Conversion rates in the Better Cotton Platform
One of the primary functions of the Better Cotton Platform (BCP) is to allow retailers and brands to make credible claims about the volume of Better Cotton sourced into their supply chains as a percentage of their total cotton footprint. The cotton footprint for a specific order or a collection of product orders is the volume of total cotton lint consumed by the spinner who made the yarns which were used to make the fabrics that went into an end-product. Cotton footprint always refers to a volume (in KG) of cotton lint consumed by spinners.
To calculate the cotton footprint for each sale entry made in the BCP and to allow suppliers and manufacturers to report this volume accurately to their customers, BCI uses two average rates to calculate the volume of cotton lint required for each product: one rate if combed yarn is used, and one rate if carded yarn is used.
To calculate the cotton lint consumed to make combed yarns, the BCP adds 28% to the net weight of the yarn sold. To calculate the cotton lint consumed to make carded yarns, the BCP adds 10% to the net weight of the yarn sold. As a result of this automated calculation, the correct number of BCCUs are allocated to a yarn sale entry, representing the volume of Better Cotton sourced through each BCI yarn order by a fabric mill.
Note that standard conversion rates in the BCP are being reviewed currently and may change later in 2020.
For example, if a spinner has produced 100 KG of 100% cotton combed yarns and the order indicates “100% BCI yarn”, the BCP will allocate 128 BCCUs to this sale entry. This calculation is based on the average rate as explained above.
When a fabric sale is entered into the BCP, the same calculation method (and same rates) are used to calculate the cotton footprint of each fabric order. For fabric sale entries, the BCP takes the net weight and the type of yarn used in the manufacturing of the fabric as basis to allocate the correct number of BCCUs.
Once BCCUs are allocated to fabrics, they are carried over and recorded in end-product manufacturers’ accounts in terms of fabric stocks. A fabric stock represents fabric shipments from a fabric mill to an end-product manufacturer with allocated BCCUs. Each stock could represent fabrics in a single purchase order or multiple purchase orders.
End-product manufacturers simply indicate the percentage of each fabric used to make their end-products. The BCP allocates the corresponding number of BCCUs to each end-product shipment, based on this percentage indicated by the end-product manufacturer.
The above methodology of calculating, allocating and transferring BCCUs allows BCI to use only two average rates (rather than multiple rates at each manufacturing stage) to calculate the cotton footprint for each order, or bundle of orders, placed by retailers and brands.