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Transparent Supply Chains in Fashion & Luxury Businesses

Supply chain transparency is a trend that has spread throughout organizations over the last few years. It has been brought, not only through lawsuits or financial crisis, but most of all through an awakening of consumers to the questionable manufacturing processes of their products.There’s need to make quick changes to the supply system and make them more sustainable. A change in the way you manage your supply chain is how they can provide more information on products, materials, manufacturing processes, supply practices and warehousing & distribution processes in respond to business leaders’ needs to be more transparent with consumers.Supply chain leaders around the world are building these sustainable supply chains for an ethical, business and to maximize their waste elimination/cost savings goals. Of course, supply chain sustainability brings its own set of challenges.However, there’s a difference in the case of sustainability transparency:

  • Supply Chain Sustainability is a strategy that aligns the management of end-to-end supply chain activities with social, environmental, and economic goals to systemically improve long-term organizational performance through total cost minimization, risk management, ethics, and cultural initiatives.
  • Supply Chain Sustainability Transparency on the other hand, is the information communicated by a company to its stakeholders, which are the consumers, shareholders, suppliers, customers, governments, and agencies, regarding their sustainability practices (health, safety, ethics, etc.).

So, saying you’re doing it is one thing, showing that you’re really doing it is another. And proof is what consumers want.

While marketing incentives often provide the motivation for transparency, consumers’ demand for sustainability creates risk in the supply chain. Collaboration with sustainable suppliers and ensuring that product materials are traceable, are essential to increase communications with the customers, because consumers nowadays want to know everything about a product. The lack of ability to provide that kind of information in matter of safety or environmental violations can create a negative perception of the brand that may require years to recover from, if at all.

For example, in the Business of Fashion, the supply chain transparency can secure recognition of those big apparel companies whose branded items are made in factories where leaders abuse workers’ rights. So, publishing supply chain information builds the trust of workers, consumers, labor advocates, and investors, and sends a strong message that the apparel company is not scared of potentially being charged with labor rights abuse in its supply chain. It is a company’s defense that it is concerned about labor practices in its suppliers.

With a modern supply chain, keeping track of these kinds of things is obviously difficult and the problem is not only in brand value and perception, but also in the future of the supply chain itself. But eventually the key to success. If a company is found to be using unethical or dangerous methods to create its products, the first point of call is to break the relationship with the offending sub contracted company. This means manufacturing stops and often time-consuming moves are made to transfer this process to another supplier, who then need to be audited to avoid this kind of practice in the future.

Despite all of this, your company’s name has been damaged to a point that some consumers are going to avoid using your products in the future.

The only way to stop this is through making your supply chains as transparent as possible, making sure that everybody has the chance to see what you are doing and communicating this widely. With the heaps of information available on every company through the web, it is now possible to see almost everything a company is up to, but the words and promises that come from brands themselves are often presumed to be untrue. Therefore, just saying that you have an ethical supply chain is not enough, it needs to be completely open and transparent. If an element seems unclear then it could be perceived as trying to hide something, rather than simply not having information about it.  Alongside this comes a need for strong supply chain and manufacturer management.

The Real-Time Fashion System, a vision and an open research project by ELSE Corp, defines in this way the future of Supply Chains:

  • The evolution of the fashion industry must centre around sustainability, seeking to reduce its social and ecological footprint. To that end, the RTFS provides the fashion industry with a tool for the sustainable transformation of the supply chain, from conception to distribution.
  • The data gathered and analyzed in the RTFS gives brands the opportunity to forecast demand accurately. This opens up opportunities for on-demand production, where brands produce only the products that their customers want. A just-in-time, transparent supply chain increases efficiency and decreases waste. With the Industry 4.0 technologies ingrained in the RTFS, brands can share, and act on, the real-time information gathered. The coordinated end-to-end supply chain enables a radically improved form of instant just-in-time pull production.

Creating and maintaining a transparent supply chain is not easy, but the Real-Time-Fashion-System may help boosting the reputations of companies who are not putting in the hard work. It will provide a fully transparent and traceable workflows and processes, guaranteed by the blockchain technology and optimized for 100% trustworthy, on-demand, individualized service delivery. So, you are also making sure these changes are ethical, even when they are not necessarily decisions you are not involved in, like changing suppliers of certain materials in the factory.

This means that a 360 degrees B2B & B2C communication throughout the supply chain is key for the future evolution of the fashion business!

To know more about the REAL-TIME FASHION SYSTEM framework:

Photo credit © Shutterstock

by Andrey Golub