BY CHRIS JONES | AUGUST 3, 2023 | 6 MINUTE READ
You can find the insights here: The Drivers for Visibility and Traceability in the Fashion Industry: Illuminating the Road Ahead (zerocarbonacademy.com)
Zero Carbon Academy insights - August 2023
The Drivers for Visibility and Traceability in the Fashion Industry: Illuminating the Road Ahead
The fashion industry, known for its glamour and creativity, has also been notoriously opaque, particularly regarding its intricate and global supply chains. Today, however, a paradigm shift is unfolding. The dual need for visibility and traceability is emerging as a compelling necessity for fashion brands worldwide. The rise of conscious consumerism, sustainability requirements, regulatory norms, and the potential for significant competitive advantage largely fuels the drive for transparency. In this article, I will outline the drivers for this shift and the steps fashion businesses must take to transform and remain competitive.
The modern consumer is far more informed, conscientious, and demanding than ever before. Armed with easy access to information, consumers are eager to understand the origin of their clothing, the practices employed in their creation, and the impact on society and the environment.
Whilst ‘Voice of the Consumer’ data for product types indicates that consumers voice their preference for sustainability (a 2020 CapGemini report states 79% of consumers are altering purchase patterns in favour of more environmentally friendly products), when it comes to product digital testing in the fashion industry, the historical findings have suggested that consumers generally select low price over sustainability when purchasing. However, despite the cost-of-living crisis, Generation Z consumers have preferred sustainability over price, leading to a downturn for some fast fashion companies. In addition, the growing incidence of global extreme weather events is beginning to sink more deeply into the general consumer consciousness.
This growing awareness is pushing brands to prioritise visibility and traceability in their operations, ensuring that their products are ethically produced and sourced, and equally importantly, they can provide proof to back up their claims of sustainability.
The call for sustainable practices in the fashion industry is louder than ever. Fast fashion's environmental toll has come under scrutiny, leading to an urgent need for a more sustainable approach. On the other side of the scale, luxury brands like Burberry have raised the ire of consumers and governing bodies by destroying large volumes of unsold clothing.
As a part of this, expectations are rising that brands should trace and verify the origins of their raw materials, monitor manufacturing processes, and ensure ethical labour practices. Such traceability helps assess the brand's ecological footprint and promotes more responsible decision-making.
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Legislation is another potent driver in the journey towards visibility and traceability. Existing regulations such as the UK’s Modern Slavery Act and France's Duty of Vigilance law prompt companies to be more transparent and traceable. Brands must scrutinise their supply chains for human rights abuses and environmental harm and publicly report on their findings and remediation actions.
Imminent legislation such as the EU Ecodesign regulations, which includes the Digital Product Passport and ban on the destruction of unsold textiles, clothing and electronics, and the New York State Fashion Act, will increase the transparency required from Fashion companies. These new regulations will enforce the visibility of supply chain processes and facilities and the traceability of raw materials and labour used throughout the supply chain to manufacture the final product.
There is existing legislation from which major brands may fall foul due to a lack of visibility and traceability in their supply chains. One example is the Uyghur Forced Labor Prevention Act, signed into law by President Biden in December 2021. This legislation was introduced in response to using Uyghur forced labour in garment factories within the Xinjiang region, China in 2020. However, earlier this year, Nike, Adidas, Shein, and Temu were sent letters from The US Government House China Committee about forced labour used in picking cotton, or previously banned cotton, used in their products sold in the US. The root cause of potentially severe consequences for these businesses, due to questions of forced labour and banned cotton in products sold to US consumers, is a lack of visibility in Tiers 4, 5 & 6 of the fashion supply chain.
It's a sobering thought that many brands and retailers currently need more visibility of Tier 2 partners in their supply chains.
In the fiercely competitive fashion industry, transparency isn't merely a moral obligation; it's a strategic lever for differentiation. Brands that embrace transparency will likely enjoy enhanced consumer trust, brand loyalty, and reputation, all of which contribute to a strong competitive advantage. Moreover, transparency enables brands to identify and rectify inefficiencies within their supply chains, improving operational efficiency.
Supply Chain Stability Amid Geographic Instability
Geopolitical uncertainties and climate change-induced disruptions underscore the importance of resilient supply chains. Transparent supply chains lend themselves to better risk assessment and management, helping fashion brands mitigate the impacts of geographical instability.
Fashion Brands like Mango are transforming their supply chains to introduce greater agility. Tony Ruiz, CEO of Mango, says, “The whole [supply] chain is only as strong as its weakest link”. To this end, Mango focuses on working with suppliers with manufacturing in distributed locations and the ability to switch production to another country or region while maintaining the same processes and quality standards. Transparency is essential to this agility. Mango’s swift progress in its journey to full supply chain transparency can be demonstrated by its initial publication of Tier 1 factories in October 2020 and, recently, a fashion industry first, with its publication of Tier 3 suppliers in January 2023. This puts pressure on fashion competitors to respond; one of the perceived fashion sustainability leaders, H&M, publishes Tier 1 and 2 supply chain partners.
Steps to more sustainable fashion
Taking these drivers into account, the following are some key steps fashion brands should prioritise to improve visibility and traceability.
Develop Comprehensive Supply Chain Mapping
A comprehensive understanding of the supply chain is the first step towards achieving visibility and traceability. Of course, mapping all processes within brands and retailers at Tier 0 through partners’ processes in Tiers 1 to 6, including those without direct contact with the brand or retailer, is a massive undertaking. Outside help is essential, with supply chain partners deeply involved in the process and additional expertise required to lighten the load and provide specialist methods to enable structured and modular decompositional process mapping in a phased approach.
The mapping of processes is the start of this transformation journey, though also a critical element for proposed sustainability regulatory compliance. Companies should also consider the technology that must be utilised in monitoring the processes, such as blockchain and AI, to track and authenticate the journey of their products, from the production of raw materials in fields or chemical plants to finished garments in stores.
Photo by Alvaro Reyes on Unsplash
Partner with Technology Enablers and Certifying Bodies
Collaborating with certifying bodies can help verify a brand's product sustainability claims. These organisations provide third-party validations of ethical and sustainable practices, adding credibility to the brand's transparency efforts.
However, primary data from supply chain processes is critical to evidence of sustainability claims and the measurements required for continual sustainability improvements – as Lord Kelvin said, “If you can’t measure it, you can’t improve it”.
There are many new ventures creating technology that manages this data in user-friendly ways and presents effective data insights on sustainability options, but more importantly, the methodology and techniques to capture this enormous volume of data efficiently… data that brands and retailers would not be able to collect themselves.
Encourage Supplier Engagement
As mentioned, brands must work closely with their suppliers, encouraging them to adopt more transparent practices. This collaborative effort includes process mapping, process monitoring, and primary data collection and will enhance traceability throughout the supply chain, ensuring ethical and sustainable sourcing and manufacturing.
Brands such as Mango focus on the partners investing in mapping their processes, implementing the technology to monitor supply chain operations, and collecting primary data. The supply chain partners that invest will benefit from stronger relationships with brands that provide a greater volume of more predictable business. Brands benefit from the additional visibility and traceability that enables supply chain agility to boost competitiveness, innovation, sustainability, and profits and provide evidence for regulatory compliance.
In the future, supply chain partners that cannot offer this visibility and traceability to brands and retailers may struggle to fill their order books.
Communicate Transparently and Strengthen Stakeholder Engagement
Transparency is not just about providing information; it's about communication and engagement. Brands should actively engage with stakeholders, including consumers, employees, suppliers, regulatory bodies, and NGOs. Listening to and addressing their concerns can lead to collaborative problem-solving and increased trust.
Transparent communication with stakeholders is essential to this objective, and monitoring the entire supply chain, with measurements from science-based primary data, is critical. Brands should regularly share their progress and data insights, be honest about challenges, and commit to continuous improvement.
Photo by Jason Rosewell on Unsplash
Invest in Sustainable Innovation
Addressing the fashion industry's environmental footprint demands significant investments in innovative, sustainable solutions. Whether eco-friendly materials, low-impact manufacturing techniques and processes, or circular business models, sharing these innovations helps build a positive brand image and promotes industry-wide transformation.
Cultivate a Culture of Accountability
Brands should foster an internal culture that values accountability at all levels, emphasising setting measurable goals, tracking progress, and taking responsibility for any shortcomings.
The Supply Chain transformed into the Digital Value Chain
These critical steps will help every partner in the fashion supply chain - brands, retailers, sourcing agents, manufacturers, and suppliers – to execute the digital transformation required to remain competitive, but also work together to transform the often manual and disconnected fashion supply chain into a digital value chain for the good of the industry and the planet.
Photo by Shubham Dhage on Unsplash
Further challenges for the industry
Despite the effort to manage this digital transformation, brands and textile manufacturers must be prepared to improve their operations in other areas.
For example, the Netherlands has introduced extended producer responsibility (EPR) for clothing and textiles. The EPR for Textiles Decree requires brands and retailers to submit total clothing and textiles sales from 2024. From 2025, any retailer selling clothing or textiles in the Dutch market must recycle or reuse a percentage of the total sold in the preceding year.
The 2025 compliance targets are listed below and will increase each year.
- At least 50% of the textiles sold "must be prepared for reuse or recycling".
- At least 20% of the textiles sold are prepared specifically for reuse.
- At least 10% of the textiles sold are "reused in the Netherlands".
- At least 25% of the recycled textiles are "fibre-to-fibre recycled".
The ability to plan to comply with these targets will rely heavily on visibility and traceability within the digital value chain but also requires the evolution of the design of products and materials to introduce greater circularity.
The fashion industry's drivers for visibility and traceability are compelling and multifaceted. By acknowledging and responding to these drivers, fashion brands can improve their practices, enhance their reputation, and contribute positively to a more sustainable and ethical industry. Further, transparency and traceability will also support the evolution of design and materials used to manage the growing pressure and future compliance for circularity product design.
In an era where consumers seek connection and authenticity, transparency isn't just a desirable trait; it’s an expectation that can shape the fashion industry's future.
CHRIS JONES, FOUNDER & DIRECTOR, JBSO GROUP
After originally training and working as an engineer, Chris joined a fashion services and technology company 30 years ago to implement ISO9001. Since then, he has helped over a hundred fashion brands, retailers, sourcing agents, and manufacturers to optimize their processes, supported by innovative technologies and concepts, working in offices, showrooms, and factories world-wide.