The State of Apparel Supply Chain Transparency: A Case Study on VF Corporation

With the public’s increasing demand, fashion companies are making more significant efforts to improve their apparel supply chains’ transparency, i.e., mapping where the product is made and knowing suppliers’ compliance with social and environmental regulations.

Recently, VF Corporation, one of the most historical and largest US apparel corporations, released the entire supply chain of its 20 popular apparel items, such as Authentic Chino Stretch, Men’s Merino Long Sleeve Crewe, and Women’s Down Sierra Parka. VF Corporation used more than 300 factories worldwide to make these apparel items and related textile raw materials.

We conducted a statistical analysis (Multivariate analysis of variance, MANOVA) of these factories, aiming to evaluate the state of VF Corporation’s apparel supply chain transparency, including its strengths and areas that can be improved further. The findings of this study will fulfill a critical research gap and significantly enhance our understanding of the nature of today’s apparel supply chain and the opportunities and challenges to improve its transparency.

The results show that VF Corporation’s suppliers in different segments of the apparel supply chain had different transparency performances overall:

  • While more than 92% of tier 1 & 2 suppliers shared their environmental or social compliance information with VF Corporation, less than 60% of VF Corporation’s tier 3 & 4 suppliers did so (note: statistically significant).
  • A higher percentage of VF Corporation’s tier 2 & 3 suppliers (i.e., mills making fabrics, yarns, or accessories) received environmental compliance-related certification than tier 1 suppliers (i.e., garment factories) (note: statistically significant).
  • Meanwhile, VF Corporation’s tier 1 suppliers were more active in pursuing social compliance-related certification than suppliers in other levels (note: statistically significant)
  • However, no evidence suggests that whether from a developed or developing country will statistically affect a vendor’s transparency performance.

The study’s findings have several important implications:

  • First, more work can be done to strengthen fashion companies’ transparency of tier 3 & 4 suppliers (i.e., textile mills making yarns and fibers). Despite the significant efforts to know their garment factories (i.e., tier 1 suppliers), fashion companies like VF Corporation still have limited knowledge about vendors upper in the supply chain. Notably, even VF Corporation doesn’t have much leverage to request environmental and social compliance-related information from these vendors. According to VF Corporation, often “Supplier was unresponsive to VF’s request for information.”
  • Second, the results suggest that vendors at different supply chain levels have their respective transparency priorities. However, it is debatable whether tier 1 & 2 suppliers also need to care about environmental and sustainability-related compliance, and if tier 3 & 4 suppliers should be more transparent about their social compliance record. The growing concerns about forced labor involved in cotton production (i.e., tier 4 suppliers) make the debate even more relevant.
  • Additionally, different from the public perception and previous studies, the findings call for equal treatment of suppliers from developed and developing countries when vetting their environmental and social compliance-related transparency.

Because this case study looked at VF Corporation only, future research can continue to investigate other fashion companies’ supply chain transparency based on data availability. It will also be meaningful to hear directly from tier 3 & 4 suppliers to understand their perception about improving the apparel supply chain’s transparency and related opportunities and challenges.

by Sheng Lu and Lora Merryman

Note: The study will be presented at the 2021 International Textile and Apparel Association (ITAA) Annual Conference in November.

Author: Sheng Lu

Professor @ University of Delaware

9 thoughts on “The State of Apparel Supply Chain Transparency: A Case Study on VF Corporation”

  1. This study of VF corporation’s supply chain was eye-opening. One of the trends mentioned in this article that I found intriguing is that Tier 1 suppliers were most likely to receive social compliance-related certification while Tier 2 and 3 were more likely to get environmental-related compliance certification. I think this trend can be related to the fact that Tier 1 suppliers are garment-making factories which is a very labor-intensive process so statistically speaking this industry is more known for not being socially responsible and treating their workers improperly. I think part of their reasoning for being more socially compliant is there were a lot of protests and demands for social responsibility following the Rana Plaza collapse and other traumatic events in the garment factory industry. I think this shows that factories show “transparency” and compliance only when it is an issue that is widely talked about and they are being looked at under a microscope. For example, environmental sustainability should be a focus of garment factories also since the manufacturing process is energy-intensive and can release greenhouse gases. However, since this effect is not detrimental right now it is not being addressed and I think that is fascinating. On the other hand Tier 2 and Tier 3 factories are more likely to be environmentally compliant because they produce fabrics and yarns that are more well known for having environmental effects since the process of each textile material like cotton or polyester has a variety of environmental issues in their production process. I think they feel social compliance is less important since they are a more technology-intensive industry and don’t have as many employees as the garment industry. However, like mentioned in the article their are still social problems in these tiers like forced labor in cotton production. In conclusion, I think all of this shows all Tiers should be focusing on environmental sustainability and social responsibility and not just what is being immediately impacted.

    1. I agree with all points made in your comment and in the article. I found it very interesting that a major corporation like VF has begun to be “transparent” in their apparel supply chains. I think it’s very telling that less than 60% of the tier 3 & 4 suppliers shared their environmental and social compliance information when I think they are the one’s who are most likely being put in unethical work environments. Like you stated about the Rana Plaza collapse, it should’ve opened other developing countries eyes that this could happen to their factories/buildings as well. I think this is a great start for a major corporation to come out and provide us this information, it shows that they are listening to their current consumer needs but I don’t think it’s provided any substantial evidence on if they’re going to try to be better and more sustainable. There is more work for true transparency that needs to be done as pressure continues and all eyes are on them to become a better environmental and socially compliant corporation for all their brands.

  2. From this study we can conclude that many suppliers are meeting VF requirements and preferred standards on the surface levels of Tier 1 and 2, which are uncoincidentally the areas that are more heavily in the public eye. On the other hand; the more labor intensive and cost speculating Tiers 3 and 4 are less compliant when it comes to transparency and routine management. The efforts of these suppliers obtaining social and environmental compliance certifications are appreciated on an executive level, but are just not enough to those with a more educated sense of the current supply chain climate. This is because the certifications require routine auditing, which we are not sure is being done correctly or even at all. The push for more vendor performance and textile mill transparency is where VF should be investing resources and updating the rest of the industry so that developments, such as globalization that we discussed in depth, can proceed in an ethical fashion.

    1. Good point. Improving the apparel supply chain’s transparency will remain a hot topic in the coming years, especially given the new forced labor legislation implementation. As you may notice, quite a few technology companies have stepped up to conduct pilot studies exploring the possibility of tracking tier 3 & 4 suppliers. But on the other hand, the study’s findings remind us that brands have limited influence over their suppliers for transparency. Closer collaboration between brands and their suppliers is a key component.

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