"Patagonia Inc, the US-based sustainable outdoor clothing brand has revamped its supply chain in order to maintain its ethical standrads. The brand’s core philosophy was in conflict with its strategy to chase the mass market appeal. The $800 million outdoor apparel empire has earned a loyal customer base for offering heavy-duty jackets, backpacks and long underwear at premium prices, with vows to “build the best product” and “cause no unnecessary harm."

Patagonia Inc, the US-based sustainable outdoor clothing brand has revamped its supply chain in order to maintain its ethical standrads. The brand’s core philosophy was in conflict with its strategy to chase the mass market appeal. The $800 million outdoor apparel empire has earned a loyal customer base for offering heavy-duty jackets, backpacks and long underwear at premium prices, with vows to “build the best product” and “cause no unnecessary harm.”

Struggles with ethical issues in production line

Since 2008, Patagonia has tripled its profits and the company maintains a reputation for transparency and socially responsible behavior with its customers. But it is also facing challenges to retain strict code of ethics while chasing mass-market dream. In fact in 2010, German animal-rights group Four Paws claimed to have found evidence that farms supplying down feathers to Patagonia were force-feeding geese to fatten their livers for foie gras. In 2012, Patagonia discovered brokers were charging migrant workers thousands of dollars for job placement at the company’s factories in Taiwan—a practice human-rights groups say is a form of slavery. Adding to it, recently People for the Ethical Treatment of Animals posted a video online depicting grisly abuse of sheep at South American ranches that sold wool to Patagonia.

Each accusation caught the brand off guard as it has been promoting itself for its high ethical standards . However, corrective measures were immediately taken. While in Taiwan the brand worked with suppliers to repay workers, in other cases it cut ties with suppliers and rebuilt supply chains from scratch, even as it pursued global expansion and launched new product lines.

Companies often run into “a huge disconnect—where (marketing teams) are ready to tell the story before operations and supply-chain teams are ready and able to confirm it,” said Alexis Bateman, a researcher at MIT’s Center for Transportation and Logistics. “It’s possible they know where the farm is, even who the farmer is, but not what’s happening 365 days a year. Clarifying the brand’s struggles Yvon Chouinard says “When you’re trying to clean up your supply chain, you can’t believe how deep you have to go,”

With plans for increasing its market globally Patagonia has added retail partners across five continents, invested in e-commerce and launched new product lines. Along with its journey Patagonia has been struggling with serious issues related to its product supply chain time and again. While on one hand the brand was sorting out issues in Taiwan, PETA was planning a campaign against the company’s wool supplier. Within 24 hours, they learned, PETA would be posting a video to its website showing rough treatment and mutilation of sheep during shearing.

The footage was partly shot on farms within the Ovis 21 network, a collective of more than 160 ranches in South America, PETA and Ovis said. Ovis 21 was a supplier for all of Patagonia’s wool products, including sweaters, hats and socks. Within days Patagonia announced it would stop buying wool from Ovis 21. The retailer had to scale back plans to boost production of its newest wool items, including a line of long underwear the company spent three years developing and had launched just a month earlier.

Instant corrective measure to retain USP

“Although we weren’t specifically auditing for animal welfare, these were just not good practices,” Ricardo Fenton, co-founder of the farm network said. Ovis is working to fix the issues more broadly across its network through its continued efforts with the nonprofit Textile Exchange’s International Working Group, which includes Patagonia, to develop an industrywide “Responsible Wool Standard.”

Meanwhile Patagonia assembled an in-house task force to rewrite the company’s criteria for wool growers and find new suppliers. For the past year, Marcario has met regularly with the wool team and personally approved standards for castration, shearing and lamb birthing. Task-force members were on hand for shearing and the birth of lambs at several farms. In July, Patagonia announced an agreement with two ranches in Oregon and Utah, which will grow wool for the retailer’s socks. Patagonia has identified another supplier for the rest of its wool products, but has yet to sign a contract. While Patagonia is still seen as a leader in how it addresses social and environmental issues, the company and the industry as a whole should be more proactive about rooting out problems, say experts.