Apparel Industry Benefits from Supply Chain Data

While the global textile and garment industry is worth some $3 trillion, the ephemeral nature of fashion – where what’s hot and what’s not can change in the blink of an eye – poses a series of formidable sustainability challenges, not least in the supply chain of brands everywhere.

Many of these issues center around the theme of traceability, particularly when it comes to the building blocks of the sector – the fibers. The two dominant fibers are cotton and polyester, which each have different environmental issues.

Cotton is a very thirsty crop with a huge water footprint, on top of which farmers’ use of fertilizer and pesticides can cause problems for local watercourses. Cotton uses just 2.4% of the world’s cultivated land, yet it accounts for 24% of global insecticide use and 11% of global pesticides, making it the most pesticide-intensive crop grown on the planet.

Polyester, by contrast, uses barely any water in the manufacturing process but it is energy intensive and it derives from petrochemicals.

Along the chain – when those fibers are turned into clothes, shoes and other garments – many of the issues are social. High street clothes are cheap because costs are externalized. A lot of the countries where clothes are made are poor, developing countries and companies are exploiting cheap labor.

If costs rise, customers simply move on to the next low-cost destination. Factories that were first outsourced to China have moved on to countries such as Bangladesh and Vietnam as Chinese wages have risen. This gives suppliers a huge incentive to cut corners to keep costs down, leading to an industry where wages are low, investment in health and safety is kept to a minimum and workers are often exploited.

The Rana Plaza garment factory disaster – which saw 1,134 were killed in the industry’s worst-ever industrial accident in Bangladesh in 2013 – also highlighted the opacity of the sector’s supply chains, with 29 brands having clothes made in the complex without being aware of it.

There are a number of initiatives designed to turn the tide in the fashion sector. The Sustainable Apparel Coalition (SAC), which was formed in 2009 by the US retail giant Walmart and outdoor clothing brand Patagonia, has been trying to unify the industry and encourage competitors to come together to work out solutions to the range of environmental and social issues together.

Key to this collaborative approach is the SAC’s Higg Index – a standardized supply chain measurement tool that enables all industry participants to better understand their environmental, social and labor impacts.

For those just starting to implement sustainable practices, the Index guides their first steps, helping to distinguish strengths and weaknesses in the supply chain. For those already deeply engaged, it has more advanced potential, such as benchmarking sustainability performance against other SAC members, identifying macro risks and performing targeted research and analytics.

Suppliers are invited to complete an online assessment, featuring both an environment module and a social/labor module. Each supplier has their scores aggregated and the final results are used to compare companies to act as an incentive to boost sustainability performance.

Moreover, some Supply Chain software solutions already offer full integration into the Higg Index, which means users do not have to ask supplies to re-submit the same data they have already supplied. The system can automatically pull in the Higg Index data – information which can be used to determine where a company might want to prioritize its efforts, whether to better engage and help a supplier, or maybe to re-audit a supplier based on their Higg Index score. The data view can be filtered by fields such as location, company type, or by specific responses given within the Index.

The need for fashion brands to act is not just being driven by ethics. As well as the growing pressure from consumers, the industry faces a growing number of regulations on issues ranging from hazardous chemicals to modern slavery. In the UK, the Modern Slavery Act states that any business with a turnover of more than £36m must report on what they are doing to deter modern slavery in its supply chains. Similarly, in the US, many more states are likely to follow the example set by the groundbreaking California Transparency in Supply Chains Act, which asks retailers and manufacturers doing business in California to disclose what actions they are taking to address risks of human trafficking and slavery and conduct supplier audits. Companies buying from suppliers in Bangladesh that are using slave labor can now be prosecuted.