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Supply chain transparency in the apparel industry

80% of apparel companies lack supply chain transparency

Sustainability in the apparel industry has come under the spotlight in recent years.

It encompasses many different aspects of the industry, from working conditions in garment factories to the origins of raw materials. It is also an issue that continues to evolve and may yet see other facets such as water usage and fair wages come under the spotlight in the future.

Supply chain transparency is essential when it comes to sustainability.

Without total visibility of all the companies across the entire supply chain and traceability of all materials used, the sustainability credentials of a brand cannot be verified.

What does supply chain transparency mean?

A company has supply chain transparency when it completely understands what is happening at every link in its supply chain.

This means being able to monitor and evaluate all relevant information along the chain, from sourcing raw materials to packaging.

There are two main components of transparency: visibility and traceability

Visibility

Total visibility is when a company has a comprehensive view of all parties that play a role in its supply chain, from farmers producing the cotton through to the delivery company that handles their packages.

Traceability

When a company can trace all the materials and components used in a product from their origins, through each step of processing and manufacturing, to the final good sold to a purchaser, only then can they truly say they have traceability.

KPMG Study

Conducted in August 2021, just before the COP26, Moving the needle – Threading a sustainable future for apparel was a joint study on sustainability, traceability and transparency within the apparel supply chain.

It asked over 200 senior executives around the globe, representing brands and retailers, suppliers, manufacturers and sourcing agents of varying sizes, to share their sustainable practices.

The results were eye-opening.

What the study found

While two-thirds of respondents thought transparency was “extremely important”, only 20% had a full overview of every party in their supply chain, with even less (15%) having full traceability.

The reason for such low accountability in the apparel industry is how it has evolved over the years.

The global apparel supply chain has developed over decades to meet one objective – keeping costs to a minimum.

That push for cost efficiency has come at the expense of transparency. Most companies just simply don’t know who is in their supply chain as they go further upstream.

A brand might buy their fabrics from a wholesaler in Thailand, but they don’t know (or care) where that fabric came from in the first place, or what kind of environmental/social damage it created.

Supply chain transparency

Why companies should become more transparent

The world is changing and sustainability is high on the agenda for many people.

Transparency is a prerequisite for sustainability.

A business cannot claim to be sustainable and then shrug its shoulders when asked where they get the materials for their clothing.

Any company that does not embrace supply chain transparency will lose a huge competitive advantage, and they must act now if they are to meet the growing demands placed on the industry.

Collaboration across the supply chain is key to success. Every business must be honest and open about their practices, and importantly, must only work with others who have the same ethos.

One bad apple in a supply chain has the potential to derail an entire business. As a matter of survival, brands will only work with other transparent companies to ensure they’re protected in the future.

Traceability isn’t a “thing” in itself – it’s more a tool, and businesses need to think strategically and use this tool for the future.

Today, the major issue impacting the industry is cotton traceability, but tomorrow it will be carbon footprints or water consumption.

Solutions need to be able to grow with the industry’s needs, and none of it is possible without supply chain transparency.

We take sustainability very seriously, helping our clients make the change to sustainable practices where possible.

Big changes are coming in the industry, and with our help, you can ride the wave, coming out stronger than ever.

Contact us today to find out more about how we can help your business be more transparent when it comes to the supply chain.