Supply chain management in times of COVID-19: How do we support and monitor our supply chains in 2021?

Major disruptions like Covid-19 put global supply chains at risk. During such challenging times, partnership is more important than ever. We believe that long-term partnership is the key to strengthen business relations. Nowadays more than ever. That is why we take our responsibility seriously and expect the same from our business partners.

Furthermore, it is important for us to regularly communicate with our local business partners, especially producers to understand the challenges they are facing and how supply chains and production are affected by that. Therefore, we ask our business partners to consider related guidelines recommended by the BRANDS Fashion headquarter or assigned partners. Without any exception we expect that necessary measures are implemented to keep the people working in supply chains producing for BRANDS Fashion as safe as possible. We ask our direct business partners and top leverage suppliers to provide information on the current situation and any actions taken in the BRANDS Fashion involved supply chains regularly. Hereafter you find an update on the Covid-19 situation in our supply chains from summer 2021. For further information on the measures we have taken to implement responsible purchasing practices in times of supply chain disruption, please check our report from 2020.

COVID-19-Update from business partners

Due to regular communication with our suppliers, we are well informed about their current situation. For instance, we ask them to send us detailed information about the country wise situation. Additionally, we want to know, what they do to prevent infections and if all measurements are implemented. Of course, we do offer help if needed.

We do have the confirmation of all our suppliers, that workers continued to be paid in the case of sickness. In Bangladesh, this is additionally verified by our Triton team via documents and interviews with employees. Our suppliers also give us insides regarding their financial situation and its affects in jobs or wages. We also track whether there is an increase of complaining of the workers. In Bangladesh, more complaints have been received through the Bangladesh Accord regarding unpaid wages and grievances in factories. These complaints are being investigated by our local Compliance team.

Feedback from suppliers: established systems & current challenges

General:

  • Many of our suppliers received fewer orders and cannot fill their capacities. Some customers even do not accept goods that have already been produced.
  • Lockdowns and sick leave caused delays in production, and delivery dates are pushed back.
  • All our factories continued to pay the wages of their workers, even in the case of illness.
  • The pandemic lead to an increased need for water, disinfectants, and masks, which caused more waste.
  • The ever-changing situation (lockdowns, quarantine restrictions, hygiene policies) led to an unpredictable transport shipment. It was not possible to predict a usual delivery time. In addition, the market suffered from the conflict between the high demand and the low-capacity carriers.

Turkey
So far, there have been an increase of infected persons in 2021. At the end of April until the end of May the country was in lockdown, it was allowed to continue the production with special permission. Some of our suppliers and subcontractors were completely closed.

China
So far, there have not been many Covid-19 cases in China in 2021. In January only there was an increase in the Shijiazhang region, therefore a short lockdown followed in January & February. Two of our suppliers were affected.
Due to hygiene measures and reduced staffing levels in the handling facilities and terminals, there were delays and backlogs in processing. The shortage of empty equipment further exacerbated the situation.
Yantian International Container Terminal in Shenzhen, one of China’s busiest container ports, imposed strict infection and quarantine measures due to Covid-19. As a result, port operations were restricted.

Bangladesh
In the beginning of 2021 Bangladesh was severely affected by the 3rd wave, with infection rates increasing twenty-fold during March.
In early April, Dhaka declared a partial shutdown, suspending public transport and ordering offices into home offices. Factories producing export goods were allowed to continue production unhindered under the given hygiene measures.
From mid-April, there was a nationwide lockdown. Textile factories were allowed to continue working but were forced to close at 5 p.m. In the beginning of July there was another lockdown, but factories continued to run.
Importing raw materials from third countries to Bangladesh was difficult due to the availability of raw materials. On one hand, this can lead to delays; so far, it primarily drives up the prices of the products.
Supplies of accessories from China, for example, have also become more expensive, as freight rates here have risen sharply.

Pakistan
At the beginning of April, the infection rate is moderate, according to our partners testing and vaccinating in the country was rolled out, there were no serious restrictions. One of our suppliers informed us at the end of April, he provided more buses for the workers than usually to keep the distance inside. They also must work multiple shifts to do this. These measures increased costs. In addition, customers ordered significantly less than usually.
In May, we got the info that the vaccination of everyone over 30 has started (in the beginning of May over 40 and 50). For a week public transport was suspended and markets closed. At the end of May, stores and markets were allowed to be open only until 18:00.

India
India was most affected by the 3rd wave, there was a rapid increase in new infections. By the end of April, the number of new infections was around 300,000 people per day. Hospitals across the country were overcrowded, with oxygen in short supply, especially in the Delhi area.

During that time, factories in the Bangalore and Mumbai regions were already closed. Our production facilities in the state of Tamil Nadu continued to operate, as the infection figures here were not yet so high. The lockdown of our suppliers there followed at the beginning of May until the beginning of June.
One of our suppliers for example was allowed to work again with 10% of its capacity, since 14.6. with 25% and since 21.6. with 50%. Currently, most parts of India are again allowed to operate at 100% of capacity. In July, most parts of India were again allowed to operate at 100% of capacity.

Our Indian core supplier informed us that he had been able to handle the financial situation on his own. If this should change, we have promised support.

At another Indian supplier almost all the merchandisers were sick with Covid and in some cases their families as well, fortunately all have recovered without serious complications. For the sick factory workers, the factory created an isolation center with beds and oxygen supply. They also recovered in the meantime.
In mid-June, the supplier let us know that they have vaccinated most of their employees and their families. They get paid vacation, food for a week and toys for the children.
Travel to and from India was significantly reduced and as a result, so has air travel between India and Europe. Air cargo capacities were thinned out.
Due to hygiene measures and reduced staffing levels in handling facilities and terminals, there were delays and backlogs in processing.

Air freight was available, but due to strong demand, rate levels were high.