The regulatory age is upon us. And this creates some profound opportunities for new collaboration across the supply chain.
Governments across the globe are proposing and enacting new requirements at a speed and with a purpose that we haven’t seen in our industry ever. International, regional, national, and subnational authorities are all actively working to impose new laws and regulations on our industry that cover a host of supply chain disciplines, including transparency and disclosure, due diligence, climate change, traceability, chemical management, workers’ rights, and extended producer responsibility.
Some of these requirements – like those on worker safety – relate to concepts that have been around for a long time. Others – like extended producer responsibility (EPR) to hold companies responsible for the waste that is created when consumers discard their clothes and shoes – introduce new concepts that will forever change the face of fashion supply chains.
A debate has been raging over whether these requirements are needed now. Some argue that new regulations will be too costly or will stifle innovation. Others, like AAFA, welcome these approaches, believing, if done right, they will help us scale the solutions we so desperately need. AAFA is actively working to make sure these regulations are “good” regulations – transparent, harmonized, effective, and implementable.
“Regardless of where you fall in the debate, there is no question that brands and retailers will succeed in this new regulatory regime only if they have cultivated strong and healthy supply chain partners.”
Regardless of where you fall in the debate, there is no question that brands and retailers will succeed in this new regulatory regime only if they have cultivated strong and healthy supply chain partners. Many of these new requirements – such as tracking materials – task companies to require supply chain partners to take specific actions. Continuing a trend that has been well under way for decades, some of these rules will require and enforce greater public disclosure of these partners. And many of the rules specifically envision a set of actions that will mandate how brands and retailers should treat those partners.
Let’s look at how a new regulatory construct supports, benefits, and even requires stronger supply chain partnerships.
Regulatory approaches that foster a rebalance of the supplier/brand relationship become a sustainable new dynamic as brand after brand embraces the concept of first mile thinking – making sure the fashion they design and create is worthy of the time and effort that will eventually be spent to get those products along the last mile of their journey from concept to consumer. When done right, first mile thinking invites supply chain partners into an actual partnership, making sure they have the resources and education needed to make a product with purpose. It also means ensuring that those partners are fully, fairly, and timely compensated, rewarding past partnership while also building in success for the next “first” mile.
In fact, our industry is already undergoing a significant supplier/brand rebalancing as these supplier and brand partners are already seeking out those who share their values. As regulations require more public and detailed conversations that reach back even further into supply chains, and extend shared producer responsibility well past where it has traditionally existed, the opportunities for mistakes magnify and become more consequential. Brands and retailers will be dependent, more than ever before, on talented supply chain partners to help get compliance right.
“Brands and retailers will be dependent, more than ever before, on talented supply chain partners to help get compliance right.”
Finally, smart regulations can also factor into efforts by the industry to achieve supply chain savings. Voluntary initiatives that move the industry forward have played an important role. But they have left a sad and costly legacy where partners often have to pay for similar tools or audits multiple times to prove compliance. There is a valid, recognized concern about the cost of new regulations. But imagine the far greater savings we can share with these same partners if we can replace the inefficient system that has given us expensive audit and initiative fatigue with a streamlined regulatory approach with a clear way to achieve compliance.
“There is a valid, recognized concern about the cost of new regulations. But imagine the far greater savings we can share with these same partners if we can replace the inefficient system that has given us expensive audit and initiative fatigue with a streamlined regulatory approach with a clear way to achieve compliance.”
Think of traffic safety. The command to drive at a safe speed could be interpreted and measured differently, and trying to demonstrate that vague command to diverse entities with varying expectations could be an endless and expensive process. But the command to follow a specific speed limit – especially given the systems and tools that have been developed to ensure compliance – is a much more straightforward, achievable, and cost-efficient task.
The regulatory journey our industry is on will definitely feel challenging at times. But the opportunity for it to solve some of our biggest problems, which we haven’t been able to solve on our own, and to do so with like-minded partners, will ultimately make the journey smooth.
Stephen E. Lamar is President and CEO of the American Apparel & Footwear Association, the national trade association representing more than 1,000 brands in the apparel and footwear industry. Steve leads a dedicated team of professionals who represent AAFA members before the government, through the media, and in industry settings on key brand protection, supply chain and manufacturing, and trade issues. Steve also advises AAFA member companies on legislation and regulatory policies. Follow on LinkedIn.
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