Annual Social Report 2011
J.C.Rags Social Report 2011
J.C. Rags BV, Mangaan 11 5234 GD, ’S-Hertogenbosch The Netherlands T. +31 (0)73 644 3434 F +31 (0)73 644 3333 © 2011 J.C.RAGS BV WWW.JCRAGS.COM
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Contents
1. Summary of Goals and Achievements 2011
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2. About J.C. RAGS, the brand and the company 2.1 The J.C. RAGS brand 2.2 The origins of J.C. RAGS 2.3 J.C. RAGS B.V. Executive leadership 2.4 J.C. RAGS B.V. Facts and figures 2011
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3. Our Sourcing strategy 3.1 Vendor selection 3.2 Organization of our production chain 3.3 About our production cycle
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4. Corporate Social Responsibility 4.1 About our CSR policy 4.2 Zinvest Corporate Policy of Engagement 4.3 CSR responsibility chart 4.4 Independent partners we work with 4.4.1 About Fair Wear Foundation (FWF) 4.4.2 About Société Générale de Surveillance (SGS) 4.5 Our four point approach to social responsibility 4.6 Coherent system for monitoring and remediation 4.7 Looking back at 2011 and Outlook 2012:
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5. Training and capacity building 5.1 Activities to inform staff members/Agents 5.2 Activities to inform manufacturers and workers
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6.
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Transparency and communication
7. Appendices
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J.C.Rags Social Report 2011
1. Summary of Goals and Achievements 2011 At J.C. Rags, we firmly believe in Corporate Social Responsibility (CSR) being an integral part of the overall sourcing strategy. Our overall sourcing strategy, which did not change much in 2011, continues to be driven by the focus on achieving higher levels of customer satisfaction by getting the right merchandise to the shop floor at the right quality and price mix while operating in a socially responsible manner. 2011 was a continuation of the social compliance initiatives already started in 2010. The focus areas for J.C. RAGS set out at the start of 2011 were: • Gaining more insight into the overall sourcing chain. • B ringing more of the vendor base under active monitoring. • R igorously following up the Corrective Action Plans (CAPs) to closure. • In general, making the processes related to social compliance simpler and more transparent.
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For 2011 we started out with a target of achieving 40% audit coverage (by spend) for the vendor bases of J.C. RAGS and DEPT combined. We achieved an actual coverage of 59% against this target. J.C. RAGS achieved a 48% overall audit coverage (by spend in 2011) of its own vendor base. The under-achievement of J.C. RAGS on audit coverage was mainly due to: The biggest vendor in 2011 which accounted for 15% of the overall spend could not be audited in time (the audit is planned is June 2012 after their ongoing factory relocation); and due to no further ordering (on hold) with two vendors who together accounted for another 15% of the overall spend in 2011. The key challenges identified within our CSR management are on sustaining the momentum in monitoring, on the CAP follow-up which has fallen short of the expectations in 2011, and on follow-up trainings for the sourcing partners. Volatility in the vendor base (newer vendors being added, spends redistributed) and reduced volumes remain key concerns going forward and these are being addressed at the executive level.
Our overall sourcing strategy continues to be driven by the focus on achieving higher levels of customer satisfaction in a socially responsible manner.
The below measures have been taken to make the audit and CAP follow-up processes simpler and more transparent: 1. The social audit details are maintained at the vendor level in the main ERP system itself so that the latest audit status is visible to everyone. 2. The summary of the corrective action plans are being filed in a central place (this is already filled for about 75% of the audited vendors) so it is easy to know overall what kind of social non-conformances and/or improvement areas exist in the vendor base. 3. A social compliance health dashboard is maintained as part of the management reporting. This is published internally periodically. This dashboard is based on a subjective Red, Amber, and Green flag assigned to a vendor based on the number of the issues recorded from the audits and status of the CAPs.
With the help of the already established processes and the above initiatives, a more realistic overall audit coverage of 65% by the end of 2012 is targeted for J.C. RAGS. Some further objectives set out for 2012 until 2014 are: • A ctively look to reduce the overall active vendor base to under 50 so that more-focused partnership programs can be conceived and implemented to improve the working conditions in the sourcing chain. • Increase the active monitoring to over 75% by end 2013. This target is quite ambitious and is very dependent on the aforesaid vendor base consolidation. • Include social health of the vendor as a key parameter in the under-development vendor rating program and roll the program out by end 2012. • A ctively seek out and work with other brands to co-operate on CSR initiatives. • E nrich the on-line sourcing platform further to include and support all key social compliance processes and information.
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J.C.Rags Social Report 2011
2. About J.C. RAGS, the brand and the company 2.1 The J.C. RAGS brand J.C. Rags is a fashion forward menswear collection, inspired by generations of workers, tailored to the trends of today. The design philosophy of the J.C. RAGS brand revolves around the concept of a tailored work wear. J.C. RAGS is the perfect blend of clean tailored garments and rough denim related work wear. Tailored work wear is the brand’s USP, which sets it apart from the competitors by positioning the brand between pure denim brands and preppy/vintage and casual brands, giving the consumer the perfect mix of both.
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2.2 The origins of J.C. RAGS J.C. RAGS was born out of the ambitious plans of the Thomas Group. When the brand team returned from exploratory trips from the retailing capitals of the world, they planned to bring a new concept in retailing to the Netherlands, and needed a menswear brand to add dimension to the product offer of DEPT stores. So in 1994, the first J.C. RAGS collection was launched. inspired by the lifestyle stores of new York, J.C. RAGS has always offered a refreshingly uncomplicated solution to Denim related fashion style. By understanding the key items that make up the twenty something’s wardrobe, J.C. RAGS found fantastic success in tuning into the zeitgeist of the mad nineties, and selling high volumes of the perfect basics, for which the brand became famous. This created a platform to build on for the future. Since then, J.C. RAGS has represented masculine, honest and inventive cool.
2.3 J.C. RAGS B.V. Executive leadership
Headquartered at Mangaan 11, 5234 GD, ‘s hertogenbosch, Netherlands
Zinvest Fashion B.V. Patrick Maes, CEO Yogi Laijawalla, COO
J.C. RAGS B.V. Patrick Maes Executive Director
2.4 J.C. RAGS B.V. Facts and figures 2011
Subsidiary of Zinvest Fashion B.V. (100% ownership)
J.C. RAGS B.V. Yogi Laijawalla COO
Executive board Patrick Maes – CEO, Zinvest Fashion B.V. and Executive Director, JCRAGS B.V. Yogi Laijawalla – COO, Zinvest Fashion B.V. and COO, JCRAGS B.V. Employees 2011 23 Sales 2011 11.11 million EUR net Production 2011 636 thousand garment units received Further information www.jcrags.com
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J.C.Rags Social Report 2011
3. Our Sourcing strategy Our sourcing strategies for J.C. RAGS are driven by the long term shop floor delivery cycle. Therefore J.C. RAGS maintains its respective annual schedule that define the key dates when the brands’ collections are planned, designed, developed, manufactured, and ultimately delivered.
Based on our findings, we will activate a new vendor (or de-activate an existing vendor). Our aim to continuously monitor the conditions in factories is achieved through monitoring by our production hubs, through independent audits, and through on-site checks done by our production teams.
3.1 Vendor selection For us, choosing the right vendors involves much more than simply looking for the cheapest source to produce; Our assessment and selection depends on a wide range of factors, but the most important ones are:
The co-operation with our vendors is strategic and to get vendors to comply, we make it clear that our intention and ambition is to grow the association through a long-term partnership in line with seasons and the annual schedule.
Order fulfillment, On Time Delivery, Margin, Production Quality, and Human Rights.
The quality and the safety of the goods are checked by our production hubs (agents) where, if needed, testing is carried out both on the overall fabric quality and on the technical specifications to assess if the items meet the brand’s quality requirements on various parameters. Our detailed quality requirements are published and shared with our sourcing partners though our online production manual site.
In line with the above factors, the selection of factories and sub- contractors involved in producing our products are covered by our Policy of Engagement (POE) and measured against our four-point approach (see CSR chapter. When we source for new vendors or a vendor of interest approaches us, before starting any co-operation of any sort, we request them to send a full factory profile (which allows us to see all details, including if they have been previously audited). If this profile fits within the boundaries of our POE and our 4-point approach to sustainability, our production hub, our verification partner in the region or our production team will visit the factory. If all is met within the set boundaries we then ask the factories to fill in our self-audit forms, if not already provided.
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3.2 Organization of our production chain The J.C. RAGS production team at the HQ consists of 1 Senior Product Developer and 2 Product Developers. The developers are supervised by the seniors. Each team member follows the product from beginning to end. Each team member is divided either into the Knit- or woven development category. The Senior Product Developer(s) and their teams ensure, with the help of the production hubs, that the vendor/factory information is up-to-date, complete, and transparent. Based on verification of this information the vendor will be activated within our ERP system or not admitted.
Choosing the right vendors involves much more than simply looking for the cheapest source to produce.
In our production chain we have: • 3 production hubs (India, China and Turkey) where we work with buying agents. • Some direct vendor relationships. • One service provider, SGS, for Factory Audits, Testing and direct vendor Production Inspections on-site.
BRAND
Work Sheets Proto Review
18 weeks
PRODUCTION HUB
SMS Production SMS Review Sales
Compliance team/ QC reports
Production
23 weeks
QC checks on a frequent/ daily basis
J.C. RAGS has a 41 week production cycle for its main collections of which 18 weeks are spent on the development and production of the Sales Samples and another 23 weeks are spent on getting the goods production ready, produced, and shipped to our D.C.
Fabric Issue Production hub reports back to HQ during on-site visit
HQ checks on-site on an 8 week basis
3.3 About our production cycle Typically 41 or 42 weeks production cycles for main collections
Delivery
SUPPLIERS
J.C. RAGS also offers some speed-to-market collections that have a shorter cycle.
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J.C.Rags Social Report 2011
The search for the correct fabrics (and so the vendors) can take place before the start of the initial 17/18 week period. However no allocation to a new vendor will take place unless they have been pre-audited and approved. The detailed explanation of procedure is as below: 1. Fabric issue: Fabric packages are put together and sent to the production hubs (agents). The hubs and our production teams at HQ jointly decide which factory is the most capable in producing that particular fabric. The factories have 3 weeks for the development and production of the fabric before they receive the worksheets. 2. Worksheets: These are the style packages. They contain all the information needed to produce the product. The factory then has 4 weeks in which they have to produce the first prototype using pre-developed fabrics and as per the worksheets. 3. Proto Review: In this critical process that lasts 2 weeks, the styling and production teams come together to discuss and view the outcome of their concepts. It is at this stage that it is decided how the final salesmen samples (SMS) should look like and if any adjustments to size and styling should be made. After this, the factory has 3 weeks in which to produce the Pilot Sales Samples.
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4. Pilot Sales Samples: These Pilot Sales Samples are the first pieces off the production line and are sent directly to the HQ for the teams to check. This process makes sure that all comments have been incorporated before the final salesmen samples (SMS; showroom samples) arrive 1 week later and sales can commence. 5. Collection Review: Review is now done together by Sales, Production and Design departments. Design and Production teams take on board early feedback to ensure that the final product that will be sent to the customer is of the best quality and look. 6. Style Drops and Comments: Just 3 weeks into the sales period, styles that do not make the cut are dropped and final comments are shared for vendors to start production. Design details including fit and outlook are verified at a detailed level. 7. Fabric pre-booking and production technicalpacks: A week further into the sales period, fabrics and raw materials with long lead-times are pre-booked through an internal forecasting process. At the same time the production teams begin to put the production tech-packs together and share the same with the production hubs to start size-set making during the sales period.
No allocation to a new vendor will take place unless they have been pre-audited and approved.
8. Final orders: Once the sales period is finished the final order and last style drops are given through to the production hubs/vendors. This happens 3 weeks after the pre-commitment on fabrics. Then vendors have a minimum of 11 weeks (production lead times vary, Europe production has 2 weeks extra due to shorter delivery times) in which they need to produce the products and ship them out. During this period of 11 weeks, all final approvals are accomplished in a dynamic way to ensure manufacturing conditions and standards match the brand’s requirements. Several on-site factory visits from our production hubs take place during this period. This helps to rule out any uncertainties and resolve hindrances.
NOTE: The above cycle applies mainly to our main collections. For our speed-to-market collections, some process adjustments and/or timeline compressions apply. Transport Mode: Our preferred ship mode for goods coming from far-away sources is by Sea. For origins closer to the HQ, the goods are usually transported by Truck. On a case-to-case basis, usually where the lead-times are longer or where there are production delays, some shipments may be transported by Air.
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J.C.Rags Social Report 2011
4. Corporate Social Responsibility 4.1 About our CSR policy Within J.C. RAGS, we believe that CSR is a continuous improvement journey with no pre-defined end state. Every small improvement we make in the working conditions in the production facilities where our products are manufactured takes us that much forward in this journey but it can always be improved, and, we will try our best to make those improvements. We also believe that CSR cannot and must not be seen as a separate initiative but must be seamlessly integrated within our behavior and how we work, especially within our sourcing chain. Our CSR policy and implementation are formulated and driven forward at our group, Zinvest Fashion B.V., level. The CSR processes and activities described below are applicable, in general, to all the companies with in the group and, in particular, to J.C. RAGS B.V.; and are based on the Zinvest Corporate Policy of Engagement (POE).
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The Zinvest POE is based on the ILO convention and UN convention on ‘rights of the Child’ as stated under. J.C. RAGS implemented the POE in 2009 and continues driving and implementing the requirements with its respective buying agents and vendors including training, on site visits, and independent audits. The Zinvest POE, based on ILO / UN conventions, includes the following requirements as the basis: • • • • • •
Compliance with local labour law Statutory pay and working hours A ban on forced labour A ban on child labour The right to organize and bargain collectively Health and safety in the workplace
We believe that CSR must be seamlessly integrated within our behavior and how we work, especially within our sourcing chain.
4.2 Zinvest Corporate Policy of Engagement The full-text of the Zinvest Corporate Poilcy of Engagement (POE) is available on the website www.jcrags.com and is attached below: A: Standards ZINVEST FASHION B.V. and it’s entities (herein after referred to as Zinvest Fashion B.V.) require all their Vendors and Suppliers to operate their business in accordance with the following standards: General Principle – Zinvest Fashion B.V. Vendors and Suppliers shall operate in full compliance with all national and local laws, rules and regulations applicable to their business operations. Employment Standards – With regard to the employment of any and all employees of Zinvest Fashion B.V. Vendors and Suppliers shall comply with the following Standards: 1. Forced Labor: Zinvest Fashion B.V. Vendors and Suppliers shall not use forced labor, whether in the form of prison labor, indentured labor, bonded labor, or otherwise. No Employee can be compelled to work through force, the threat of force or intimidation of any form. 2. Child Labour: Zinvest Fashion B.V. Vendors and Suppliers shall not employ persons who are younger than 15 years old (or 14 years old where permitted by the applicable laws), or who are younger than the age for completing compulsory education in their country of employment where such age is higher than 15.
3. Harassment or Abuse: Zinvest Fashion B.V. Vendors and Suppliers shall acknowledge that their Employees have the right to have a workplace free from physical, sexual, psychological or verbal harassment or abuse and Vendors and Suppliers shall treat Employees with respect and dignity. 4. Discrimination: Zinvest Fashion B.V. Vendors and Suppliers shall not discriminate in employment, including hiring, salary, benefits, advancement, training, disciplines, termination or retirement, on the basis of gender, race, religion, age, disability, sexual orientation, nationality, political opinion, or social or ethnic origin. 5. Right of Association and Collective Bargaining: Zinvest Fashion B.V. Vendors and Suppliers shall recognize and respect the rights of Employees’ to organize and join associations of their own choosing, and to bargain collectively. 6. Wages: Zinvest Fashion B.V. Vendors and Suppliers recognize that Employees should be fully compensated for all time worked and be provided with a clear and written accounting for every pay period. Vendors and Suppliers shall pay Employees at least a) the minimum wage required by the applicable law or b) the prevailing industry wage, whichever is higher. In addition to their compensation for regular hours of work, Employees shall be compensated for overtime hours at least at the premium rate legally required by the applicable law or, in those countries where such laws do not exist, at a rate exceeding their regular hourly compensation rate.
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J.C.Rags Social Report 2011
7. Hours of Work: Zinvest Fashion B.V. Vendors and Suppliers shall not require their Employees to work on a regular basis more than sixty hours or the requirement by the applicable law, whichever is shorter per week, including overtime. Vendors and Suppliers shall allow Employees at least one day off in every seven day period on a regular basis and a paid annual leave required by the applicable law. 8. Benefits: Zinvest Fashion B.V. Vendors and Suppliers shall provide their Employees all legally mandated benefits. 9. Health and Safety: Zinvest Fashion B.V. Vendors and Suppliers shall provide a safe and healthy working environment, including, but not limited to adequate lighting, heating and ventilation systems and protection from fire, accidents, and hazardous substances. Employees shall have access at all times to sanitary facilities which are adequate and clean. When residential facilities are provided for Employees, the same standards should apply. B: Environment Zinvest Fashion B.V. Vendors and Suppliers shall comply with all applicable environmental laws and regulations and shall work towards further improving environmental conservation. Further, Vendors and Suppliers shall operate the business with consideration for environment and safety by saving resources and energy, reducing emissions, by implementing environmentally-aware purchasing, and by preventing pollution.
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C: Documentation and Inspection Zinvest Fashion B.V. Vendors and Suppliers shall maintain all documents necessary to demonstrate compliance with this Policy and any applicable laws, and submit these documents to Zinvest Fashion B.V. upon Zinvest Fashion B.V.’s request. Further, Zinvest Fashion B.V. shall have the right to conduct inspections or shall have the right to have Zinvest Fashion B.V.’s designated independent monitor conduct such inspections to determine if Vendors and Suppliers comply with Zinvest Fashion B.V. Standards and the applicable laws with or without prior notice by Zinvest Fashion B.V. Vendors and Suppliers shall accept such inspections.
4.3 CSR responsibility chart aThe Zinvest POE is implemented with the firm belief that everyone within the organization and within the partner channels needs to do their part for the companies to be able to operate in a socially responsible manner.
Having said that, the below persons are entrusted with the specific responsibilities below to ensure, in general, a socially responsible sourcing chain; and specifically, implementation of the Zinvest Corporate Policy of Engagement (POE) within the J.C.RAGS organization:
Responsibility
Name
Position
CSR Policy formulation
Yogi Laijawalla
COO
Overall responsibility for implementing Zinvest POE within J.C. RAGS
Yogi Laijawalla
COO
Formulation and execution of the work plan for implementing the Zinvest POE
Anand Swaminathan
Manager, ICT and Human Rights
Internal monitoring (follow-up CAPs)
Yogi Laijawalla
COO
Frank Bleker
Senior Product Developer, J.C. RAGS
Anand Swaminathan
Manager, ICT and Human Rights
Annual Social Report
Anand Swaminathan
Manager, ICT and Human Rights
Sourcing Decisions
Yogi Laijawalla
COO
Frank Bleker
Senior Product Developer, J.C. RAGS
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J.C.Rags Social Report 2011
4.4 Independent partners we work with We work closely with the below independent partners in our CSR activities: • W ith Fair Wear Foundation (FWF) seeking their advice and review on the companies’ CSR activities, especially on the processes and the results. J.C.RAGS became a member of FWF in late 2009. • M ainly with Société Générale de Surveillance (SGS) to conduct third party social audits on the vendor production facilities and to report the findings back to the companies. 4.4.1 About Fair Wear Foundation (FWF) J.C. RAGS is a member of the Fair Wear Foundation (FWF). Fair Wear Foundation (FWF) is an international verification initiative dedicated to enhancing workers’ lives all over the world. FWF works closely with a growing number of companies that produce clothing and other sewn products and that take responsibility for their supply chain. Both affiliates (members) and ambassadors of FWF work towards improving the labour conditions in factories and workshops where the ‘cut-make-trim’ stage takes place, all over the world. The basis of the collaboration between FWF and a member is the Code of Labour Practices. Eight labour standards form the core of the Code of Labour Practices. Members of FWF must comply with this Code of Labour Practices.
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FWF verifies whether companies comply with the Code of Labour Practices through factory audits and a complaints procedure, through management system audits at the affiliates and through extensive stakeholder consultation in production countries. The FWF shares its knowledge and (local) contacts with the member companies, providing them with access to information on local legislation, labour standards and culture. Members are required to set up a coherent monitoring system, including factory audits, factory training and factory visits. The FWF has a complaints procedure that enables factory workers to anonymously bring to light any abuses related to labour conditions. FWF’s guiding principles: • Supply chain responsibility = realising that the Code can only be fulfilled when sourcing companies, as well as factory management, actively pursue practices that support good working conditions. • L abour standards derived from ILO Conventions and the UN’s Declaration on Human Rights = basing FWF’s Code on internationally-recognised standards which have been set through tri-partite negotiation. • M ulti-stakeholder verification = verification processes developed through multi-stakeholder negotiation, and involving experts from diverse disciplines and perspectives in FWF verification teams.
J.C.RAGS is a member of the Fair Wear Foundation, an international verification initiative dedicated to enhancing workers’ lives all over the world.
• A process-approach to implementation = paying special attention to the means (i.e. building functioning industrial relations systems over time) in order to achieve the end (i.e. sustainable workplace improvements). • Involvement of stakeholders in production countries = engaging local partners in shaping FWF’s approach in a given region or country. • T ransparency = keeping relevant stakeholders informed of FWF policies, activities, and results; publicly reporting on member company efforts to fulfil FWF requirements. FWF is governed by the following organizations: • M odint (the trade association for fashion, interior design, carpets and textiles) • C BW-MITEX (business association for retailers of interior design, fashion, shoes and sportswear) • F GHS (business association for sporting goods suppliers) • F NV Bondgenoten (federation of trade unions service industry) • C NV dienstenbond (Christian trade union - service industry)
4.4.2 About Société Générale de Surveillance (SGS) As the world’s leading inspection, verification, testing and certification company, SGS provides competitive advantage, drives sustainability and delivers trust. Recognized as the global benchmark for quality and integrity, SGS employs over 64,000 people and operates a network of more than 1,250 offices and laboratories around the world. SGS helps to improve quality, safety, performance and efficiency for the following industries: Agricultural, Automotive, Consumer Testing, Environmental, Industrial, Life Science, Minerals, Oil, Gas and Chemicals, Systems and Services Certification, Governments and Institutions. History Established in 1878, SGS started by offering agricultural inspection services to grain traders in Europe. From those early beginnings, SGS grew in size and scope as its agricultural inspection services spread around the world. During the mid 20th century, SGS began to diversify and started offering inspection, testing and verification services across a variety of sectors, including industrial, minerals and oil, gas and chemicals among others. In 1981, the company went public.
• Clean Clothes Campaign (The Netherlands)
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J.C.Rags Social Report 2011
4.5 Our four point approach to social responsibility CSR is at the core of our sourcing strategy and this is best illustrated below in terms of the five key factors that drive our sourcing: Order Fulfillment, On-time delivery, Production Quality, Margins, and Commitment to Human Rights. Every season we strive to strike the perfect balance between the four operational factors (Order Fulfillment, On-time delivery, Production Quality, and Margins) without compromising on Human Rights.
Order Fulfilment
On-time delivery
Human Rights
Production Quality
Margins
To ensure the commitment to CSR is not diluted, we have adopted a four-point approach to socially responsible sourcing and have embedded the related processes into the vendor life cycle: • S elf-assessment/audit: We ask our (prospective) vendors to submit a self-assessment report before starting any engagement with them. If the vendors already have an independent audit report on their facilities then we review them as well as part of the intake. • A ctivate/Deactivate: We review the selfassessment/audit reports and decide, based on these reports, if the vendor meets the minimum requirements from a social health perspective, and, if they could be activated in the system. Also if an active vendor falls short of the expectations along the way, the vendor will be deactivated in the system. At any given point in time, purchase orders can be issued in the system only to active vendors. • Independent Audit: Furthermore with vendors that look promising (projected future spend), we try to get their production facilities audited by an independent party within 6 months of starting the engagement (unless the vendor already has had the facility audited by an independent party in the last 6 months). • C AP follow-up: We follow-up on the corrective action plans (CAPs) agreed by the vendors as part of the independent audit and get them re-audited on a priority based on the CAP status and the time elapsed since last audit.
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We have implemented a coherent system for monitoring and remediation on human rights within our sourcing chain.
4.6 Coherent system for monitoring and remediation At J.C. RAGS, we have developed and implemented a coherent system for monitoring and remediation on human rights within our sourcing chain.
Self-Audit/ Assessment
Activate/ De-activate
CAP follow-up
Independent (re)audit
Improvement through cooperation: We have developed an effective system to ensure that all new suppliers are informed, before starting a business relationship, about the POE and are committed to social compliance. This commitment starts right at the beginning of the vendor selection process: All potential vendors are required to fill in a questionnaire which includes code elements of FWF. The factories are be given a production code as active vendors only if the questionnaire has been approved by the Manager, Human Rights. Without this production code, invoices from the factories are not recognised by the finance department.
All vendors are also informed that under our commitment to active monitoring, in addition to the above mentioned audits, announced and un-announced audits by our independent verification partners may also be conducted and this is acceptable to them. We are also looking forward to actively co-operating with other companies to enhance the implementation of Code of Labour Practices in general. Vendor monitoring and rating: Our vendor monitoring and rating processes are as below: • A t the production hub level, the vendors are visited and monitored on a frequent basis by the compliance team. Production hub compliance team and SGS (when called for) do announced and unannounced audits. • O ur productions teams do on-site checks at the various production locations as and when they are there at the location and review, together with the production hubs, the audit coverage (how many vendors audited) and the Corrective Action Plans (CAPs) and the progress thereof for the alreadyaudited vendors.
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J.C.Rags Social Report 2011
• O verall the performance of the vendors are discussed with production hubs by scoring the vendors according to: a. Human Rights achievements and improvements b. Order fulfilment c. Quality returns d. On time delivery e. Flexibility f. Margins • If there is a need to de-activate a vendor due to not closing the CAP in the agreed time frame, then this decision will be jointly made by our production teams and the concerned production hub.
t en m s ge an ga ns Pl En tio on of ec ti y sp Ac l i c I n i ve t ec rr
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J. C. RAGS
Po
• F urthermore every six months, we conduct a scan if there is a need to activate new vendors or deactivate current vendors (if CAP goals are not met in a timely manner). By focusing on this monitoring system, we are confident in tackling and improving Human Rights related issues in a transparent and collaborative way.
Review of our processes: Our CSR-related processes and systems are informally reviewed as part of the Operational Task Force meetings that happen at our head quarters every week under the leadership of our COO. In addition to this, Fair Wear Foundation (FWF) reviews our processes also as part of the annual management review.
Co
• If a production hub brings up a need to start with a new vendor, not only will a full background check be done along with an independent audit on the new vendor’s facility, but a dialogue will be initiated with the concerned production hub about which vendor(s) among the existing can be deactivated so as to keep the focus on the vendor consolidation program.
Social Health Dashboard: We have developed a social health dashboard which is refreshed every week and shared with the management. This dashboard is based on a Red, Amber, Green social health status for each vendor under active monitoring, the status being assigned subjectively based on the amount and nature of the issues noted and status of the corrective action plans. This dashboard helps us focus our precious resources on where the maximum improvements can be made.
M a An na n ge CS ual me R Wo nt Re rk Au po pl di rt an t
To facilitate this process, the summary of the corrective action plans are being filed in a central place (this is already filled for about 75% of the audited vendors) so it is easy to know overall what kind of social nonconformances and/or improvement areas exist in the vendor base.
FWF
VENDORS Social Audits Complaints
In 2012 we will focus even more on the CAP closure and on making the processes around social compliance simpler and more transparent.
4.7 Looking back at 2011 and Outlook 2012: Looking back at 2011: 2011 was a turbulent time for our sourcing chain with shrinking customer demand, lower average sales volumes per product, and margin pressures all coming into play. In line with our sourcing strategy we had to shake up our vendor base to meet these challenges and this resulted in a sizeable realignment of our spends across our vendor base and some vendor churn. Despite these challenges, we are reasonably satisfied that we could meet up to our audit coverage targets. We achieved an audit coverage level (% by spend of vendors under active monitoring) of just under 50% for J.C. RAGS. However we note with concern that we have not been able to, mainly due to challenges above, achieve as much as we would have liked to on: • F ollowing-up to closure on the corrective actions plans agreed by our vendors . • Consolidating our vendor base. Although we will continue to be pragmatic in what we should do given the market dynamics, we recognize the above under-achievements as key concerns and have, towards the end of 2011, put together several systemic improvements under our aforesaid coherent systems of monitoring and remediation to aid the processes around implementation of our 4-point approach.
Outlook 2012: In 2012 we will focus even more on the CAP closure and on making the processes around social compliance simpler and more transparent. For 2012, we are targeting an overall audit coverage of minimum 65% by spend for J.C. RAGS. The approach to achieve this 65% goal is as following: • Identify the top 20 vendors by 2012 spend and go after them in terms of getting them audited and ensuring the CAPs are followed up to closure. • B ased on 2011 figures, the top 20 vendors by spend for J.C. RAGS combined accounted for just under 70% of the overall spend. Also some vendors who are not part of the current and expected top 20 have already been audited so overall 65% looks realistic. We expect even more challenges in our sourcing environment in 2012. However we remain confident that by communicating clearly with our vendors through our annual schedules and our POE; by working closely with our vendors all the way; and by making the monitoring and follow-up processes simpler and more transparent with supporting systems, we will continue to make incremental improvements in the working conditions in our sourcing chain.
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J.C.Rags Social Report 2011
5. Training and capacity building 6.1 Activities to inform staff members/ Agents The workforce of J.C. RAGS are sufficiently informed about FWF membership and the implementation of the Zinvest POE. Information on FWF is provided through regular internal meetings. The agents and manufacturers are systematically informed about FWF membership via questionnaires and meetings. So far three vendor/production hub workshops have been organized through SGS and the buying agents in the major production countries sourced from. Representatives of FWF were invited to our HQ to discuss the implementation of Code of Labour Practices with our buying agents in March 2011. This resulted in improved understanding and importance of the overall compliance initiative. Staff activities: No staff/production hub members are allowed to place even a sample order with a supplier if the Manager, Human Rights or the COO has not approved the vendor yet. 1. Staff members are routinely briefed of the fact that no factory can be approved without going through the approval process from a Human Rights perspective. 2. Staff members are required to describe the compelling need to add a new vendor and inform which vendor(s) it will replace so as to keep the momentum up on vendor consolidation. 3. On-site training to production hub staff members and the vendors were organized through SGS in 2010. In 2011 no follow up trainings were organized. In 2012 steps will be taken to review/ follow-up on the previous trainings and assist any vendor as required.
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6.2 Activities to inform manufacturers and workers Face-to-face meetings with the vendors are held either directly by the production staff during their on-site visits or by our production hubs acting on behalf of the production staff. The Human Rights requirements of Zinvest Fashion B.V. are presented to the vendors during such meetings. In order to continue the working relationship, these requirements must be accepted and signed for by the vendor. The conditions of this acceptance also include the requirement that vendors must allow J.C. RAGS, the productions hubs, or FWF to conduct announced and un-announced audits on the vendor’s production facilities. Every active vendor till date has received and placed the Zinvest POE in their factory premises in full visibility to the labour force. The POE has been written out in English as well as in the main local languages. The production hubs have undergone the needed training in 2010, and this information was passed onto the responsible key functional heads of the vendors. This is done to ensure factory management continues to inform and educate workers of their rights and responsibilities. On a need basis and at the call of J.C. RAGS, SGS will conduct on-site training. Furthermore, status of all this will be checked and discussed during the on-site production visits.
6. Transparency and communication Through periodic updates, we inform our staff about our policies, approach, and key implementation details around Human Rights. During collection presentations we regularly inform our sales agents, distributors, and customers about the same. However, in general, we refrain from making statements aimed at consumers about our ongoing monitoring of Human Rights. If requests are made, we are open to providing answers with full transparency on case-by-case basis. Our website carries our Policy of Engagement together with the FWF logo.
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J.C.Rags Social Report 2011
7. Appendices APPENDIX A: Top 10 vendors by spend - J.C. RAGS
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Internal Vendor No.
% by purchase order value
% by number of units ordered
Number of Items ordered
% by number of items ordered
26006
14,93%
13,89%
23
7,57%
26053
9,89%
20,18%
30
9,87%
26107
8,12%
5,72%
13
4,28%
26095
6,67%
5,79%
8
2,63%
26004
6,41%
3,51%
14
4,61%
26148
6,04%
4,32%
20
6,58%
26008
5,42%
10,89%
37
12,17%
26176
4,13%
2,77%
11
3,62%
26198
3,19%
1,43%
5
1,64%
26161
2,98%
1,42%
9
2,96%
APPENDIX B: Top 10 vendors by spend – J.C. RAGS and DEPT combined Internal Vendor No.
% by purchase order value
% by number of units ordered
Number of Items ordered
% by number of items ordered
26053
12,71%
18,44%
183
14,69%
26006
5,52%
4,99%
39
3,13%
26004
5,37%
3,11%
48
3,85%
26173
4,65%
3,29%
55
4,41%
26107
4,62%
3,66%
42
3,37%
26135
4,44%
2,11%
29
2,33%
26030
3,73%
3,02%
55
4,41%
26159
3,03%
3,68%
55
4,41%
26036
2,77%
3,29%
36
2,89%
26013
2,68%
3,92%
48
3,85%
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J.C. Rags BV, Mangaan 11 5234 GD, ’S-Hertogenbosch The Netherlands t. +31 (0)73 644 3434 F. +31 (0)73 644 3333 © 2011 J.C.RAGS BV
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