Partnerships are being tested now more than ever. Many brands have cancelled orders around the world, and in many cases these orders have already been finished, packed and prepped for shipment. Regardless, due to the panicked shut down of retail stores around the world, retailers are ignoring their commitments with their supply chains to save their own skins. They're forgetting that when retail life resumes, which it will, their relationships will be damaged (if their suppliers survive this disaster - made to sting even more due to their partners letting them down in their most vulnerable hours).
Generally, throughout the fashion supply chain, payment terms are agreed upon before production begins. For argument's sake, let’s say this is 50% before shipment and 50% after. This is designed to protect both parties, ensuring that the factory receive the initial money to pay for materials, while giving the retailer the security that deliveries will arrive correctly and on time. Once factories receive the legally binding purchase orders, most get capital from the banks to pay wages until the remaining 50% is paid. These bank loans mirror the purchase order, meaning that if a retailer is obliged to pay the factory 30 days after shipment the capital is returned to the bank + days after this. So when brands cancel or delay orders currently sat at ports waiting shipment, these factories will not receive payments in time for the banks. This creates very desperate people falling further into desperate times and starting a circle of ongoing financial desperation.
“The supply chain is the heartbeat, the lungs and the blood stream of the fashion industry. Without our supply chains, large or small, we simply do not have product to sell. So why is this area treated with so little respect?”
Something I have always found totally nonsensical is that the supply chain seems to be the first area dismissed in the eyes of the brands and retailers. The supply chain is the heartbeat, the lungs and the blood stream of the fashion industry. Without our supply chains, large or small, we simply do not have product to sell. So why is this area treated with so little respect?
It is important to remind brands and retailers that they have a partnership with these suppliers, and so have a responsibility to honour their commitments, for all our sakes. In these difficult times we need to support our suppliers and treat them like we should in good times - as equal partners. This time is going to be a real test of a brand’s integrity, so, It’s my belief that all committed orders should be completed - it is only fair.
When people are wanting to go shopping again, the demand on factories will come in the millions. They will be pressured to deliver and to catch up, and due to themselves being in desperate situation, they will not be able to say no. My fear is a new level of manufacturing exploitation will take place. That’s why I am begging brands and retailers to think before cancelling orders or placing new ones in the months to come.
How we treat people at our worst will still be remembered when we’re at our best.
