their dye houses, spinners, and raw material sources, so that our expectations and standards are known and implemented throughout.
- We expect transparency of their production and have a zero tolerance to subcontracting. This ensures we know exactly where our products are being made and that all locations comply with the AS Colour quality requirements and ethical values. Our purchasing practices were developed to ensure this is feasible, and our online and final inspection processes and auditing methodology ensure compliance.
We adhere to structured purchasing practices.
The AS Colour team are very conscious of the impact purchasing practices can have on the people who make our clothes. The open dialogue we have with our factories has always encouraged feedback on the challenges to their businesses, and for sure the most significant issue they always raise is the pressure exerted on them by fast fashion buying cycles.
For this very reason, our factories have always been appreciative of AS Colour business because we are NOT a fast fashion company. The fact that we continue to invest our time and resources into learning about their world, and the reality of production lead-times. The fact that we respect that not all their workers want to work overtime. The fact that we understand the true value of quality, and cost of a product. These factors have definitely all contributed to the long-term success and sustainability of our supply base.
Our buying cycle.
Our 5-month buying cycle was developed in collaboration with our suppliers to ensure the stability of business for the factory, adequate production time for the workers and the quality of the product for our customers.
Our consistent on-time six weekly order placements support these principles:
• Capacity planning is a key feature of our process, and in general, we aim to occupy dedicated production lines to enable greater transparency of work, more control over working hours and of course a more consistent quality.
• Holidays and weekends are accounted for with the expectation that overtime should not be required.
• Penalties for late deliveries are a rarity due to the fact that our agreed lead-times are generous compared to the industry benchmark, with the majority of our orders being delivered as contracted. We also believe that penalties inflict further pressure, plus are not in the spirit of partnerships where the focus should be on understanding the addressing the root cause rather than on punishment.
• Adherence to our processes are governed by our Managing Director, who has established these principles himself, continues to have a hands-on approach recognising that it always has been, and will continue to be pivotal to the success of the business.
• During the twice-yearly factory visits by our Production Manager, we discuss supplier performance against our defined criteria, as well as encourage dialogue around industry best practices. Many of our suppliers work with leading global retailers whose experience we can learn from to improve our own performance.
How we negotiate.
In line with our values, we expect our team to be fair and respectful operators. Our knowledge and awareness of impacts on price are now well established, and our relationships with suppliers long standing. As a result, we can conduct open and honest negotiations and account for and agree to any price increase requests.
“AS COLOUR asks for good fabric quality + good sewing quality, meanwhile AS COLOUR is willing to pay a reasonable price to get a good quality product”. China Supplier Feedback
Taking this one step further - open book / transparent costings are becoming a reality due to the trust and respect we have developed with our strategic partners. This transparent approach enables us to firstly to ensure price negotiations do not negatively impact labour costs, and secondly, it will increase our understanding and prepare us for the increased labour costs, which are necessary to close the gap between minimum and expected living wages.
How we train.
For us to help our suppliers meet our ethical aims, we need to ensure that our designers, buyers and production team are helping them to do the right thing. This is key to the success of our ethical trading strategy.
We are fortunate that we are a small and relatively stable team with a company culture that prioritises and fosters business ethics and an inclusive community ethos.
All employees involved in the buying process are encouraged to travel to learn and to develop their relationships with suppliers.
We have employed an Ethical Sourcing Specialist who holds weekly training sessions with the team to build on their knowledge and awareness. To date they have covered subjects such as; Human Rights Issues by country, Importance of a Comprehensive Code of Conduct, How to read Audit Reports, Gender Equality Issues, Child Labour Remediation, Effective Grievance Mechanisms, etc.
We reward the factories that show the highest engagement.
In the process of mapping our supply chain, we also monitor labour rights and environmental progress on the same working documents. Key information such as the volume of orders as a percentage of total business along with audit ratings are kept up to date and are key performance indicators used as an integral part of our order placement process.
In addition, our Ethical Specialist and CEO monitor this information to challenge business levels if performance is not being reflected or supplier feedback suggests that business levels are not meeting the forecast given. As a small business, this is easily controlled. However the challenge is when capacity in the better factories is limited, or a shift of business could be detrimental to the workers. This is all taken into consideration and clear KPIs discussed and tracked.
Twice yearly supplier reviews are integral in our supplier meeting calendar; with audit performance, remediation progress and training needs being key elements in the agenda. We are transparent with our suppliers that business growth is not guaranteed. Continuous improvement in key performance criteria including social and environmental goals is expected, and business forecasting and order placement aims to reflect this.
We hand-pick factories with safe, fair, legal and humane working conditions.
At AS Colour we seek out the best factories in each specialty. We may interview up to fifty factories before selecting one to make our products. Each factory is based on a certain fabric and an assured production capacity. All our factories get a regular order every six weeks, giving them certainty around work and income. We choose to work closely with fewer factories that we know well. Importantly, all AS Colour's products are produced under safe, fair, legal and humane working conditions throughout our supply chain.
Code of conduct.
Ensuring compliance and commitment to social responsibility.
AS Colour’s Code of Conduct forms the principal part of our commitment to social responsibility throughout our supply chain. It guides us in conducting business to the highest standards of business ethics and respect for human rights. We require each of our factories to comply with the Code as part of their contracts. In this way we ensure they adhere to standards that meet or exceed internationally acceptable good labour practices found in law, regulations and treaties (especially those from the International Labor Organisation). This helps to set out our expectations for conducting business and is part of our effort to encourage the continual improvement of local standards in all the areas we work.
All of our factories must agree to external audits, and they are expected to make improvements where standards are not met to ensure ongoing compliance. Should any non-compliance be found, AS Colour requires proof of compliance within a reasonable timeframe in order to continue working with the supplier.
Click here to view our Ethical Production Guide.