When forced labour concerns prompted the US to ban imports of cotton from the Xinjiang region of China earlier this year, it created an urgent challenge for one of fashion’s most important raw material supply chains — and an opportunity for the companies that aim to demystify it.
Within days of the announcement, supply-chain-mapping company Sourcemap upped the marketing for its product, a tool that promises to help brands weed out labour abuses for a monthly fee of about $1,700. The company says it has seen interest in its forced labour due diligence services increase threefold in the past three months.
It’s just one of a number of tools that have proliferated in recent years, prompted by headline-grabbing scandals and frequently enabled by buzzy new technologies like blockchain and machine learning.
At issue is one of fashion’s most basic challenges: brands say they are committed to protecting workers and the environment throughout the supply chain, but most of them have no idea where their cotton is grown, fabric is dyed or even where some of their clothes are sewn.
Untangling and monitoring the industry’s sprawling and disconnected network of global suppliers is a costly headache, but those major blind spots mean human rights abuses often go undetected or ignored and brands are flying blind when it comes to tackling their environmental impact.
[When] you get to a farmer, you may be literally faxing a document or delivering paper. It’s an analogue process.
It’s an issue that has plagued the fashion industry for decades, but new technologies and mounting pressure from consumers, investors and regulators are prompting a drive for solutions. BoF analyses the tools brands are turning to.
The Digital Opportunity
While fashion thrives on selling newness, its methods for managing supply chains remain stuck in the past. Suppliers can still be found recorded on sprawling spreadsheets that can contain significant inaccuracies. Further down the chain it’s not uncommon to find records kept by hand with little to no digital infrastructure, making it easy for important records to get lost.
“[When] you get to a farmer, you may be literally faxing a document or delivering paper. It’s an analogue process,” said Nish Kotecha, chairman and co-founder of Finboot, a blockchain enterprise that recently secured £2.4 million ($3.3 million) in funding and counts Spanish brand Desigual among its apparel clients.
Finboot’s Marco software allows suppliers to upload images of paperwork like invoices using nothing but a cheap smartphone, creating a digital paper trail back through the supply chain. The data is secured through blockchain technology, meaning it’s stored in a digital database that is time-stamped and tamper-proof.
Other services promise to amplify digital records with smart tech like machine learning. Brands using Sourcemap invite their direct suppliers to fill out a survey, which in turn provides information on the next tier of suppliers. It takes 12 weeks for a large multinational company to map its supply chain from factory to farm, Sourcemap chief executive Leonardo Bonanni said. Data such as payroll and production records, audit reports and business licences are then run through an artificial intellegence-powered algorithm to identify potential issues. The algorithm analyses things like whether there is enough manpower or farming land to produce the quantities that suppliers have reported.
“It works a lot like a credit card fraud detection,” said Bonanni. “If we see anything out of the norm, we notify our customers so they know where they should send their auditors.”
But these tech innovations aren’t foolproof. They rely on every link in the supply chain to accurately self-report on their business activities. Many suppliers are themselves large multinationals with facilities across continents that may not align with the billing address on invoices, leaving murkiness in the system.
Similarly, algorithms that rely on machine-learning are only as good as the data they receive. It’s hard to detect anomalies when suppliers are only asked to provide information about their production for a single brand or client, says Mark Burstein, industry principal for retail, footwear and apparel at digital supply chain solutions firm Logility. For instance, such piecemeal data collection means a supplier could potentially claim to have used the same batch of ethically sourced cotton to make an impossibly large volume of garments.
As digital tracing is adopted more widely, and if brands open up to sharing information with potential competitors, advocates say it will become easier to spot red flags or discrepancies in the data suppliers are reporting.
Supply Chain CSI
One emerging area that promises to address some of the outstanding challenges is forensic analysis.
For example, cotton products can be tested for their genetic characteristics or specific chemical elements absorbed through the soil during the growing process, both of which indicate roughly where the material was produced. Oritain, a firm that traces and verifies the origins of cotton using a unique chemical “fingerprint,” has attracted interest from companies including Gucci-owner Kering and New York-based brand Theory.
It’s not a lack of technology or tools, it’s really a lack of will and intention.
Other initiatives focus on using DNA tags that can be sprayed onto harvested cotton, which advocates say offers more granular detail as the material can be traced to a specific farm or ginning facility, not just a wider geographic region.
“It’s probably the most precise method available, not just for cotton but for any raw material,” said MeiLin Wan, vice president of textile sales at biotech firm Applied DNA Sciences. “The DNA is either there or it’s not; you only need one molecule to verify.”
It’s also one of the only physical markers to survive all stages of the apparel manufacturing process, according to a 2018 study led by by blockchain firm Bext360 and supported by a number of fashion brands that tested a variety of scientific tagging methods, including DNA tags created by biotech firm Haelixa.
Like all supply chain tools, DNA tagging requires sustained investment from brands. Industry executives estimate the cost at a few cents per garment, a number that can quickly add up for companies that produce large quantities on thin margins. Brands also need to do the work to trace back their supply to the point where raw materials can be tagged.
But not all the solutions gaining traction require new technological bells and whistles. Perhaps the most effective way to tackle the problems caused by fashion’s opaque supply chains is to address the underlying issues through closer partnerships and simplified networks of suppliers.
As scrutiny of the sector mounts, some brands and manufacturers are looking to adapt their businesses to enable greater transparency.
For instance, sustainable jeans maker Saitex is currently building its own spinning and weaving mill in Vietnam. The mill is slated to open in August, giving brands that source from Saitex full visibility back to material production. The cotton the mill uses will be monitored by FibreTrace, a start-up using blockchain-enabled trackers of special luminescent pigment part-owned by Saitex founder and chief executive Sanjeev Bahl.
Elsewhere, brands are looking at partnerships that can help drive visibility even deeper in the supply chain. Growing interest in materials that are organic or grown using regenerative practices is also helping to drive engagement at the farm level. Indian textile giant Arvind Limited said it has seen a substantial increase in interest in its programme to co-finance more sustainable cotton cultivation, both as a result of concerns over Xinjiang cotton and the rising premium for organic materials.
“Instead of depending on third parties or cotton traders we try to have more visibility and get brands involved to get a real traceable supply chain,” said Arvind’s head of sustainability Abishek Bansal.
However, for all these solutions, the industry remains chronically opaque.
“It seems like the industry is somewhat paralysed,” said Wan. “It’s not a lack of technology or tools, it’s really a lack of will and intention.”
How to Build a Sustainable Fashion Brand – Tracking and Traceability
In Fashion’s Global Supply Chain, a Ruthless Race to the Bottom
What the Latest Clampdown on Xinjiang Cotton Means for Fashion
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