It is imperative to ensure that corporate and social compliance along with ethical sourcing requirements are fully and firmly addressed
Mr. Pallak Seth talks about compliance in the global textile industry in an exclusive interview with Fibre2Fashion.
Synopsis:
PDS Multinational Group manages the supply chain for major brands and retailers all over the world. It provides total sourcing solutions to its customers. The group has around 2800 employees all over the world, and has around 23 offices globally. It exceeds an annual turnover of USD 600 million, and is a renowned name in the international market.
Mr. Pallak Seth is the brain behind PDS. He is responsible for strategy and development initiatives. He holds the Bachelor of Arts degree with specialization in Economics and International Business. His hobbies include travelling, contemporary art collection, reading, and cricket.
Excerpts:
As part of implementing the compliance program, where do you see is the biggest and toughest challenge? What according to you are the highlights of your social compliance program?
With every challenge, comes a hidden opportunity. Geographically speaking, the challenge is more or less the same in all countries. However, in some countries, there have been drastic changes based on certain local situations and the expectations from our customers also has become more stringent. It is a challenge to try and meet those requirements but as part of that process, we proactively implement these new trends in our other source bases also. We have been fairly successful in sustaining ourselves even in the tougher environment, and given the fact that we have a capable team we are confident of overcoming these challenges.
Recently, we have initiated a process through partnership with NAVEX global. This provides a hotline feature for anybody to anonymously inform the Board about any violations they may find. Such issues can be brought to our notice by an employee/supplier/customer either through the phone line or website and this has a link from our home page also. This again adds to the checks and balances we try to incorporate in the system to ensure that our process is robust. In short we desire not just to succeed but to excel in what we do, and are continuously learning.
In your opinion, in terms of priority, where does compliance stand? Tell us about your social compliance program.
Compliance is foremost. Despite the price pressures, quality requirements, and other value additions that we provide, I am of the firm opinion that it is imperative to ensure that corporate and social compliance along with ethical sourcing requirements are fully and firmly addressed.
We have recently strengthened our global compliance program. We have revisited our entire code of conduct and made it more relevant to the current scenario. This will be the touchstone based on which the entire sourcing strategy will be cascading. We are now working on fine tuning our entire audit process to have a unified methodology as a basic PDS standard across the globe and this is still work in progress. We have also, on-boarded experienced people from the industry to review and redesign our compliance program. We are trying to benchmark ourselves with the brands that we work for who have the most stringent standards and accordingly reshape our process.
What according to you are the highlights of your social compliance program?
Recently, we have initiated a process through partnership with NAVEX global. This provides a hotline feature for anybody to anonymously inform the Board about any violations they may find. Such issues can be brought to our notice by an employee/supplier/customer either through the phone line or website and this has a link from our home page also. This again adds to the checks and balances we try to incorporate in the system to ensure that our process is robust. In short we desire not just to succeed but to excel in what we do, and are continuously learning.
PDS Group, a multinational unit, had its fair share of success in the years that passed. How do you see the coming years? What challenges do you foresee and how do you plan to overcome them?
Being in Fashion business, we listen to our customer requirements and provide innovative solutions which are cost effective and efficient. We expect to continue this practice and work with our customers closely. PDS group revenues exceeded $ 600 mn in 2013-14 (11% growth over previous year) in a tough market and with this base we expect to grow strongly in 2014-15. Our confidence stems from the fact that we enjoy high level of equity with our customers, banks have been supportive to provide required financial facilities and the Board has been actively working with the management teams to deliver the business results. The coming years will be challenging given the pressures on price points and compliance requirements getting more stringent. However PDS group is strategically placed to deliver strong topline and bottom line growth due to investment it has made in existing and new businesses over the last 2 years. We are expecting a 15% growth which will see our revenues rise to USD 700m in FY 2014-2015. As I said earlier, in every challenge we see an opportunity, so here again, we will be looking at educating factories, helping them improve their systems to become compliant, consolidating the source base based on factories' capability to meet the requirements and ensuring a transparent relationship at both ends of our supply chain. We will continue to build our partnership and building on the strengths of our symbiotic relationship.
You work with so many brands, some of them have very stringent compliance standards while some may be a bit different. How do you reconcile these differences, if any?
As a first step we have a clearly defined set of Zero Tolerance Violation and Critical Violation. This list is aligned with the best in class. Even if we work for customers who may not have very stringent standards, we will do our internal audits based on our standards which includes the ZTVs and CVs and then we share the information with the customer. Only after their alignment, do we move on to the next step of sourcing. For brands who have their specific requirements, we incorporate those requirements as well as part of our audit process. We believe transparency is what is going to sustain us and we will do our best to meet that requirement.
How easy or difficult is it to assimilate the requirements of different brands into your standards and processes?
By and large the core of all compliance program is the same. Having said that, there are differences in the implementation where some brands focus on areas of HSE more while others may have a different take on employee benefits, etc: For us though, when we do our internal first cut audit, we look at all these areas with the same level of stringency so that even if we err, it is on the conservative side. Hence, we don't see a big difficulty in assimilating the differences into our processes. On the other hand, it gives us a lot of advantage and flexibility because when we audit a factory for "a" particular brand, we are also aware that the same factory could be a potential for another brand hence, this diversity really helps.
How do you see the current scenario for compliance in the South Asian apparel and garment industry? Is the awareness of this concept and its implementation satisfactory or is there room for improvement?
In any enterprise, there is always room for improvement. The industry is now responding positively to issues that have been encountered but we need to try and foresee what future risks can confront us. For ex: in the near future, carbon foot print from this industry could become a cause for concern given the huge logistics. Some brands/buyers/industry members have started this exercise but it is still not common place in compliance. Similarly, life cycle analysis of products from an environmental perspective, is still in infancy in this industry. So in terms of awareness and implementation, I feel based on today's needs there is a strong movement and there has been great progress but there is definitely room for improvement but these will come at a certain cost. The question is, will the ROI be viable in today's competitive world.
Published on: 08/07/2014
DISCLAIMER: All views and opinions expressed in this column are solely of the interviewee, and they do not reflect in any way the opinion of Fibre2Fashion.com.
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