The Road to Transparency: Vendor OnboardingAugust 2, 2019
McKinsey and Company’s State of Fashion Report 2019 recognizes radical transparency as one of the top trends that will shape the fashion industry for the year ahead. As a result, presenting a transparent supply chain has become a mark of success for apparel companies. In our last two blogs, we touched on the need for product compliance and vendor compliance. The final component in bringing transparency to a supply chain is the vendor onboarding process.
With up to 83% of fashion companies planning to reduce their sourcing from China in the wake of the ongoing trade war, onboarding new vendors with the proper procedures is more critical than ever. The ability to provide full transparency will be a key factor in determining which brands and retailers can live up to the standards consumers have today. As companies find alternative destinations to source from, ensuring vendors are properly onboarded isn’t just a box to check, but is an investment in the company’s future and brand reputation. To manage effective vendor onboarding, fashion companies should understand what it takes to get there.
Put Standards and Terms of Engagement in Place
Despite retailers’ best efforts, supply chain visibility remains a challenge, with as many as 39% of suppliers viewing their clients’ sustainability commitment as being important “only on paper.” In order to break that mindset, companies should endeavor to establish clear-cut expectations and procedures for their suppliers before any work commences. This will also help brands and retailers avoid a host of problems including discrimination, harassment and abuse, child labor and unsafe working conditions. Defining a Code of Conduct, or Standards of Vendor Engagement, at the onset of the relationship standardizes the guidelines for evaluating compliance internally and keeps vendors informed on how they are expected to operate.
In addition to adhering to a specific set of standards that promote safety and transparency across the supply chain, identifying the Terms of Engagement keeps vendors in line with the company’s standards. Successful vendor relationships will be based not only on price, quality and the ability to meet deadlines, but also on transparency, accountability, responsible sourcing and worker non-retaliation.
Transparency is a fundamental component of any good relationship; after all, you have to trust your partner. Vendors must take responsibility for any non-compliance issue and address it immediately. We all know that mistakes happen, but the sign of a true partner – one you can trust – is owning up to mistakes and taking action to correct them. Responsible sourcing means that your company is committed to upholding the FLA’s Principles of Fair Labor and Responsible Sourcing.
Implement Training Programs
Once vendor standards and Terms of Engagement are explicitly outlined, companies must enforce compliance. Implementing training programs as part of the onboarding process is essential to ensure that you and your vendors are on the same page. More than just a formality, these training courses should equip suppliers with the skills and knowledge they need to adhere to the standards you’ve set. Additionally, training courses should be easily accessible and available in the local language. With a solid training program in place, you’ll have a foundation for a lasting relationship that occurs in a transparent supply chain.
Invest in Digital Technology to Increase Efficiency
Vendor onboarding is nearly impossible to manage through a manual system of email, spreadsheets and attached documents. Instead, a technology solution, particularly a Vendor Compliance solution, can help onboard, organize, vet and manage your vendors in a systematic, efficient way. This will help you make better sourcing decisions, ensure overall compliance and mitigate any potential risk before it becomes the next trending topic on social media.
NGC’s cloud-based Andromeda Vendor Compliance solution offers global accessibility and multi-lingual capability, as well as local training support, to assist with the rollout of your global solution. The solution allows you to not only streamline your processes, but also improve the onboarding and ongoing management of your global vendors to ensure compliance, both now and in the future.
“With today’s highly-engaged consumers, Corporate Social Responsibility is critical to maintaining a company’s reputation,” said Mark Burstein, president of sales and development, NGC Software. “A single incident involving a vendor can cause irreversible damage to brands and retailers. With comprehensive vendor policies and procedures in place, NGC’s Andromeda Vendor Compliance solution can help retailers and brands manage the complexities of CSR.“
To learn more about effective vendor onboarding, download NGC’s whitepaper, “Managing Your Global Vendors — The Three Pillars of Success.”