Working with our suppliers during Covid-19 April 2020
Working with our suppliers during Covid-19
April 2020 - The Covid-19 pandemic has impacted the global apparel industry and its supply chain like never before. We want to be open about how we are working with our suppliers during this time and the work we are doing to protect them and their businesses.
Our own-brand suppliers are incredibly important to ASOS and we want to make sure they remain open for business now and into the future. We have 150+ suppliers around the world who we work with on a long-term basis; on average, our Top 30 suppliers (making up two-thirds of our supply base by volume) have partnered with ASOS for more than eight years and tend to work predominantly with ASOS. We operate a unique business model focussed on wide product choice and limited availability rather than depth, meaning that we order relatively lower volumes of product but more frequently than the industry average.
As Covid-19 took hold, customer demand dropped, impacting both the number of purchases our customers were making and the type of product they were choosing to buy. We have had to work with our suppliers to react to this change in demand, reviewing our stock intake, reducing our reliance on categories that have been affected such as dresses and tailoring, and shifting into higher- demand product, like loungewear and activewear.
As a result, we have had to delay some orders and cancel others. The amount of made stock cancelled by ASOS totals approximately £5-6m at cost value, or less than 1% of our total Spring/Summer 2020 intake. We did not use any force majeure clauses as part of this process.
In line with our industry-leading ethical trade programme, these are some of the steps we’re taking to support our suppliers during this time and to minimise the impact of any cancellations:
- Placing new orders. As an online retailer, we are continuing to serve customers around the world, albeit at a reduced level due to the drop in customer demand and the strict social distancing measures that we have put in place in our fulfilment centres. We have been able to accept the vast majority of existing orders and place new ones with our suppliers (for in-demand product such as leisurewear) ensuring they can continue to do business and provide employment.
- Working with our suppliers on an individual and personal basis. Our suppliers are unique businesses, and therefore we must engage with them individually, rather than adopt a blanket approach. On making these stock intake reductions, our teams have spoken to each of our suppliers personally to find mutually-agreeable solutions. The response from our suppliers to this approach has been positive.
- Ensuring prompt payment on previously agreed terms for existing orders and expediting payment where necessary. All stock in transit prior to 13th March has been accepted and is being paid in full. We are paying on time and in full for all orders where we haven’t agreed any cancellations or delays and are facilitating accelerated payment terms for suppliers on a case-by- case basis.
- Reducing the volume of cancelled made orders. We continue to work daily to reduce the volume of cancelled stock (currently less than 1% of total SS20 intake) and react to customer demand. We’re also pushing out orders to a more relevant date and considering dark storage solutions for stock that is not saleable now but will be in the future (ie swimwear), as well as relaxing rules around ‘cabbaging’ (de-labelling and reselling) stock so suppliers can recoup costs.
- Addressing unmade stock. We’re collaborating closely with our suppliers to work through any issues arising from cancellations of unmade stock, particularly where suppliers have already purchased fabric. In these cases, we are working to use that fabric in future orders.
Is ASOS listening to the concerns of suppliers and workers?
Yes, absolutely. Our teams are in regular contact with our suppliers so they can share any issues they are facing and we can arrange solutions on a case-by-case basis. Beyond speaking directly to our suppliers, our ethical trade programme has built trust and strong relationships on a local level in many countries through local stakeholders, meaning workers in our supply chain have alternative means of raising issues and grievances directly with ASOS or our partners. You can read more about this in detail in our latest Modern Slavery Statement from March 2020, here.
What are we doing to safeguard workers from Covid-19?
We have shared WHO- & Government-issued guidance with our suppliers on health & safety measures to protect workers from Covid-19 and have asked them to report their compliance with these guidelines.
Are there any at-risk regions that ASOS is sourcing from?
ASOS has a geographically diverse supplier base which is not overly concentrated in any one country. We publish an updated supplier map on our plc site every two months, which you can view here.
The UN International Labour Organisation (ILO) has identified that workers in a number of regions are at risk due to order cancellations in the garment industry, in particular Bangladesh. Until very recently, ASOS had not sourced from Bangladesh and as a result we only have a very small footprint in the country. As part of our entry into the market, we signed the Accord on Fire and Building Safety in Bangladesh, which we fully support as the most effective labour rights initiative ever carried out in contemporary apparel supply chains.
Another key sourcing region is Turkey, where ASOS works with a number of suppliers. We have a number of ethical trade programmes operating in Turkey, including gender empowerment training carried out by local women’s rights organisations, and we launched a worker hotline in conjunction with IndustriALL Global Union in 2018. The hotline operates in Turkish and Arabic via an app and a direct phone line, providing information to workers about their rights and giving them access to remedy.
Further background on ASOS’ approach to ethical trade
We believe everyone who makes ASOS products should feel safe at work, financially secure, respected and protected, and access to enabling human rights such as freedom of association, collective bargaining, gender equality, and living wages is vital to achieve this. We collaborate with a wide range of international and local stakeholders to bring about long-lasting improvements in supply chain working conditions, and we were the first ecommerce brand to sign a Global Framework Agreement (GFA) with IndustriALL Global Union and its local affiliates in 2017. We continue to focus our efforts on the implementation of our GFA and our role as an active member of Action, Collaboration, Transformation (ACT).