Data Over Opinion

Over 50% of fashion industry decision-makers state that supply chain traceability will be one of the top five enabling factors to reduce emissions by 2025.

If fashion brands want to achieve sustainability goals, ranging from better sourcing of materials to improved regulatory compliance to emissions reduction, they will need a complete view of how their products are manufactured: the location and distribution of product materials throughout all stages of the supply chain, including contractors and subcontractors.

Beyond their first-level suppliers with whom they have direct relationships, much of their supply chain practices around social and environmental issues are poorly equipped to monitor and manage.

Supply chain Traceability systems powered by tracking software and Big Data will help brands reach into their supply chains to understand the entire lifecycle of their products.

But what are the main barriers to traceability? Manual processes and unreliable data. Due to the complex and fragmented nature of the value chain, technology is the key-factor in achieving traceability.

Who is driving this change?

New legislation and the increasing frequency of supply chain traceability disruptions, combined with pressure from consumers and investors, are driving this change.

Legal

Supply chain Traceability plays a crucial role in helping companies proactively respond to the evolving regulatory landscape:

• United States → where the Securities and Exchange Commission will require US-listed companies to disclose emissions from levels one, two, and three of their supply chains;

• EU Green Deal → will establish minimum mandatory levels for recycled content in products and require digital twice for products that contain sustainability information to fight misleading marketing, or greenwashing.

Investors and the ESG imperative

Similarly, companies need greater visibility into traceability to demonstrate to the financial community how they are meeting environmental, social, and governance investment criteria.

Customer expectations

Finally, customers are increasingly asking brands to be better equipped to assess and disclose their sustainability claims.

In China, 25% of customers rank sustainability as one of the top three factors they considered when purchasing luxury products. In Europe, 20% is at the purchase stage.

What needs to be in place for supply chain traceability to work on a large scale

A common language!

A level of standardization will allow manufacturers and suppliers to more easily share data with multiple brands, encouraging a higher level of buy-in throughout the value chain.

As labelling and data validation standards emerge, consolidation of traceability and monitoring standards will likely occur, enabling more efficient and effective supply chain management.

To achieve a common language, brands will need to collaborate, both in terms of the types of data collected along their supply chains and in how key metrics are compiled and assigned at the product level (e.g. water usage and emissions).

The power of data!

Technology will be key for the development and adoption of a common data language.

Given the complexity and fragmentation of value chains, brands will require tracking software for data collection and repositories.

Brands may seek to establish a decentralized registry (a peer-to-peer shared database without a central administrator) to efficiently collect and distribute data and ensure reliability: the data within digital registries is immutable.

What’s next?

Supply chain traceability will put the industry on the path towards a more transparent and responsible future, ensuring that investors, consumers, and regulatory authorities can interact with brands based on trusted sustainability information.

Based on this, brands must adopt a new collaborative mindset to enable information sharing, extending tools and providing training and support to their suppliers so they can embrace a more traceable sector.

Why we can help you to avoid a crash

If you are sailing blindly into the ocean and fear crashing into an iceberg, book a free demo call with us and learn about our data-driven and tracking solutions.