A Radical Transparency approach
Fashion consumers are demanding to know much more about a range of issues: where and how items are made, which materials have been used, pulling deeper information from brands’ supply chains.
This increased requests has made “radical transparency” a trend for the fashion industry.
Surveys suggest that trust in Fashion Brands fell and it makes sense that as trust has eroded, consumers have become more active in scrutinizing the brands they do follow.
Millennials are at the vanguard: 52% agreeing that they always research for background information before buying, compared with 45% of Gen Z consumers and 41% of Baby Boomers.
Reviews and articles are common sources of information.
“Social media has enabled a certain transparency,” says Farfetch chief strategy officer Stephanie Phair. “You can no longer control your luxury messaging within borders.” We expect the critical dimensions in which fashion players will be most scrutinized include creative integrity, sustainable supply chains, value for money, treatment of workers, data protection, and authenticity.
To understand the impact of making consumer goods, Brands must determine how natural and human resources are used at every step of the production process, whether in the supply chain or in direct operations.
A tragedy spread a new approach to a Sustainable Sourcing
It will be impossible to forget that the fashion and textiles industry was rocked by the second largest industrial disaster in history during 2013. The Rana Plaza factory collapse took the lives of nearly 1,200 garment workers in Bangladesh and forced the apparel and textiles sector to put the lens on the way clothing is made.
It took weeks for some major global Brands and Retailers to determine whether their clothes were made by those factories in the Rana Plaza building. A few companies were literally scrambling to figure out what contracts they had with whom, where, for what products and for how long a business relationship lasted.
It has become obvious that a lack of adequate supply chain transparency and traceability is putting the entire industry at risk and making it extra difficult to respond to always more demanding consumers.
And the risk increases as you dive deeper into supply chains, beyond that first tier. When a company tries to look at the other stakeholders in its supply chain the mills, cotton growers, tanneries, animal welfare, etc. the water gets even murkier. A recent study suggests that non-compliances increase dramatically in the second and third tier. In other words, less visible suppliers are often failing to meet social and environmental standards. Fashion Industry simply cannot afford to not know, or even further not understand, what’s happening across a supply chain from raw materials to final product.
What Pioneering Brands are doing?
As of today plenty of Fashion Brands have been claiming to have implemented traceability within their supply chain, involving Tier 2 or Tier 3 players but how functional, transparent and updated are all data collected?
A very interesting approach to transparency comes from VF corporation: in their website, at the sustainability landing page, they have provided a complete picture of their supply chain, showing they have a deep knowledge of WHEN, WHERE and by WHOM their products are made, going deeper, letting T2 and T3 vendors/supplier to be listed, monitored and sometimes even audited; for some item out of their brand’s collection there’s an interactive sourcing map showing the “journey” of several items from raw material to final product, pointing out at every single step of the journey.
Traceability as KPI, a driver to Transparent business model for fashion
Traceability and transparency, has deep impact even on daily activities of any employee, working for any brand’s industrial operations dept.
Try to imagine to lead a team managing a complex supply chain in the fashion industry with more than 100 players amongst Factories or material vendors: rethinking the KPI system on which the industrial and procurement structures are measured, resulting from a transparent supply chain architecture, guided by traceability.
It means switching to a “transparent” business model which brings to the fore the steps that generate attractive products and experiences and justify their premium price. It also means guaranteeing respect for the environment, for the social contexts within which the brand is included and for the supply chain partners, with a view to the creation of sustainability in all three of its dimensions.
Moreover, it means to innovate, both from a technological and organizational perspective. Just talking about digital isn’t enough, simply having the enabling tools won’t do. It is necessary to intervene on the organization and on processes, so that the Supply Chain can effectively communicate with the Style and Merchandising functions, making the technical and quantitative skills available and then synchronizing all the procurement, production and distribution activities in order to become more efficient and quick.