The official report from Ethical Denim Council’s (EDC) first hearing names Turkish denim importer Odak Tekstil as the buyer guilty of showing “unethical behavior during the purchasing process.”
Ethical Denim Council Conducts First Hearing
EDC found several instances where the majority of its Eight Ethical Principles, including honesty and transparency, empathy, trustworthiness, loyalty, reputation and morale, accountability and respect, were not followed.
The decision came down in the volunteer watchdog group’s first hearing earlier this year. An independent council, consisting of four individuals with NGO, business consulting, communications and legal backgrounds, deliberated on the dispute between the anonymous denim mill, referenced as “John Denim Mill,” and Odak Tekstil, who sourced denim fabric from the supplier. Despite initial agreements on price and quantities, John Denim Mill claimed Odak engaged in a series of unethical demands that ultimately led to the cancellation of orders, with 100,000 meters of fabric left unclaimed.
In the report, John Denim Mill asserted that the initial agreed upon price included a discount and that it gave further discounts at Odak’s request. After several rounds of communication and attempts by the supplier to maintain the relationship, Odak ended communication and said they were no longer interested in doing business with John Denim Mill.
John Denim Mill said it had to sell the unclaimed 100,000 meters of fabric as deadstock. The mill is asking for Odak to pay $100,000 to reimburse them for the amount lost when selling the fabric.
Odak disputed the claim, saying they were asking the mill to help them because they couldn’t move the goods due to cotton prices falling after the initial agreement was in place. They also believe John Denim Mill should have come to them prior to selling the deadstock fabric at a greater loss.
While the EDC acknowledged Odak’s belief that John Denim Mill should’ve reached out before selling the remaining fabric, it did not agree the burden for communication should’ve been place solely on the mill when communication had already been cut by Odak.
Rather, EDC made the unanimous decision that Odak showed unethical behavior during the purchasing process.
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“The buyer sees this situation as ‘just business’ and doesn’t believe that they did anything wrong. At the Ethical Denim Council, we believe this is emblematic of the problem. The way business is currently conducted puts the cost burden solely on the supplier. They alone are asked to absorb the risks and losses of the changing market. In a true ‘partnership’ respect, gains, and losses are shared equally by both sides,” EDC stated in the report.
EDC said Odak did not take any action to prevent or correct inappropriate behavior and did not take any accountability, instead blaming market prices. The council also did not feel the purchasing process was fully transparent since it only involved Performa Invoices and emails that sought to change the prices initially agreed upon.
“There was a high risk of things not being communicated clearly because of the multiple channels of communication and no contractual agreement with binding language,” EDC stated in the report.
EDC said its biggest concern was the lack of negotiation and accommodation on the side of Odak and its “take it or leave it” communication.
“The supplier, John Denim Mill, seemed to ‘bend over backwards’ to accommodate the needs of the buyer but no reciprocity was shown,” EDC stated. “The Council acknowledged that business inherently has some uncertainties but felt this was a situation where the problem was the result of external forces and not the fault of the mill. The Council didn’t feel that the sole burden of cost should’ve been placed on the mill.”
EDC was established in 2022 by Andrew Olah, CEO of Olah Inc. and founder of Kingpins Show and Transformers Foundation , as a platform to address and correct the imbalance of power within the denim supply chain. industry. By holding parties accountable and promoting ethical purchasing practices, the council aims to promote more equitable relationships between brands and suppliers.
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