To promote sustainability and compliance throughout the supply chain, brands should be careful to avoid the mistakes of the past
By Claire Milner, VP EMEA Sales
It’s easy to think of the world of fashion as fast moving and disposable. A fickle industry built on what’s hot right now, with little use for yesterday’s trends. But when you talk to industry, another pattern begins to emerge. Brands care more than ever about their impact on the environment and the working conditions of their suppliers. Sustainability and corporate social responsibility initiatives are in style, and it’s a trend that won’t likely go out of fashion soon.
Following a great couple of days participating and discussing with apparel vendors, NGOs, sustainable associations and coalitions, I have been struck and pleased (as someone passionate about this subject) by the momentum I see across all parts of the industry. There is a growing realisation that being sustainable isn’t just about “being good” or “doing the right thing.” It is also about good business and a long term sustainable growth strategy. We even heard some cases where investments from VCs, funds and banks used improvements in having or achieving a more sustainable supply chain as additional KPIs or reasons to invest. This is an important step in my mind. If we fail to connect sustainability and corporate social responsibility (CSR) to the bottom line, these initiatives will either stall or never deliver on their commitments or desired objectives.
How do you measure sustainability?
There are thousands of initiatives linked to sustainability. Whether it’s a move to promote transparency or traceability in leather back to the cow or cotton to the bud, the reduction of water in manufacturing, improvements in welfare and conditions for factory workers, the reduction in CO2, carbon or SOX/NOX compliance, they are all valid programmes, all driven by the dedication of passionate people who want to make a difference in the way we design, source, make and consume our clothes. And yet while collaboration is happening through the sharing of ideas and methods to solve these problems, it’s still hard to measure success. Many initial “solutions,” and by that, I mean the digital solutions businesses are developing today, are repeating the same mistakes made in other parts of enterprises 10 years ago – mistakes we’ve spent the last 10 years trying to solve. These solutions are being developed in isolation of each other or other parts of the business, in silos. And while they’re done in the interest of the common good, when developed in a vacuum, these solutions represent standalone pieces of information out of context and out of sync with the reality of running a supply chain in today’s highly networked world.
I’ve heard many times, “if only there was an innovative way to share and collaborate on sustainability data instead of just putting it in databases and then running reports, or us all having to develop our own solutions.” And how do we create financial value from these initiatives for the bottom line so we can get funding?
My view from the field having worked in technology for more than 20 years is why reinvent the wheel or build it yourself if a great solution exists – even if it was not originally built to solve the problem we are trying to address today. What’s at the center of most sustainability and CSR initiatives? It’s transparency, traceability and incentives backwards into the supply chain to encourage fair trade, to improve working conditions, and to develop manufacturing practises that have positive environmental impacts. Success depends upon collaboration between multiple parties, from suppliers to fashion brands, and their trading partners. And the solution must be straightforward and easy to understand, or else no one will adopt it. Most fashion brands work with many – often hundreds – of suppliers. And each of those suppliers works with many brands. If everyone has a different model, a different way to integrate, a different way to audit, proprietary compliance methodology, disparate IT systems, or different requirements, the suppliers won’t be able to keep up with all the portals and reports and solutions they must use and the costs of re-building the integrations each time for each solution will be prohibitive. Complexity on this scale is the enemy of innovation.
Embrace technology if you want customers to embrace your brand
What if there were a business trade network: a digital technology platform that was already connected to a significant number of first tier suppliers and some second- and third-tier suppliers in the apparel and footwear industry? A network that was built to synchronize data, to facilitate collaboration between brands, suppliers, and third parties. A digital platform that already enables improvements in working capital for both the brand and the supplier, that can facilitate the reduction in lead times and provide better visibility into supply to improve allocation and replenishment decisions. A platform that allowed banks and the IFC the possibility to offer access to better rates of capital for suppliers that make environmentally or ethically smart decisions about their business practises. What if there was a network that was designed to be developed upon, allowing external third parties to use the power of this connectivity to build additional functionality to solve new challenges (such as sustainability) that require a collaborative effort that could then be shared easily across brands and across suppliers because they are already operating their day to day businesses on the network. Suppliers could then use the same solution to interact with all their brands, brands would get the improvements they are looking for on traceability, auditability, and sustainability, the industry would have a global standard by which to benchmark as everyone would be using the same metrics.
These capabilities all exist today, and they’ve contributed to the success of brands like Patagonia, Puma, and Levi’s – brands that are leading the way with creative solutions to support corporate responsibility programs while rewarding sustainable practices among suppliers. By adopting a networked approach to supply chain financing and visibility, businesses can improve sustainability and tie those initiatives to measurable business outcomes, and, importantly, provide the security of knowing where, how, and who made your products.
Tagged: corporate social responsibility, fashion, partner collaboration, supply chain finance, sustainability, visibility