Taking on the challenge of fashion traceability

The fashion industry has become unsustainable. It accounts for up to 10% of global emissions and few fashion brands able to claim that workers across their supply chain are paid a living wage.¹Tackling these issues will require significant investment at a time where most businesses are under increasing pressure to further reduce costs.

However, even incremental or marginal changes will not be enough to tackle the root of the sustainability problem. One of the main issues is that businesses do not always have visibility at every layer of their supply chains. To manage the lack of traceability risks and maintain resilience in a challenging environment, it is now critical that businesses gain full visibility of every material and movement of products through their supply chain. Stakeholders are expecting it, consumers demand it, and future legislation on fairer labour practices is heading that way.²

Making a supply chain more traceable requires different technologies and the implementation of new internal business capabilities. Currently there is no single, standard approach or legal imperative. Businesses looking to achieve greater traceability will need to navigate different solutions to select one that supports their ambitions, which may involve:

• mapping their supply chain, providing visibility at a supplier level
• tracking a material or product’s live path through the supply chain
• authenticating materials, using lab-based verification of physical marking or attributes.

There are many barriers to addressing the traceability challenge. It is not a legal requirement yet, it is expensive, it might reveal issues that require solutions that might be difficult to implement, and it requires organisational change and collaboration with suppliers. As a result, traceability is often not a priority for business leaders. However, business focus changing alongside growing pressure from stakeholders, many businesses are wondering where they should start.

Data and systems

First, robust and granular product and supplier data will be a key requirement for businesses to gain visibility of the key risks that each raw material and/or tier of suppliers brings to their business. These risks can include forced labour, impact on climate and on biodiversity.

However, one of the biggest challenges when tracing back through any supply chain, includes collating the right data from thousands of products from potentially thousands of suppliers moving through the supply chain at any one time.

Collating, navigating and cleansing this data is no small task. Prioritisation of materials or specific supply chains, informed by corporate commitments and targets, can accelerate a traceability implementation by reducing the initial scope. For example, cotton, leather and silk have different supply chains, material attributes, and risks to consider, so focusing on one at a time limits the complexity and number of third parties involved.

Where the chosen solution requires data collection, encouraging suppliers to integrate their own data upfront, rather than taking that responsibility for them, can be a more efficient approach.

Supplier engagement

Depending on the scope of their traceability implementation and the complexity of their supply chain, a fashion company may require involvement and input from hundreds of direct suppliers, and thousands of third-party suppliers across lower tiers. This is no small feat, as each supplier needs to be informed and will want to understand why and how their information will be used. Suppliers may show resistance for a wide range of reasons, including the effort required, concerns around confidentiality, or a lack of trust.

Fashion companies that have an ongoing dialogue with their suppliers will be better equipped to deliver a successful and timely rollout. A good relationship between the brand and its suppliers should surface suppliers’ concerns and provide a platform for resolving any blockers. Over time, these resolutions can inform a standard approach for managing common supplier concerns, helping to manage these at scale.

To get started, businesses should assess whether their internal resource can commit enough time to supplier engagement to handle the change management required. This will help define timelines and determine how much external support is required. Support can include a dedicated technical team, a partner to conduct the supplier dialogue, or the development of an onboarding process that suppliers can replicate with their own suppliers. A proof of concept is a valuable first step for validating a chosen approach, it includes understanding the barriers to implementation, measuring the effort required to onboard suppliers, and establishing the deployment timelines.

Industry-wide collaboration

It is often easier for businesses to take an isolated approach when managing challenges like traceability. More collaboration requires wider engagement and, perhaps dauntingly, acknowledging and disclosing the problem to an external audience. Yet initiatives like WRAP’s Sustainable Clothing Action Plan (2012-20) – which achieved a carbon and water footprint reduction greater than its targeted 15% across participating organisations (representing nearly half of UK clothing sales by volume) and made some progress reducing textile waste – demonstrate the power of collaboration in supporting and delivering positive change.³

Sharing experiences of using different tools, can help identify the most fit-for-purpose solutions for the fashion industry’s specific complexities. These include capturing diverse product and material attributes, managing the changing and potentially short-term business relationships due to supply gaps during the process of designing and launching new collections. Broad adoption of the same solution also offers synergies in terms of data collection, as shared suppliers only need to be onboarded onto a shared platform once.

Therefore, part of any traceability initiative should be to identify or establish the right forums to engage with the wider ecosystem, enabling the benefits of collaboration.

Traceability cannot remain optional and will be fundamental to achieving greater supply chain resilience and efficiency.

Traceability may be difficult to achieve, but there are clear benefits to understanding and managing risks within the fashion supply chain. Businesses that make this a priority now and actively collaborate with their suppliers and the wider industry to tackle the challenge will be best prepared to reassure stakeholders, meet potential reporting requirements of the future, and remain resilient against supply chain risks.

To learn more about selecting the right traceability solution and approach, and to get in touch with Deloitte UK’s Supply Chain & Network Operations Traceability team, please reach out to Clarissa Bladen.

¹ https://www.bbc.com/future/article/20211105-how-carbon-might-go-out-of-fashion & https://www.fashionrevolution.org/about/transparency/

² “According to Deloitte’s research, 35% of UK consumers are more likely to trust a business that has a transparent, accountable and socially and environmentally responsible supply chain.” See more: https://www2.deloitte.com/uk/en/pages/consumer-business/articles/sustainable-consumer.html & https://ec.europa.eu/commission/presscorner/detail/en/ip_22_1145

³ https://wrap.org.uk/taking-action/textiles/initiatives/scap-2020