Buyers and suppliers in the garment industry must rebuild relationships if the sector is to recover from the coronavirus outbreak, according to consultancy GlobalData.
GlobalData said garment supply chains had “unravelled” with orders abandoned or scaled back due to store closures and plummeting sales, leading to factory closures and the loss of jobs in some of the poorest countries.
GlobalData said “stronger and more stable relationships” between companies, suppliers and countries were urgently needed, along with cross-industry initiatives to “fix flaws in the system”.
Leonie Barrie, apparel analyst at GlobalData, said: “Global clothing supply chains have unravelled in just a few short weeks, as has the trust and goodwill between many buyers and manufacturers. Rebuilding these relationships is key if the sector is to recover, and now is the time to start thinking about how the apparel industry can reset for the future.
“When the dust eventually settles, brands and retailers will depend on their suppliers to ramp up production. But if large numbers of factories have gone bankrupt, where will they source their goods? Onboarding new factories is a long and complicated process.
“Retailers that have treated suppliers badly may also find their support lacking when they eventually come to restock. Consumers, too, may shun brands whose focus on self preservation is at odds with their promises of social responsibility.”
Consultancy Verisk Maplecroft said more than one million workers in Asian manufacturing hubs had been laid off, leaving them vulnerable to exploitative employment, forced labour and human trafficking.
Verisk Maplecroft said firms faced a “combustible mix of reputational risks that cannot be offset by onsite inspections”, along with supply disruptions and civil unrest in key hubs, and a “business-as-usual model won’t work”.
Sofia Nazalya, human rights analyst, risk insight, at Verisk Maplecroft, said: “Over the next several months, global retail companies will face increasing pressure by international and grassroots labour advocacy groups to ensure that the most vulnerable workers in their supply chain are not left behind.
“In particular, retail companies will be pressed to meet payments for orders placed, and to ensure that suppliers that do continue with operations enforce strict health and safety measures.”
She added: “Some companies have already begun to implement measures to mitigate impacts of Covid-19 on garment workers. Such measures include establishing Covid-19 wage funds and committing to payment for orders already placed. However, these actions are unlikely to be a lasting solution for workers who ultimately face sustained unemployment.”
In March it emerged fashion brands had cancelled or suspended orders worth $3bn.
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