This is a part of the blog series from retraced called „Perspectives on Transparency: Why is it important in Fashion?“ that dives into the importance and impact of supply chain transparency for the apparel industry. This is part II: The Supply Chain Management Perspective
Over the last decades, global fashion supply chains were created with the major objective of cutting costs in order to remain price competitive in the market. As a result, most supply chains were moved away from the countries, where the fashion was actually consumed, to so-called low-cost countries. Supported by faster and more efficient means of transportation and communication, there has been no more natural stop from where to order products or raw materials. The world, as a whole, has become a place to produce fashion. Unsurprisingly, supply chains have become more and more complex. With sourcing agents and subcontractors being an integral part of many supply chains and changing collections over a year, brands struggle to find out who is ultimately producing for them and who is delivering the respective raw materials.
Despite not directly owning the supply chains, many brands have rightfully acknowledged that they are still responsible for what is happening within their supply chains and are seeking solutions to manage their processes accordingly. Tracing products along supply chains may be the first step into the right direction for achieving this goal and for paving the way to proactively managing supply chains.
"Only what is measured can be managed." Having fully traceable and transparent supply chains enables fashion brands to make comprehensively analyses. This allows brands to understand the underlying supply chain processes and to take over more control. This, in turn, enables brands to improve or automate supply chain operations with regards to impact on people, the environment and, of course, process efficiency. For example, a quantified report on the products’ environmental footprint across all processes enables a brand to benchmark themselves against their peers and to take adequate action to lower their comparative impact. This could include, for example, lowering energy consumption during production or finding cheaper and more sustainable transportation means.
Additionally, integrating the necessary means to ensure efficient and automated traceability naturally forces brands, manufactures and suppliers to get in contact with digitalization. A positive side effect that - especially the fashion industry - is a long overdue step to increase communication and process efficiency in supply chains.
Besides that, tracing their supply chains will help fashion brands to strengthen their relationships with all their supply chain partners. This opens new opportunities for deeper and better cooperation with greater reliability, greater flexibility and increased accountability for all parties involved.
The collapse of many global supply chains, especially in the fashion industry, due to the outbreak COVID-19 (Coronavirus), shows us how important deep supply chain knowledge and flexibility are. Most companies are unable to adjust and move production quickly, as they take too long to figure out whether their suppliers are actually affected, by what degree and where else to source the respective raw material, in case of a potential supply disruption.
Most certification authorities, such as Global Organic Textile Standards (GOTS), who make visits to the sites of supply chain participants don’t always help to achieve the required depth of a supply chain. A certification usually only shows a snapshot of a small piece of a supply chain rather than a continuous overview over the whole supply chain. Thus, tracing a production chain is a great way to complement certificates in order to guarantee uninterrupted transparency. Having fully traced supply chains also simplifies the process of getting certified for the first time or renewing a certification upon expiration.
Besides gaining great insights into one’s supply chain, continuously keeping track of it helps to mitigate the risk of having inhumane labor conditions or environmentally harmful practices sneak into them. Logically, this should be a priority not only out of intrinsic motivation, but also out of extrinsic motivation, since incidents and scandals around one’s supply chain can harm the company's reputation irreparably.
While working on making their supply chains more transparent, most brands will realize that some of their partners or processes do not comply with their standards or values. Therefore, the process of achieving transparency and traceability alone will already help them to make changes and improve their supply chain sustainability. Achieving a fully traceable supply chain is a complex process, of course. Yet, one should always keep in mind that the journey is the goal and getting the right mindset is the first step into the right direction. The power of transparency enables SCM managers to manage complexity along the way and open up paths towards positive and sustainable opportunities.
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