LONDON — Canceled orders due to the coronavirus could have devastating implications for every link in the supply chain, according to Simone Cipriani, chief executive officer and founder of the U.N.’s Ethical Fashion Initiative, which helps marginalized artisan communities connect with international lifestyle brands.
He said it’s up to the industry to mitigate the impact of quarantines, dark shops and a decrease in consumption on developing nations in particular.
“While brands and retailers in the Western world scramble to cope with the business implications of the pandemic and impending recession, the social and human fabric of whole communities in less fortunate settings is set to be literally wiped out. Order cancellations could see supply chains grinding to a halt in developing countries,” said Cipriani.
He is hoping that brands and retailers refrain from canceling orders. He acknowledges that this will be tough for many, and suggested that businesses amend payment terms to avoid entire systems from collapsing.
“Try to reschedule [payments], and if you are able to, advance money to your more trusted suppliers to enable them to keep salaries running. These are some measures retailers can take to pay for things that have already been produced and are waiting to be shipped. Canceling orders is a death trap and a real disaster for suppliers.”
According to Cipriani, there will be 4,000 job losses in his direct network if orders are canceled. He estimates that the global loss of jobs will rise into the millions, with fragile communities the hardest hit and social problems coming to the fore.
Unemployment in these regions, he argued, can lead to illegal trade and immigration. “These communities work in very difficult places, so when people become unemployed, they are forced to find coping mechanisms. Young people might join violent networks and illegal trade,” he said.
Cipriani also raised another issue: Sustainability. While the environment has benefited from quarantine measures, with multiple reports on clear skies and drop in pollution levels, Cipriani is fearful that once things return to normal, environmental sustainability will be at a greater risk than before as retailers rush to pick up production that has faltered in the past few months.
“A lot of companies may push unscrupulous industrial producers in the developing world to produce without paying for clean technologies, to produce cheaper but dirtier such as closing water treatment plants near textile mills,” he said.
His hope is that, after the crisis, and when businesses are able to get back on their feet, an awareness about social responsibility and environmental responsibility will emerge. He is also hopeful that, going forward, the industry will work together in finding new ways of production, whether that’s working locally and digitally and overall, investing more in the people within the global supply chain.
And today, with online now being the only available channel for consumers to purchase, he said he hopes this will enrich the value of local production and retailers.
“At the end of the day, a lot of production still takes place with traditional technology, a stitching machine is a stitching machine. However, the zero sum game of the present situation in the global supply chain, where brands want to find the shortest times possible even if it means changing suppliers, won’t work anymore. They will need stability in the supply chain and this will force investment and new developments,” said Cipriani.