Spinners - Better Cotton Initiative

Report
Better Cotton
Chain of Custody & Traceability
Kerem Saral
BCI Supply Chain Manager
2014
1
Overall Goal:
Transforming cotton production worldwide by developing Better Cotton as a sustainable
mainstream commodity.
SPECIFIC AIMS:
Improve…
Increase…
livelihoods
and economic
development in cotton
producing areas
commitment to and flow of
Better Cotton throughout
the supply chain
Reduce…
Ensure…
The environmental impact
of cotton production
the credibility and
sustainability of the Better
Cotton Initiative
2
BCI GLOBAL TARGETS
Livelihoods
Global
Indicators
Number of Better
Cotton farmers
Environment
Supply Chain
Better Cotton
Better Cotton lint
hectares under volume in MT
cultivation
BCI Sustainability
Earned income
as % of global
costs
2012 actual
165,000
685,000
670,000
50%
2015 target
1 million
2 million
2.6 million
75%
2020 target
5 million
9 million
8.2 million
100%
3
WHERE DOES BETTER COTTON GROW?
USA
Turkey
Tajikistan
India, Pakistan, China
Mali, Senegal, Burkina
Faso, Cote d’Ivoire,
Ghana
Brazil
Mozambique, Malawi,
Zambia, Zimbabwe
Countries where Better Cotton is grown via a partnership agreement between BCI and a national actor
Better Cotton Countries with BCI owned legal entities and operations
In the pipeline
Australia
New vs. Old
» New Better Cotton CoC requirements for
traders, spinners, and intermediaries and
retailers
» Introduction of Better Cotton Claim Units
» No more UBICS
» Output declaration forms from spinners
» Making Better Cotton volume claims
» Better Cotton Traceability System
5
New Chain of Custody Guidelines - But Why?
» Inform all supply chain actors about their role in tracing Better Cotton
throughout the supply chain
» Enable retailers to make claims with confidence
» Eliminate past challenges that led to low uptake rates
» Availability issues, inventory management problem, timing
problems, overstock/out of stock suppliers, premiums
» Lay the groundwork for introducing physical traceability as an
option in 2016
6
Better Cotton Chain of Custody & Traceability System
Before and After
Ginners
Better Cotton Traders
Chain of
Spinners
Custody
Intermediaries
Retailers
Supply chain actors
in BC traceability
Better Cotton
system
Traceability
System
BEFORE July 1st
2013
AFTER July 1st
2013
Physical Segregation
Physical Segregation
Physical Segregation
Mba w/ Country Scope
Physical Segregation
Mba w/ Site Scope
Physical Segregation
Mba w/Site Scope
Claim UBICs
Claim BCCUs
Ginners,Traders, Spinners,
Ginners, Retailers
Retailers
Bale Tacking System (BTS)
+
Traceability System Bale Tracking System (BTS) Better Cotton Tracer (BCT)
7
What is a Better Cotton Claim Unit?
BCCU = Better Cotton Claim Unit
» The units of conventional cotton that can be substituted for
equivalent units of Better Cotton - Due to Mass Balance
» 1 BCCU represents 1 kilo of physical Better Cotton
8
Better Cotton Chain of Custody
MASS-BALANCE ADMINISTRATIVE
SEGREGATION
Chain of Custody Guidelines
Ginner Monitoring
Guidelines
Membership Code of
Practice
Retailer clients monitoring
requirements
Membership
Code of Practice
BCI membership
not required
Registered BCI
membership required
BCI membership
not required but encouraged
BCI membership
required
Trader
Farmer
100%
Seed BC
100% BC Bale
BTS
Products with associated BCCU
(Better Cotton Claim Units)
Better Cotton Tracer
Better Cotton
Tracer
Better Cotton CoC Guidelines – Gin Level
Better Cotton is kept
physically separate from
conventional cotton at the
gin level in all countries
In order to create 100%
Better Cotton Bales = Total
available lint Better Cotton at
a global level
10
Better Cotton CoC guidelines - Traders
Mass-balance with Country Scope
Trader’s warehouse in Brazil
100 Kilos of
Brazilian
Better Cotton
Bales
Volume In
=
Volume out
BC
CC
BC
CC
BC
CC
Better Cotton
100 Kilos of
Brazilian
Conventional
Cotton Bales
Conventional
Cotton
Having bought 100 kilos of BC Bales gives the trader 100 Better Cotton
Claim Units. They can then ship 100 kilos of conventional cotton bales
with the same country of origin to fulfil a BC order using these 100
BCCUs – by attaching earned BCCUs to conventional cotton bales
11
Better Cotton CoC guidelines Spinners
Mass-balance with Site Scope
Spinning factory in Bangladesh
Volume In
100 Kilos of
Chinese
Better Cotton
Bales
=
Volume out
BC
CC
BC
CC
BC
CC
100 Kilos of
Indian
Conventional
Cotton Bales
Better Cotton
Conventional Cotton
Better Cotton Bales can be swapped with conventional cotton
bales of any origin as long as they are in the same site, using
BCCUs earned by buying bales with allocated BCCUs from BCI
traders or BCI-registered ginners.
12
Better Cotton CoC guidelines –
Intermediaries
Mass-balance with Site Scope
Fabric manufacturer in India
Volume In
100 Kilos of yarn
with allocated
BCCUs from
China
=
Volume out
BC
CC
BC
CC
BC
CC
Yarn with BCCUs
100 Kilos of yarn
without any
allocated BCCUs
from India
Yarn without
BCCUs
Yarn with allocated BCCUs can be swapped with yarn without
any BCCUs of any origin as long as they are in the same site
and volume-out doesn’t exceed volume-in.
13
Tracing the “volume” of Better Cotton
Until now – BCI has enabled retailers to claim individual bales of physical Better Cotton.
From now – BCI enables retailers to claim usage of lint Better Cotton (a certain amount of it) in
their supply chains.
But How?
Output Declaration Forms from Spinners
14
Output Declaration Form from Spinner
15
Mass-Balance & BCCUs help BCI to:
Trace the volume of physical Better Cotton throughout
retailer and brands’ supply chains
This is done by transfer of BCCUs from one supply chain
actor to the next using output declaration forms (ODF)
Traders
Traders
Earn BCCUs
purchasing
physical BC
Transfer these
BCCUs along with
bales they sell
Spinners
Spinners
Earn BCCUs
purchasing bales
w/ BCCUs
Transfer these
BCCUs along with
yarns they sell
Fabric Mills
Fabric Mills
Receive ODF from
spinners
Pass ODFs to
retailers and
brands
(Coordination is
required)
Retailers/Brands
Receive ODF that
was generated by
spinners on Better
Cotton Tracer
Enter claims
accordingly
16
Better Cotton Volume Claims by Retailers
Retailer
Total claims
reported to BCI
Product with
allocated BCCUs
(indicated on
spinners’ ODFs)
Yarn with
BCCUs
BCCUs
BCCUs
Yarn without
BCCUs
Cotton
Tracer
17
How would it work starting with the retailer?
Fabric Mills
Retailers/Brands
Set BC usage
target
Decide how to
spread this %
throughout
products
Set KPIs for various
departments
Ask fabric mill to
provide ODF from
spinners
Receive the PO
from RBs given a
set % of BC to be
included in the
fabric
Calculate the net
weight of yarn
needed
Place order with
spinner and
indicate the % of
BC to be included
in the yarn (same
% received from
retailer)
Spinners
Receive PO from
fabric mill
Traders
Calculate needed
BCCUs for the
ordered yarn,
using the fixed
conversion rates
built into the
system
Receive PO from
spinner
Order lint
accordingly
Enter transaction
into the Cotton
Tracer
Enter transaction
into the system
and generate
ODF
Buy lint bales
from ginner
accordingly
Ship lint bales
18
Spinner’s
ODF w/BCCUs
HOW?
Retailer’s
Claim
Coordination effort
Engage with suppliers down to the spinner or fabric mill level – suppliers’ suppliers
Inform about Better Cotton requirements – no UBICS, mass-balance, no certificate, ODF
Ask for ODF to be transferred to you – how? The actual document or information on it?
Due diligence
Fabric mill level redistribution of BCCUs
BCCUs in = BCCUs out for your specific orders
Ask the fabric mill to keep records of BCCUs received and passed along to retailers?
Ask your spinners to pass the ODF directly to you?
Special cases
Cancelled orders – when to enter claims into the Better Cotton Tracer?
19
Things to take away
» New Better Cotton CoC requirements for all
Ginners
Traders
Spinners
RBs
100% Segregation CoC
Mass-Balance Admin. with country scope
Mass-Balance Admin. with site scope
Enter claims against spinner BCCUs
on the Cotton Tracer
» Introduction of Better Cotton Claim Units
» No more UBICS
» Output declaration forms from spinners
» Making Better Cotton volume claims
» Better Cotton Traceability System
20
Better Cotton Tracer
 General web site functions
 How the transfer of BCCUs work between members
Entering purchase and sales transactions
Generating output declaration forms
 How retailers and brands make their claims using ODF
from spinners.
21
Thank you!
Please contact me or my country teams to:
Ask any questions regarding our traceability system
Your account on Better Cotton Tracer
To get a copy of this presentation
Report troubles you identified in your BC supply chain
Kerem Saral – BCI Supply Chain Manager
[email protected]
Direct Line: +41-22-939-1293
Skype ID: keremsaral
Selvin Lloyd - India Supply Chain Coordinator
[email protected]
Muhammad Shuiab – Pakistan Supply Chain Coordinator
[email protected]
Leo Xiao - China Supply Chain Coordinator
[email protected]
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