Will technology be the game-changer for rising transparency in the fashion supply chain?
This article is sponsored by Lenzing.
With close to 80 percent of consumers believing that it is important for brands to disclose and provide transparency into their supply chains, from raw materials to garment (PDF), fashion brands are clearly in need of a more sustainable way to manage their many hard-to-trace production facilities. In addition to the continuous sourcing problems and poor labor conditions, there is an absence of a connected and visible supply chain which may lead to overproduction and result in unnecessary waste. The lack of transparency also enables counterfeiting of sustainable fibers in the textile supply chain. Some estimates suggest that up to 30 percent of all sustainable fibers in textile industry could be fake.
Therefore, a transparent production process is crucial for making sure the company’s sustainability targets are met, garment workers receive a fair living wage and safe working conditions, and issues that may further affect consumer decisions are identified. A more transparent supply chain also allows customers to have greater visibility into the product’s journey and the production system brands use to deal with waste and pollution.
How are brands becoming more transparent?
In 2017, 17 companies committed to the Transparency Pledge, and this number has more than doubled in just two years. In 2019, leading fashion brands and retailers such as H&M and Esprit published details about their supply chains for the first time, marking a milestone in commitment to transparency from industry leaders.
On the other hand, according to Fashion Revolution’s 2019 report, most fashion companies still have major gaps in information, particularly when disclosing the effects of social and environmental commitments. Despite signs of improvement, extremely complex supplier networks still prevent many brands from identifying and assessing each stage of production to improve supply chain transparency.
These limitations sparked discussions on the potential of using technology to improve transparency. Ever since blockchain technology made headlines and gained awareness in the latter half of the 2010s, discussions have grown about how this technology may bring scalability, improve transparency and create new a level of collaboration in the fashion supply chain. Until recently, brands have not incorporated this technology on a practical level into their regular business operations.
80 percent of consumers believe that it is important for brands to disclose and provide transparency into their supply chains.
How blockchain is paving the way
In a blockchain network, information is recorded and distributed across a series of devices instead of a single entity, ensuring data is stored securely and accurately in a digital, tamper-proof and accessible database. As brands use blockchain to track their supply chain, supply chain traceability data can be recorded from subcontractors and raw material suppliers as textile products move along the chain, thereby connecting the players. This enables higher scalability and automation of the traceability process while simultaneously reducing costs, time delays and human error. The ability to create a direct link between tangible goods and their digital identities on a blockchain also makes it easier to track damaged and counterfeit products.
With industry players leading the movement, brands are stepping up their technology game by quickly adopting blockchain. Fashion conglomerates LVMH and Kering introduced plans to use blockchain technology to track goods and prove authenticity. Every stage of production — including raw materials, manipulation (dyeing, weaving and tanning), manufacturing and shipping — will be disclosed to retailers and consumers. Fashion for Good carried a similar traceability exercise, enabled by blockchain, for organic cotton from farm to retail, working with multiple stakeholders.
Further up the supply chain, sustainability leaders in fiber production are also bringing traceability solutions enabled by blockchain to the market. Lenzing, a leader in sustainable wood-based cellulosic fibers, has pioneered the adoption of "fiber-to-retail" traceability enabled by blockchain technology. In 2019, the company announced a partnership with traceability platform TextileGenesis on a fiber-tracking system. A cross-industry pilot involving World Wildlife Fund (WWF), the Hong Kong-based brand Chicks and four supply chain partners was launched to introduce “fiber-to-retail” transparency. Lenzing issued blockchain-based Tencel "fibercoins" to its supply chain partners as a proof of the sustainably sourced Tencel branded fibers.
These digital tokens build a reliable authentication mechanism, which enables a secure digital chain-of-custody across the entire textile value chain. This offers brand partners easy access to a credible identification mechanism for the raw materials used in their products, and reduces compliance costs and time to achieve full supply chain traceability. Lenzing is further conducting five additional pilots with global brands and TextileGenesis platform prior to the full commercial roll-out in second half of 2020.
As Fashion Revolution’s founder Carry Somers says, "There is no beauty without truth and there is no truth without transparency." While technology creates a platform for brands to improve supply chain transparency, it ultimately comes down to the brand itself to take the first step towards sustainability. It is vital for industry players to evolve together, to cultivate and drive the common practice of transparency. This will help safeguard the environment and the lives of millions along the industry supply chain.