Project Description

With emerging brands touting “Made in America” in their crowdfunding campaigns and social media platforms providing bleeding-edge, front-page coverage of the world’s environmental and social disasters, supply chain transparency has become the latest – and most widespread – fashion trend.

Consumers are strong influencers of this trend, using their digital voices to directly impact every aspect of a brand’s equity and pushing companies to provide more focus and commitment on transparency and sustainability. Today’s consumers are more savvy than ever and understand that corporate supply chains were historically designed to be anything but transparent. Measuring and testing the social, environmental, and commercial impacts of supply chain choices is now part of the public domain. As such, ethical fashion is rewarded and celebrated.

With style-setters announcing that fashion comes first, but ethical fashion following as a very close second, the race towards sustainability and supply chain transparency is now an imperative. Moreover, commitment and progress are as equally rewarded as actual impact. Consumers and fashion industry audiences are cheering for every valiant effort at transparency. Whether perception or reality, they have come to realize that the stakes are high and companies who do not resolve their supply chain issues are part of the problem.

Once only visible inside corporate walls, traditional supply chains are no longer business as usual for brands that design, develop, and source products. Corporate initiatives around supply chain transparency have become just as essential as a brand’s logo, mission statement, and value proposition. In this point of view, we unravel some of the implications and developments around achieving supply chain transparency, as well as discuss resources and enabling systems.

Supply Chain Transparency Strategy and Execution

The emergence of international agencies and increasingly supportive boardrooms has compelled companies to develop clear initiatives focused on labor practices, energy consumption, waste and carbon emissions measurement, and water supply management.  Additionally, the financial implications to an organization’s balance sheet are being scrutinized.  The reason?  There are more and more examples of why a responsible and ethical approach to the supply chain makes for a profitable business and provides a true competitive advantage.  Benefits include greater efficiency, responsible entrepreneurship, attraction and retention of talent, and increased customer loyalty.

From small luxury brands to large discount chains, creating and sustaining a “compliant global sourcing strategy” continues to require agile and superior execution.  Even with the best intentions, poorly planned or executed strategies can quickly create a catastrophe that will be echoed and amplified on consumer social media channels around the world.  And because buying a product with no knowledge of its supply chain footprint is a consumer’s prerogative, choosing supply chain transparency will be the competitive differentiator of only the “truly inspired” brands.

Past considerations for providing supply chain transparency such as the “why” (workers rights and environmental concerns topping the list) have been replaced by the “how” (establishing compliance standards and measuring everything that matters). When it comes to supply chain transparency, it takes people and processes. It takes discipline, analysis, and data – lots of data. This combination of key factors implies the need for supporting tools and software.

The ability to provide transparency is directly proportionate to an organization’s supply chain complexity:  smaller and younger are typically better.  Newer, more nimble brands are designing products to not only delight the fashionable, but also to seduce the ethical.  Strategies include using recycled materials with minimal environmental footprints, sourcing organic fabrics and threads, and even sharing the name of the factories where products are sewn as well as providing visibility to the suppliers of their textile suppliers.

A good example is H&M, which states, “Our aim is for all our products to be made from recycled or other sustainably sourced materials by 2030.” Their website provides a front-end interface for presenting supply chain information to consumers, while the sourcing and design teams execute the strategy on the back end. The vision and the execution are all aligned, facilitated by people, processes, and systems to support the story-telling. This commitment to transparency raises the bar for the ethical-elite. However, small-scale micromanagement and monitoring with a business model designed for this exact impact may pose greater challenges for older, more established bands and manufacturers.

Sharing Supply Chain Transparency Innovation

“Plan, Design, Make, Ship” are the mantras of every brand.  Supply chain transparency disrupts these entrenched processes and provides an opportunity for change.  Critical considerations will determine how these processes are designed, implemented, and supported:  What are the new requirements for managing materials?  Should we create a portfolio of sustainable materials?  Why not develop sustainable prototyping, sourcing, and manufacturing models?

Sharing innovation is no longer a “no-no.” Silence is. The questionable exploits of Hollywood stars are forgiven quicker than today’s “supply chain indiscretions.” This is why certain bigger brands, some with tarnished supply chain legacies, are taking the lead. They are not only asking lots of questions, but also visibly providing many of the answers. With considerations such as: How do we super-impose transparency into the day-to-day operations of designers, sourcing teams, and their extended vendors and suppliers? What solutions are available today to support this level of transparency? Which ones need to be created?

The Global Fashion Agenda developed the Materials Sustainability Index (MSI) , a database that is the result of  years of research on more than 77,000 materials. Companies are training their supply chain teams on material choices in design and sourcing.  This creates accountability on the creative side of the supply chain, not just at the end.  The MSI is available to the public in a best of breed open-source model.  This disruptive measure puts pressure on brands to consider full transparency as a supply chain mandate.

Another tool is the Higg Index. This suite of assessment tools standardizes the measurement of environmental and social impacts of apparel and footwear products across the product lifecycle and throughout the value chain. The index is also open source and free to the public.

The industry has also adopted Life Cycle Assessment (LCA), a measurement process to determine the impact of all the materials and activities used in developing clothing and consumer products, including raw materials to manufactured products, packaging, and transportation of goods.

While the industry’s skilled and committed resources are initially focused on collecting and crunching data that impacts supply chains, the next steps include developing tools and methodologies, as well as implementing or adapting systems and processes.  Even with innovation generating the headlines, existing systems and tools can be quickly adapted to maintain the momentum and do the heavy lifting.

Enabling Systems

Product lifecycle management (PLM) is one type of system that provides a platform for supply chain collaboration – a key driver of transparency. With the ability to support a product portfolio and deep, detailed product definition information (including material, costing, testing, and vendor management), a solid PLM system can become the backbone of a company’s supply chain transparency initiatives.

The design phase determines most of a product’s environmental impacts.  This is where PLM systems offer the maximum impact.  By designing products with very detailed material specifications and by providing product and merchant teams with the information they need to choose materials from more suitable vendors, sustainability objectives can begin to impact brands.  Material libraries in PLM systems provide visibility into fabrics, trims, packaging, sub assemblies, and graphic treatments.  Scoring material vendors and suppliers on criteria such as compliance with the Restricted Substance List (RSL) testing or defining attributes around water program requirements can impact material choices.  With features such as “where-used” and processes such as “re-use,” designers can leverage pre-approved materials into their designs and tech packs.  Developing a product bill of materials (BOM) with approved materials will streamline sourcing activities.  BOM “what-if” scenarios can be played out to understand trade-offs of using alternative materials or factories and the implications to the design, cost, and delivery.

PLM systems’ vendor management capabilities provide a platform for creating an end-to-end collaboration and transparency backbone.  Vendor management includes vendor scorecards, quality and compliance, inspection management, social compliance audits, technical compliance audits, factory improvement plan management, and production capabilities certification.  These scorecards provide the foundation required for ethical decision-making. By incorporating these metrics into the traditional supply-chain measures of quality, cost, and delivery, an organization can adapt PLM to support many transparency objectives.

These features are available in many PLM systems, with minimal configuration or customization. However, more integrated processes and requirements can be configured to provide the unique end-to end visibility and transparency required by organizations committed to best practices. Such customizations are called extended PLM (e-PLM) and often include mobile apps for design and submittals. New apps to support on-site photo streaming from factory floors showing work conditions, recordings of interviews with workers, and real time global communication are expected as the next wave.

With teams being developed to support new supply chain transparency initiatives, PLM solutions can support new approval, testing, and data collection workflows.  Sustainability-focused manufacturing and sourcing teams can work closely with design and product development teams, and new calendars can be set up to support the unique timeline considerations of sustainable practices.  Global collaboration will impact top and bottom lines through increased data integrity and more efficient processes.

Aside from PLM, other systems include compliance, quality, and materials management. These tools can integrate with PLM systems and provide in-depth visibility and accountability to material vendors, material testing and audit reports, as well as include environmental testing attributes and standards. Online information sources are also available and are designed to provide transparency into overseas suppliers through customs data and directories, allowing organizations to investigate companies, trade records, and global trade trends.

Final Word

Supply chain transparency is about making more ethical, sustainable products today, with an eye to the future. Brands are commitment to innovation and the desire to embed sustainability best practices into product development and manufacturing. Doing so, the day-to-day systems and processes can transcend “business as usual” through a balanced approach to product development and supply chain operations that takes into account environmental, social, quality, and cost impacts. By assessing the global impact and redefining corporate performance to meet new standards for excellence, fashion and retail brands can play a role in designing the future. Supply chain transparency is no longer a trend, it is an imperative that defines our industry.

About Parker Avery

The Parker Avery Group is a leading retail and consumer goods consulting firm that specializes in transforming organizations and optimizing operational execution through the development of competitive strategies, business process design, deep analytics expertise, change management leadership, and implementation of solutions that enable key capabilities.

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