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1 Better Cotton Chain of Custody & Traceability Kerem Saral BCI Supply Chain Manager 2014.

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Presentation on theme: "1 Better Cotton Chain of Custody & Traceability Kerem Saral BCI Supply Chain Manager 2014."— Presentation transcript:

1 1 Better Cotton Chain of Custody & Traceability Kerem Saral BCI Supply Chain Manager 2014

2 2 Overall Goal: Transforming cotton production worldwide by developing Better Cotton as a sustainable mainstream commodity. SPECIFIC AIMS: Improve… livelihoods and economic development in cotton producing areas Increase… commitment to and flow of Better Cotton throughout the supply chain Reduce… The environmental impact of cotton production Ensure… the credibility and sustainability of the Better Cotton Initiative

3 3 LivelihoodsEnvironmentSupply ChainBCI Sustainability Global Indicators Number of Better Cotton farmers Better Cotton hectares under cultivation Better Cotton lint volume in MT Earned income as % of global costs 2012 actual165,000685,000670,00050% 2015 target1 million2 million2.6 million75% 2020 target5 million9 million8.2 million100% BCI GLOBAL TARGETS

4 WHERE DOES BETTER COTTON GROW?

5 5 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

6 6 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

7 7 Better Cotton Chain of Custody & Traceability System Before and After

8 8 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

9 100% BC Bale Products with associated BCCU (Better Cotton Claim Units) BCI membership not required Ginner Monitoring Guidelines SEGREGATION MASS-BALANCE ADMINISTRATIVE BCI membership not required but encouraged Retailer clients monitoring requirements Registered BCI membership required Membership Code of Practice Trader Chain of Custody Guidelines Membership Code of Practice BCI membership required 100% Seed BC Farmer BTS Better Cotton Tracer Better Cotton Chain of Custody

10 10 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

11 11 Better Cotton Conventional Cotton 100 Kilos of Brazilian Better Cotton Bales 100 Kilos of Brazilian Conventional Cotton Bales Mass-balance with Country Scope Trader’s warehouse in Brazil BC CC BC 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 Volume In = Volume out 11 Better Cotton CoC guidelines - Traders

12 12 Mass-balance with Site Scope Spinning factory in Bangladesh 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 - Spinners Better Cotton Conventional Cotton 100 Kilos of Chinese Better Cotton Bales 100 Kilos of Indian Conventional Cotton Bales Volume In = Volume out BC CC BC

13 13 Mass-balance with Site Scope 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 Better Cotton CoC guidelines – Intermediaries Yarn with BCCUs Yarn without BCCUs 100 Kilos of yarn with allocated BCCUs from China 100 Kilos of yarn without any allocated BCCUs from India Volume In = Volume out Fabric manufacturer in India BC CC BC

14 14 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

15 15 Output Declaration Form from Spinner

16 16 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) 16 Mass-Balance & BCCUs help BCI to: Traders Spinners Fabric Mills Traders Earn BCCUs purchasing physical BC Transfer these BCCUs along with bales they sell Spinners Earn BCCUs purchasing bales w/ BCCUs Transfer these BCCUs along with yarns they sell 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

17 17 Better Cotton Volume Claims by Retailers Yarn with BCCUs Yarn without BCCUs Product with allocated BCCUs (indicated on spinners’ ODFs) Total claims reported to BCI Retailer BCCUs Cotton Tracer

18 18 How would it work starting with the retailer? Traders Receive PO from spinner Buy lint bales from ginner accordingly Ship lint bales Enter transaction into the Cotton Tracer Spinners Receive PO from fabric mill Calculate needed BCCUs for the ordered yarn, using the fixed conversion rates built into the system Order lint accordingly Enter transaction into the system and generate ODF Fabric Mills 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) 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

19 19 Spinner’s ODF w/BCCUs Retailer’s Claim H O W ? 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?

20 20 Things to take away »New Better Cotton CoC requirements for all Ginners 100% Segregation CoC Traders Mass-Balance Admin. with country scope Spinners Mass-Balance Admin. with site scope RBs 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

21  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 Better Cotton Tracer

22 22 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 Direct Line: Skype ID: keremsaral Selvin Lloyd - India Supply Chain Coordinator Muhammad Shuiab – Pakistan Supply Chain Coordinator Leo Xiao - China Supply Chain Coordinator


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