In: Operations Management
Using THIS template, answer the three questions concluding the summary (minimum four sentences, per question).
Fast-Fashion and the Ethics of Low-Cost Labor
Who wants to wait six months for runway looks to hit the stores? In today’s fast-fashion world, six months is an eternity. Nearly extinct is the tradition of three luxurious fashion seasons per year (fall, spring, resort). Those seasons have been replaced by rock-bottom prices on 30 to 50 trend-driven cycles—per year. Consumers in the United States and Europe have embraced the entire fast-fashion approach—inexpensive apparel and high turnover of designs. In fact, their shopping behaviors have allowed companies like H&M and Zara to grow into international retailing behemoths.
The speed of fast-fashion goes beyond the production cycle. Europe’s fast-fashion chains have grown faster than the retail fashion industry as a whole, partly because the combination of low cost, fresh designs, and quick turnover is extremely successful in fueling consumer demand. Fast-fashion companies also boast higher margins that those reported by their traditional counterparts—an average 16% compared to an average of 7%. Undeniably, the application of planned obsolescence to fashion has been financially successful.
The fast-fashion approach is not without controversy, however, particularly when it comes to outsourcing production. Companies like Benetton, Walmart, and Disney place huge orders with offshore vendors who often cannot deliver the entire order without enlisting the help of additional subcontractors. Unauthorized subcontracting is the end result, and brands don’t always know who is producing their products or where. Phil Robertson, deputy director of Human Rights Watch’s Asia division, affirms this, saying, “I’ve talked to Thai workers who are three or four levels down from the original orders. If the brands don’t know, they should know. A lot of them are turning a blind eye to outsourcing.”
One country that has grown from outsourcing in the garment industry is Bangladesh. With labor rates averaging $40 per month, Bangladeshi garment workers are the cheapest around. (Compare that to approximately $120 per month on average for garment workers in China.) Those low labor costs have caused explosive growth in the size and scope of the country’s garment industry. In 2005, the country exported $6.9 billion worth of clothing. By 2011, that figure had risen to $19.9 billion, making the Bangladesh the world’s third largest exporter of clothing, behind China and Italy.
Makeshift garment factories have popped up all over Bangladesh. It now has roughly 4,500 garment factories, and disasters have ensued from the rapid growth. In November 2012, the fire at the Tazreen Fashion factory resulted in 112 deaths. In the subsequent five months, over 40 other fire-related accidents occurred in Bangladesh, and in April 2013, Rana Plaza, a building housing numerous garment factories, collapsed killing over 1,000 people.
Bangladesh isn’t the only country where concerns about subcontracting are growing. Vietnam, Indonesia, Thailand, and Cambodia also regularly face issues with multilayer outsourcing, and each of them could be next in line to wear the lowest-labor-cost title.
Subcontracting to vendors to produce garments at lower costs can be beneficial to companies in the following ways:
Despite the benefits, subcontracting to low-cost providers with unsafe working conditions has generated much controversy, not only in fast-fashion, but in the broader apparel and footwear industry as well:
So, who is ethically responsible?
You Decide:
1. EU’s threat to use trade agreements as a weapon in the fight against low-cost subcontracting could be a legitimate way to address the issue with the developing countries. This will make participation from not just at the government level of various countries but also the companies outsourcing and outsourced companies to act in a manner that is beneficial. Even if the government regulates number of subcontractors involved in a production of a product, businesses are less likely to more ethically responsive to various catastrophe and working conditions. This primarily due to the fact that the companies who in the fast fashion as in the retail industry in the developed world, generally demands for ultralow prices and ultrafast turnaround times which put extreme pressure on garment manufacturers throughout the developing world. Secondly, if the number of subcontractors involved are regulated, it still implies that the companies who are outsourcing still doesn’t have a control on the sub-contractors as it depends on the suppliers who implements and abides by the same.
2. If a brand explicitly forbids a vendor from subcontracting, but the vendor subcontracts anyway, in such case the vendor has to bear the responsibility for any tragedy that ensues.
In the case of events like Tazreen Fashion factory fire and the New Wave Style building collapse, both in Bangladesh, ethically it is responsibility of both the parties involved to take accountability. Since this involves three parts of the issue, one is the factory ensures that there is enough safety aspects available within their organisation to cater to the needs to the client. Secondly, the customer before gives the contract to the supplier in developing needs to give is not a ultra-low price and if there are quick turnaround are required for supply, the supplier is adequately paid for the same to ensure better working conditions. Thirdly, the contracts are long term to ensure that the suppliers are able to work in less stressful conditions and thereby provide support to their staff and working conditions.
3. End consumers of a fast fashion needs to realise that the inexpensive apparels with a high turnover of design that is retailed at the stores comes at an ethical cost. Due to the same, the companies or retailers in the developed world are resorting to outsourcing to achieve faster turnaround of designs and are paying very low prices to suppliers who are contracted in developing world. This results in having working conditions which are not safer. So the consumers need to be supportive of the fashion apparel brands and should be ready for pay a price for the products that come with a large design around. This way fast fashion can work in ways to support the industry and the tragedies shouldn’t occur. So, in a way, the end consumer is also ethically responsible for the tragedies that have occurred.