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Article: Squeezed in the Middle: Optimizing brands’ supply chain interventions for organic cotton

In 2016, the Organic Cotton Accelerator (OCA) interviewed a vast number of brands’ suppliers and buyers to assess the current perception of first-tier suppliers on the attractiveness of organic cotton as a business, and the influence of sourcing practices on this. Next to the Sourcing Practices Benchmark report we offered to our partners, we published this publicly available article.

Executive Summary

As the dynamics of the mainstream apparel industry entered the organic cotton sector, the middle of the supply chain started to face increased competition and price pressure. In a context of increasing raw material costs, alongside a high dependency on the quality of their inputs, suppliers found themselves squeezed in the middle.

Acknowledging these challenges, brands implemented specific sourcing practices in their dealings with suppliers of organic cotton products to help them safeguard the sustainability and scalability of their businesses. While increased flexibility and the commitments made by brands do allow suppliers to better meet business demands, the differentials paid for organic cotton fail to make organic cotton an attractive business for all. Some of the supply chain interventions which have been made even seem to have added to the challenges of suppliers by weakening their downstream negotiating power.

In terms of best sourcing practices, there is no one size fits all solution. As is the case in all relationships, the synergies between buyers and suppliers are most successful when relying on mutual understanding and trust. Transparency with regard to costs, lead times, upstream suppliers, and longer-term projections do help, but these will be most effective in a setting of open dialogue which focuses on the impact of current practices, and facilitates the joint piloting of new ways of working. While the demand for organic cotton is on the rise, strong partnerships throughout the supply chain are urgently needed to ensure continued viability, sustainability and of the organic cotton sector.

Read the article here.