The importance of fashion supply chain transparency

Fashion supply chain transparency has been a hot topic in recent years. Consumers are asking for more and more information on products and companies today have numerous technologies to satisfy them. But is transparency just a passing trend or is it a need that will persist?

The environmental impact of fashion

To understand the importance of fashion supply chain transparency we must talk about the industry's environmental impact. The fashion industry is one of the most polluting industry in the world. And the supply chain is a significant part of that pollution.

From farming to fiber production, textile manufacturing, garment construction, and finally shipping to retailers, every step of the fashion supply chain is responsible for greenhouse gas production, resource consumption, air, water and land pollution.

The problem with the fashion supply chain is that brands often relocate production to developing countries that do not adopt strict environmental protection policies as in Europe. Furthermore, the distance makes it difficult to control the activities of suppliers.

The working conditions along the fashion supply chain

In addition to the environmental impact, fashion supply chains often involve working conditions that do not respect human rights.

A large part of the supply chain is still manual and this often takes place in countries where there are no laws or regulations to protect workers' rights. Living wage is not guaranteed, child labor is frequent, as well as exploitation and abuse, and safety measures are lacking. This impoverishes not only the individual worker but the entire local community.

An example of poor working conditions is the Rana Plaza tragedy that occurred in Dakha, Bangladesh, in 2013.

In this disaster, an eight-story building that housed several garment factories collapsed, killing more than a thousand people. The conditions in which the workers were employed were precarious: the building was not suitable for housing factories and there were cracks in the structure that had been reported but ignored. If the workers had been unionized, they would have refused to enter the building, but most of them were afraid of losing their jobs if they did not show up for work.

Customers are evolving

According to a 2021 Deloitte survey, 58% of consumers have chosen ethical and sustainable clothing brands, and 1 in 3 stopped purchasing brands because of concerns related to the environment and social responsibility.

They want to be sure that the production of the T-shirt they are about to buy did not cause an excessive water consumption, or that the advantageous price does not depend on the exploitation of labor.

But to make conscious purchases, customers are constantly looking for information on brands, products, materials, and production processes. And that's not always easy.

Have you ever heard about greenwashing?

This difficulty does not depend only on the lack of information but also on phenomena such as greenwashing.

Greenwashing is a marketing strategy that companies use to make their products or processes appear environmentally sustainable when they aren't. It is a way to mislead consumers into thinking that a product is eco-friendly when it is not. An example of greenwashing is a garment made with conventional cotton but marketed as "organic". Sounds like a scam? It is! However, companies often have good intentions but act superficially. Think of a company that prides itself on using recycled materials, but hides that these materials are not biodegradable. Can it really declare itself environmentally committed? 

Fashion and counterfeiting

According to a study by the OECD, the global trade in counterfeit and pirated goods was worth about USD 500 billion in 2016, or around  USD 650 billion if we include digital piracy. This is more than the GDP of countries such as Denmark or Portugal.

However, when original products can be easily traced back to their source, it becomes more difficult for counterfeiters to pass off their products as genuine.

Counterfeiting also has an impact on working conditions because it often takes place in unregulated contexts, where there are no safety measures and workers are paid very little.

Why fashion supply chain transparency is the key

The fashion industry should be more committed to supply chain transparency. Here are some reasons:

• it allows brands to have greater control over an often long and complex fashion supply chain;
• if the suppliers do not respect company standards, the fashion brand can decide to turn to someone else. This incentivizes suppliers to improve and reduce the environmental and social impact;
• traceability and brand transparency [LINK Traceability and brand transparency are the drivers of sustainable fashion] give fashion brands the opportunity to give aware consumers the information they seek;
• the sharing of information on products and production also educates consumers who have so far paid little attention to the environmental and social impact, encouraging them to a more conscious lifestyle.

In other words, fashion supply chain transparency favors a more sustainable and socially responsible industry. But there is more.

Customer loyalty, retention, and brand reputation

In addition to the ethical and environmental implications, fashion supply chain transparency is also important for marketing and profits. Consider the following stats:
 

• When buying, more than 70% of consumers consider elements related to trust in the company, including supply chain, reputation, values, environmental impact and customer before profit. (Edelman Trust Barometer)
• A broad range of consumers says that brand trust is essential to buying. (2019 Edelman Trust Barometer Special Report)

Nowadays consumers are looking for brands they can trust. Supply chain transparency is a way to build that trust. But why is it important? Because trust leads to brand loyalty and loyalty to customer retention.  

The old Pareto principle may suggest to us that 80% of a company's future profits come from 20% of its current customers, not from acquiring new customers.
Trust encourages customer loyalty. A loyal customer is more likely to buy more products, spend more, and share their positive experiences through word of mouth or online reviews.

In conclusion, fashion supply chain transparency gives companies an advantage over their competitors in the long run.

How to increase supply chain transparency

Companies can rely on technology to increase supply chain transparency. here, a few useful tools:

• a supply chain management software that allows to track production processes, and optimize logistics and inventory management;
• blockchain, to follow a product throughout the entire supply chain, from raw materials to finished products;
• smart labels, RFID tags, QR codes and NFC tags, to be attached to a product so that customer can access information about it simply through their smartphones;
• Web portals and mobile apps, and authentication methods like those of Certilogo, to help sharing more information. Moreover, customers can register a product they bought and verify its authenticity. This is particularly useful in the case of second-hand products.