How a New Supply Chain Mapping Tool Helps Macy’s ‘Better Manage Business Risks’
Date: Wednesday, September 11, 2019
Source: Sourcing Journal
The department store retailer adopted a new supply chaintransparency platform called SGS Transparency-One and also enhanced its social compliance audit tools to better monitor factory working conditions. Today it reaches 56 percent of its Tier 1 Macy’s Private Brand factories, which are now using Sustainable Apparel Coalition (SAC) assessment tools.
“Macy’s is committed to advancing our own sustainability and advocating for sustainable practices among our brand partners, and across the retail and fashion industry,” said Jeff Gennette, chairman and chief executive officer, while the report added, “We–and our customers–want to be confident that our merchandise is produced in an ethical, responsible manner.”
With “reliable information on each step of a product’s life cycle, from source to store, that gives us the ability to identify the greatest impacts, risks and opportunities for improvement,” Macy’s can better manage its operations with social and environmental responsibility in mind.
Supply chain transparency
By the close of fiscal 2018, Macy’s has managed to consolidate its “supply chain into a single organization that oversees the entire product journey,” the report said. “We are also improving our supply chain systems, processes and facilities to enhance productivity and efficiency.”
The company draws on data to gain transparency into its raw materials, manufacturing process and suppliers to create its finished product. SGS Transparency-One, an online information platform, allows for the direct exchange of technical information with Macy’s suppliers.
“We use this system to map our supply chain, make our training materials and resources more accessible to our suppliers, help us to more efficiently track working conditions, ensure compliance and better manage business risks. Our immediate goal is to roll out this system to our Tier 1, finished-good private brand suppliers in 2019, and then to the rest of our suppliers in subsequent years,” the report said.
Macy’s said it is requiring all private and national brands to operate ethically and with respect for the human rights of their workers and with regard for their environmental impact, adding that its Vendor and Supplier Code of Conduct (i.e., Supplier Code) outlines the minimum standards.
The report cited as an example cotton sourced from Uzbekistan and Turkmenistan, which may have been harvested through a state-orchestrated forced labor scheme. “This violates international conventions prohibiting forced labor, and we prohibit Macy’s Private Brand suppliers from sourcing cotton from these countries,” Macy’s explained in the report.
Macy’s requires its Tier 1 private-brand suppliers to source “metal trim components from our Nominated Trim Supplier list. Trim suppliers who are not able to meet or maintain these expectations risk being removed from our program.”
Supplier training and factory audits
In addition to “rigorous screening of new suppliers,” Macy’s provides ongoing training and regular audits to make sure its suppliers operate according to high ethical and performance standards. They’re trained on topics including child and forced labor, human trafficking, illegal subcontracting, bribery, fraudulent record-keeping, homeworkers and physical abuse. Audits aid with improving security measures at production sites and reducing the risk of terrorist activities throughout the supply chain.
Macy’s said it conducted 836 factory audits during 2018, and found four factories its considers to “high-risk,” meaning they could be connected to human trafficking and slavery. Of the four, three were terminated while one was allowed to remain active for production, “pending corrective action and specialized remediation,” Macy’s said.
As for sustainably sourced materials, Macy’s began offering consumers access to cleaner cotton—a fiber that often requires numerous finishing chemicals—last year. For women’s and men’s apparel, it is using Standard 100 by Oeko-Tex, a global textiles certification that indicates that the cotton has been “independently tested for harmful substances according to scientific criteria that go beyond global legal regulations.”
Macy’s also introduced its first apparel product containing recycled polyester last year, and plans to “expand its selection within the next year.” The retailer is using fabric from recycled polyester that “gives a second life to fossil-fuel based material that is not biodegradable and otherwise might end up in landfill or the ocean.”
The company’s Private Brands group joined the Leather Working Group in 2017, a global initiative that assesses environmental compliance and performance of tanneries, and Macy’s expects all of its tanning facilities partners to be certified by the group by 2021.
Macy’s is moving toward using cleaner products and removing unwanted chemicals from the production process. Under its Chemical Management Program, the department store chain will expand education and training around chemicals of concern and provide ingredient transparency when appropriate. It will also restrict hazardous chemicals used in finished products, as well as during manufacturing .
“We have developed a two-part approach that will be implemented over the next six years,” the company said. It will develop restricted substance lists, one for finished products and another one for the production process.
And Macy’s noted its partnership with the Sustainable Apparel Coalition (SAC), an industry group working to reduce the environment and social impact of apparel and footwear products.
“We first asked our suppliers to use the [SAC] Higg Index in 2014, and are pleased to report that by 2018 more than 400 facilities participated, including all of our trim suppliers, representing 56 percent of our manufacturing volume. This progress positions us well to direct 100 percent of our Tier 1 factories to use SAC Higg Index tools by 2025,” Macy’s said in the report.