In the recent past, a few developments and investments in the textile value chain have set the pace for how future supply chains will work. These developments are noteworthy as they are across the supply chain and indicate the urgency for integrated operations.
- CIEL Textile, a leading textile and garment manufacturer, has opted for traceability solution to map out and trace product-level order flow through its global supply chain.
- KAYA&KATO, which is a leading German clothing and textile manufacturer, has unveiled a blockchain network development in association with IBM. The network will tell information such as where the used fibre has come from, where the fabric has been processed and the completion of the final clothing product, providing detail of each process in order to enlighten end-users with the information that the clothes they have bought are produced sustainably.
- The most recent implementation is done by India’s renowned apparel manufacturer Arvind which has joined hands with Textile Genesis, a specialist of blockchain technology, in order to enhance process visibility and transparency in its supply chain.
A common thread in these investments is the focus of the industry on increasing need for supply chain traceability. The timing of these investments also has significance, as all the above three developments took place after the world was hit by COVID-19, when traceability has become a major concern. What could be a better background to fast track the use of Blockchain Technology to ensure authentic traceability for complete transparency and credibility of product and material movement along the supply chain with no fear of tampering?
With sustainable and ethical practices/products becoming a norm, tracing credibility at each stage of the supply chain is becoming very critical. However, the complex nature of apparel product manufacturing has resulted in a lack of trust along the supply chain partners. The journey of these products, from raw material to finished goods, often spans multiple geographies, manufacturing sites and agents, and very often courses through ruptured and distrustful networks.
On one hand, fashion shoppers can access an attractive assortment of products made accessible by mobile, personalisation, immediate delivery and convenient returns. On the other hand, manufacturing is determined to become more efficient and effective than ever before, due to increased automation and computerisation across pre-production, production and post-production processes. But how can a product cycle ensure that there is no breach of trust and the product is delivered as promised with no contamination or tampering of certificated produced?
Although databases do exist, they are often fragmented and do not provide a single view of product provenance. For these reasons, traditional centralised approaches, solutions and technologies are incapable of keeping pace with this increasingly fragile ecosystem.
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Blockchain’s Distributed Ledger Technology (DLT) is a solution…
DLT, although not utilised and understood thoroughly by the fashion industry, can provide greater transparency, traceability and auditability along the supply chain and can provide the consumer a lens for ethically sourced products. Underpinning evolving blockchain networks, DLT is quickly proving itself to be a reliable and well-invested technology stack.
As compared to other production-centric industries such as pharmaceuticals, aerospace and automobile manufacturing that have long product lifecycles, and require modern manufacturing practices to operate in a highly regulated environment, apparel manufacturing supply chains are typically based on factors such as accessibility to cheap but quality raw material, cost-effective labour, trade policies, production costs, transportation networks, industrial modernisation, law and order framework, etc., and supply chain traceability plays even a bigger role in apparel sector.
Now the question is – what are some of the incidents impacting the fashion retail supply chain? Let’s understand this through the table below –
| Social | · Worker health and safety
· Human trafficking · Below minimum wage · Child labour
|
· Rana Plaza collapse – Bangladesh
· Migrant workers’ exploitation – Turkey · Forced labour usage – Xinjiang (China) |
| Environmental | · Discharge of untreated toxic chemicals into the ground and water bodies
· High level of water consumption to produce cotton fabric · Production of wood-based fibres leading to deforestation
|
· Independent analysis of water around viscose-producing factories in India, China and Indonesia, where severe water pollution was detected
· Desertification of the Aral Sea |
| Quality | · Spurious or inferior raw materials
· Presence of harmful chemicals
|
· A large US-based retailer where the use of Egyptian vs. Indian cotton was in question
· Significant levels of cadmium found in jewelry at major US fashion retailers · A large UK fast fashion retailer had to recall thousands of flip-flops after discovering a carcinogenic chemical used in the dye
|
Courtesy: Cognizant
Compiled by: Apparel Resources
Supply chain risks and issues affecting authenticity have remained opaque for many years and the above table points out at possible loopholes` and severity in a fashion supply chain. Consumer awareness, relentless activism and engagement have forced brands to raise their consciousness on these issues to not only protect brand equity but to avoid penalties in the countries in which they operate. Therefore, it has become imperative for fashion companies to lead the change by embracing supply chain transparency as a strategic objective, in order to: Manage risks; Realise efficiencies; Improve gross margins; and Build better products.
Steps to integrate blockchain/DLT into the apparel supply chain…
For fashion brand or retailer – The brand/retailer can access the blockchain to verify the origin of each input used in manufacturing. A fashion organisation’s applications are integrated with the blockchain to facilitate visualisation of traceability and correlate with data from other sources. For example, for a given product, users will be able to see the details of factories that were involved in the product’s manufacturing. DLT also makes available the factory certifications and material transaction details that help ease the auditing for fashion retailers. Since these certifications are verified and cannot be tampered, the chain is authentic and transparent.
For Regulator – Since the information sealed within the blockchain is authentic, industry regulators can also inspect, spot-check data and verify the entire lifecycle process using the digital ledger with confidence. For example – the regulator can inspect the facilities to flag any instances of health and safety violations, child labour or unauthorised subcontracting. There is complete transparency in the chain.
For Customer – Customers can view a product’s entire journey in details and check on certifications from field to shelf via QR codes or apps. They are then able to make an informed decision to purchase the product. For example – Product pages online or a QR code scan in a store will reveal the entire journey of the product, sustainability and fair-trade information, making it easier for the customer to take an informed decision without fear of false claims.
Smart contracts and certifications are important aspects of provenance…
Certification proves that every material input and process has been performed to acceptable standards. The different types of certifications for each participant in the smart contract needs validation and tracking of supply chain data for the raw material producer, manufacturer and retailer.
For example, a raw material producer will have to take certifications for labour practices,
sustainability of material and environmental practices, where the input to the blockchain will be ‘quantity of harvested certified cotton’. What to be validated will be ‘Quantity sold <= Quantity certified’.
For manufacturer, the validation will happen for ‘Cotton consumed <= purchased certified cotton’ and ‘Quantity sold <= quantity certified’. While, for retailers, the validation will happen for ‘Fabric consumed <= Certified purchased fabric’ and ‘Date of production < certification expiry’.
How to track data across the supply chain and handle issues of data privacy…
Traceability across the supply chain presents unique challenges. Data must be collected not only from a retailer’s direct suppliers, but also across sub-suppliers until the raw material providers have been found. To efficiently capture data, some level of classification will need to be considered (such as batches or standardized quantities) in order to adhere to the industries’ norms.
Although this is a developing area, the digitisation of the product element can be used by incorporating bar codes, serial numbers, radio-frequency identification (RFID), near field communication (NFC) and Internet of Things (IoT) sensors.
A major issue in the process is ‘Privacy of data’ while managing commercially sensitive information and blockchain types. While supply chain partners want full transparency, the fact of the matter is that a majority of participants are competitors and would like to protect their data. Manufacturers A and B may not want the selling price of a shirt, or their relationship with producers to be revealed through transactions on a common network. Hence, the ongoing blockchain debate: public, private or consortium-led blockchain alternatives.
A public blockchain (e.g., Bitcoin, Ethereum) is open, and anyone with computing capacity can contribute to the network and manage the ledger. While in a private blockchain, one or more businesses have authority to decide who can join and which members can write, edit or view information in the digital ledger. The consortium provides a hybrid between the public and private models.
Despite the many challenges, organisations confront in unlocking DLT’s full potential. Forming a consortium can help individual companies overcome the trust barrier and encourage stronger collaboration to solve deep-seated industry challenges. Various industry organisational bodies such as Better Cotton Initiative (BCI)14 and The Sustainable Apparel Coalition along with a number of start-ups (Provence, Sourcemap and Skuchain) are exploring ways to integrate and implement blockchain technology into the supply chain through their POCs.
