Reference no: EM133187817

Tasks

You are the CSR manager at Fabulous Fits. The CEO has directed you to deal with this situation and to develop a strategy for how the company will ensure something like this does not happen again.

1. Who are the key stakeholders in this situation? How can Fabulous Fits provide remedy to impacted stakeholders in the immediate term?

2. Outline what Fabulous Fits's roles and responsibilities are in this situation. How have they contributed to this situation?

3. What changes should Fabulous Fits make for the future? Provide a strategy that outlines key steps that Fabulous Fits need to take and what these involve.

Background

Fabulous Fits is an Australian fast fashion brand that sells trendy clothes with styles that change often. The company started in 2014 and has been growing steadily, increasing their market share by selling "runway styles" for cheap prices and targeting young adults through social media campaigns.

Fabulous Fits have stores in all major cities in Australia and sell their clothes at big retailers such as David Jones and Myer. They also have an online store that, prior to 2020, was pretty simple and small. The company sources clothes from a range of different suppliers in countries such as Bangladesh, India and Myanmar. Fabulous Fits have a team of buyers whose job it is to find suppliers that can produce clothes in the style that Fabulous Fits wants at low cost so that Fabulous Fits can sell their clothes to customers at a low price with a 10% profit margin. As Fabulous Fits market themselves as always having new trendy styles, suppliers need to be able to fill orders fast and be flexible in case Fabulous Fits needs to change the quantity of an order or make style changes at short notice. The buyers at Fabulous Fits talk about these things as "pushing for speed to market" and "squeezing prices" from suppliers. The Sourcing Manager is always telling the CEO how their flexible contracts with suppliers are central to the company's growth.

At the factory called Garmentz International in Bangladesh many of the garment workers are employed on casual contracts, most of them month to month. Only the production line managers and a few of the sewing machine operators have permanent contracts. Most of the workers are women who have moved from small rural villages into the industrial zone in the outskirts of the big city to get work. They live in dormitories with other garment workers, and they try to work as much overtime as they have the energy for in order to send money home to their families. For many of the women this is the first time they are able to make an income on their own and they are proud to be able to contribute to their families' needs. How much they can send varies week to week depending on how many hours of work they get at the factory. The garment workers often consult each other about whether anyone has heard the factory managers talking about "a big order" as they know that means considerable overtime and more hours of pay.

Covid-19 and the garment industry

On the 11th March, 2020, the World Health Organisation declared COVID-19 a global pandemic and Australia implemented a nationwide lockdown on 23 March. Shops, restaurants, schools and other public venues closed and people were told to socially distance and only leave their houses for specific reasons. Fashion sales, both globally and in Australia, plummeted as consumer demand collapsed, with the garment industry being one of the industries most impacted by lockdown during 2020.

The Sourcing Manager at Fabulous Fits tells the team of buyers that they need to act fast in order to save the company's profit. As per the contracts, Fabulous Fits only pay their suppliers after orders have been delivered to Australia, and so the Sourcing Manager told the team to cancel all orders currently in production and to delay all orders ready for shipment to Australia. The Sourcing Manager did not have time to talk to the CSR Manager but considered this to be fine as it is "such an extreme situation for us".

At Garmentz International the management team is panicking. They have bought all the fabrics, thread, buttons and the other raw materials and the garment workers have sown more than 80% of the garments for the order from Fabulous Fits when they receive the email that the order is cancelled. At the same time they get similar emails from several other brands who they produce for. The managers walk out into the factory and send the garment workers home.

A month later Garmentz International have not been able to pay the garment workers for the work they had already done on the orders that were cancelled. The garment workers are worried because they have not heard anything about getting paid for the work they had done and they haven't had work for many weeks. People are whispering that Garmentz International might have to close. Many have had to move back home to their home villages and their families are having to use what little savings they have to get by, for some this means selling family jewelry and valuables they have.

One of the garment workers at Garmentz International is part of a small labour union and has done a training course on labour rights that was run in collaboration with the NGO Clean Clothes Campaign. The garment workers decide to send an email to the East Asia office of the Clean Clothes Campaign and tell them about what is going on. The Clean Clothes Campaign people tell the workers that they have received many reports about garment workers being laid off and not getting paid, and that they will publish a list of the fashion brands that have cancelled their orders and have not paid for them under the hashtag #payyourworkers. Clean Clothes Campaign has previously used this hashtag to draw attention to how as little as 0.6% of the price of a t-shirt goes to paying wages for workers.

Journalists at the ABC produce a high profile report about the impacts of Covid-19 on the garment industry and name Fabulous Fits as a company that "is refusing to pay their workers and have put thousands out of work". The story is picked up by several media outlets. On an episode of the television program '60 Minutes' one journalist asks the CEO of Fabulous Fits " What will you do to remedy this situation for workers? How will you change the way you do business to make sure this does not happen again?" The CEO, looking very stressed, replies "My team is looking into it".