The time is now for digitalization of the apparel industry
For consumable food products, product safety, freshness, quality, traceability, and tracking of origin have been standard requirements with regulatory measures in place for long. It is understandable that as consumers, we want to be sure of the safety of the stuff we put into our bodies directly.
Why worry about these issues when it comes to clothing? We don’t eat our clothes. The answer lies in one simple Google search -- Rana Plaza, which will throw up 10,800,000 results in 0.41 seconds.
It becomes obvious that there is a huge amount of concern around issues surrounding the apparel industry, such as worker safety, sustainability, corporate social responsibility, compliance, and transparency.
Retailers and brands are concerned, because the credibility and reputation of their brands in the eyes of their customers is directly impacted by such issues. If it is not good for planet Earth and its inhabitants, it is not good for business. This is the mantra for today’s conscious customers.
CSR, compliance, and sustainability, which were treated as “necessary evil” relegated to a separate HR or audit department even a few years ago, have today become the central core of strategy for any brand or retailer. It is no longer a mere PR exercise, but something that sits right at the centre of what defines a brands core values and unique value proposition.
It’s quite like the quality revolution that our fashion industry underwent in the past decades. There was a time before the advent of TQM, Kaizen, and Lean Six Sigma, when companies would discover quality problems only after the entire order runs were finished and inspected. Today, most factories perform in-line inspections and have procedures for nipping quality problems in the bud.
In the context of Bangladesh, one look at the websites of Alliance and Accord will reveal the tremendous headway that has been made in the apparel manufacturing world in collaboration with brands/retailers and bodies of the government.
About 90% of Alliance factory remediation is complete, more than 1.5 million workers have been trained to protect themselves in case of a fire emergency, and a confidential helpline is available to 1.5 million workers, 24 hours a day. Most importantly, there has been zero loss of life due to a structural, electrical, or fire-related accident in a factory where the Alliance has led on remediation.
Similarly, Accord’s Quarterly Aggregate Report on remediation progress of RMG factories covered by Accord states overall remediation progress rate of safety issues identified in initial inspections reported or verified as fixed has reached 84%. Remediation is close to completion at 767 Accord factories which have completed more than 90% of the remediation. 142 factories have completed all remediation from initial inspections, out of which 14 factories have remediated all the issues, including the new findings.
While these are impressive achievements, there are several challenges still facing the apparel industry. Transparency requires an openness and trust that not every company is willing to embrace.
The complexity of the global apparel supply chain with multiple players at tiers one, two, and three, combined with age old practices of buyer/supplier relationships -- each holding their cards close to their chests -- makes it challenging to achieve transparency.
Within the organization, for too long, sourcing professionals have been measured for their performance on price, margins, and on-time delivery. Sustainability, CSR, compliance issues have not yet become integrated into performance metrics at individual professional level. Many companies still have bifurcations between sourcing and compliance function.
A factory can be instructed by a compliance team to do something one way, and then sent different signals by the sourcing team. Incentivizing decisions that directly impact sustainability and transparency are significant internal changes that need to occur.
The time pressures of fast fashion that reduce the lead time from concept to shop floor, further makes it difficult to adjust or make changes in sourcing plan if safety or compliance has been compromised. The tendency is to go ahead as before due to “time” pressures. Fast fashion encourages short-term thinking where as issues such as sustainability, compliance, CSR require long-term thinking and transformational approach.
A full 70% of Apparel Survey respondents say their supply chains are only somewhat transparent, mostly not transparent, or have very little visibility. A big part of the problem is the manual way many apparel retailers, brands, and manufacturers report they are collecting and managing supply chain information.
Additionally, when systems don’t talk to each other, it takes a lot more effort for internal teams and global trading partners to do so. Accuracy and timeliness of the data is another major challenge.
Despite the challenges, the importance of having supply chain transparency at the core of business cannot be undervalued any longer. Consumers care for such issues more than ever before, especially the next generation. Citing research from the Haas School of Business, the article states “more than nine in 10 millennials would switch brands to one associated with a cause.”
A recent study of 20,000 adults in five countries by Unilever found that: One-third of consumers buy from brands based on their environmental and social impact. A $1.15 trillion opportunity exists for brands that make their “sustainability credentials” clear.
Technology can be a major enabler in achieving transparency in today’s world of fashion and apparel. Global internet connectivity is improving each day. Cloud-based platforms are becoming more cost-effective. Several technology solutions are available in the market already.
Digitalization can ease increased transparency directly from the factory floor -- including direct worker feedback and tracing materials from cradle to shop floor.
Specific digital solutions include cloud-based platforms for vendor compliance, RFID, and IoT technologies that trace the product from its origin to its end. DNA tagging has enabled the tracing and tracking of product in textile sector from cotton seed to the final garment.
Another interesting technology which is worth mentioning and watching out for is blockchain technology. It has the potential to completely transform the way information and transactions are captured, owned, stored, and shared among companies and whole ecosystems -- and thus, radically increase transparency across the supply chain. In addition, it will enable much easier end-to-end tracking of products along the value chain.
Having a single source of truth is also important. Sustainable Apparel Coalition has developed a self-monitoring standard rating system called Higgs Index that companies can use for assessing environmental and social sustainability throughout the supply chain. Denim Expert Limited became the first apparel manufacturer from Bangladesh to join SAC.
These are positive signs. Digitalization is the enabler to build customer-focused business models based on single view of information, real-time data-based decision making, collaboration across the supply chain partners, end-to-end efficiency, and total transparency.
Time for adopting technology and digitalization is now. Are you ready?
Mostafiz Uddin is the Founder and CEO of Bangladesh Apparel Exchange (BAE) and Bangladesh Denim Expo. He is the Managing Director of Denim Expert Limited.