The origins of the things we make have assumed a new importance.  Across every industry, end consumers care more about where products come from, and who services are performed by, because world events have made them more environmentally and socially aware than ever.  And enterprises of every size and shape are wrestling to understand their supply chains to a level of detail that allows them to answer difficult questions about where their sourcing and production processes reside, and if standards are not being met, why.

The rationale behind the modern emphasis on transparency and traceability is multi-faceted, but whatever the brand or retailer’s reasons for wanting deeper insight into global procurement, trade, and production, they have one thing in common: there is little hope of them, or any other business, being able to carry on as they did pre-COVID, blind.

Why material visibility matters

The most cut-and-dried justification for greater sourcing and supply chain visibility is the economic one: an efficient supply chain relies on optimum resource usage, and the age of out-of-sight, offshore manufacturing has worked against this by creating numerous visibility gaps through which valuable time and capacity have been leaking.

Perhaps the most urgent reasons for any commercial entity wanting to better understand its supply chain come from civil society and governments.  The court of public opinion is quick to condemn brands that fall short of ethical standards, and reports produced by NGOs and other bodies are routinely exposing precisely these kinds of transgressions.  Last month’s Business of Fashion Sustainability Index revealed that fashion as an industry is still taking less adequate action on stemming the tide of textile waste, and protecting workers’ rights than any other area of concern.  And while evidence was visible pre-pandemic of consumers choosing to buy from brands with more transparent supply chains, that trend has manifested itself in a more significant way recently, with shoppers making significant lifestyle changes to accommodate sustainability as a result of COVID.

The world’s raw cotton production – from farm to gin – is concentrated in four countries.

At the same time, similar scrutiny is being applied at the investment and financial level: according to Morningstar Research, the quantity of assets in sustainable funds reached an all-time record in the fourth quarter of last year.  And although qualifying for inclusion in a sustainable fund requires a high level of transparency and disclosure from any organisation, further research from the same organisation reveals that a quarter of all European fund assets now meet the most stringent EU sustainability disclosure standards. In short: people are placing their money wherever they can do it with a clear conscience, and S&P Market Intelligence has now shown that sustainable funds are outperforming traditional index funds – a tipping point that could create a self-reinforcing cycle effect in the near future.

And private investors are only the thin end of the wedge, with nations taking a proactive approach to ethical and environmental concerns; regulations are now in force banning the importation of raw fibres, prepared materials, and finished products from one of the world’s top-producing territories by volume – China’s Xinjiang region.

All of which underlines the importance of re-examining your sourcing strategies, and seizing on the current opportunity to rebuild them, post-pandemic, in a smarter form than before.

How cotton can help us understand global sourcing strategies

In a past collaboration, we explained why cotton’s future and fashion’s future are intertwined.  The majority of apparel, footwear, and home textile brands use cotton fabrics in a significant proportion of their products – from poplin shirts to performance fabrics.  As fashion’s original fibre, cotton has been one of the world’s most-traded commodities for centuries, and a complex value chain has been constructed around it.

This makes cotton the ideal case study for understanding where supply chain risk and opacity originate.  And also how they can be overcome.

Cotton fibres undergo an exhaustive evaluation process.

The world’s cotton raw production is concentrated in four countries: India, China, the USA, and Brazil, in that order. From the farm to the ginning process, these countries, according to the U.S. Department of Agriculture (USDA), produce the bulk of the planet’s cotton fibres, which are subsequently used both domestically or as exports to be spun into yarns, or used in nonwoven products.

The yarn spinning process is conducted by mills, and the global market is similarly consolidated at this stage; while more than 100 different countries make use of cotton in mills and manufacturing, just six countries make up more than 80% of cotton mill-use, and China and India alone account for close to 55%.

While demand drives the flow of cotton, the balance between production, export, and use of raw cotton, is not equal country-to-country.  China is one of the world’s top two cotton producers, but it does not appear in its top five exporters; a significant amount of cotton grown in China is kept in-country for use in manufacturing for Chinese and international brands. And while India does account for 12% of the world’s export trade in cotton, it’s also the second-largest consumer of raw cotton – using more than 24 million bales in the 2020/21 crop year – meaning that it takes in much more than it puts out, in raw material terms.

This correlation between top producers and top consumers means that some countries can effectively safeguard their own supply chains, building up national reserves of raw cotton, and shore their industries up against disruptions in global trade.  Other regions that use cotton but don’t produce it – or export more than they need for domestic purposes – have become heavily reliant on imports of fabrics and finished goods.

These are, not coincidentally, the markets that have been the most exposed to the interruptions caused by COVID, and also the ones that were the most affected by geopolitical trade disruptions pre-pandemic. 

As well as more mundane forces, such as price volatility and exchange rate fluctuations, the global trade in cotton has been subject to successive rounds of tariff impositions and human rights concerns.  And these variables are not going away, no matter what materials you use. Although cotton may be the most visible commodity affected by international bans on the importation of fabrics and finished products that have links to Xinjiang, where 90% of China’s cotton is grown, new investigations are being conducted into the possibility that the fibres that make up other popular materials could also be traced back to the region.

The sourcing lesson here is clear: whatever products you create, and whatever materials you use, there are numerous overlapping justifications for being able to source those materials in a smart, agile way.

Make it, but make it traceable

To comply with both current and upcoming regulations, brands and retailers are understandably keen to make sure that their finished products can be traced back to their origins, with no interruptions or blindspots.  And here cotton provides a strong example of the ways in which the manufacturing process can either serve or undermine that visibility.

First, it’s important to understand that single origin cotton in manufacturing is often not the case.  In many regions, this complicates the start of the traceability process, since cotton bales, sometimes from different origins, are routinely blended to create more consistent yarns, it becomes difficult to confidently track a fabric back to its original sources, and sustainability credentials can end up being diluted past the point of qualifying for certifications

Permanent Bale Identification (PBI) allows for a bale of cotton produced in the US to be traced back to the gin where the bale was produced.

The same principles also apply to fibre quality: cotton fibres should undergo an exhaustive evaluation process prior to being sold in bale form, or being used in a mill, being graded for colour, strength, fineness, length, and uniformity.  Outside the United States, depending on sourcing location, this level of bale-specific data is not always easy to obtain, which has implications not just for sustainability statements, but the quality and durability of end products.

The United States has taken significant strides to enshrine the provenance of domestically-grown cotton using Permanent Bale Identification (PBI), which allows a textile mill anywhere in the world to easily identify the origin of the U.S. bale back to the point of the cotton gin location in the U.S.

For cotton sourced globally, then, a different approach may be required, and various traceability technologies are currently being proposed to plug the gap in visibility that the trade, mill-use, and manufacturing of cotton fabrics can create.  These fall into two categories: inherent and additive.  As the names suggest, inherent traceability properties are naturally-occurring compounds that are built into the fibre itself, allowing it to be traced back to the environment in which it was grown.  Additive properties are added to the fibre, the yarn, or the fabric at a position in the value chain at which, ideally, the provenance up to that point can be quantified some other way.

Both are exciting types of technologies with clear applications, but both may have limitations given the way that cotton is routinely blended – both with other cotton fibres, and with synthetics and manmade fibres, which will require their own traceability approaches.  Picture a 50% cotton, 50% acrylic mix, where each of those halves requires its own provenance-tracking technology, and where each could also have been created from a blend of fibres with different origins. Within this context, it might be difficult for any brand to say, definitely, where a product made from that fabric “came from”.

But the benefits of getting this right will be significant.  Not only at the point of sale, where the consumer can buy with genuine confidence, but in design, development, and sourcing, where establishing a clear understanding of the material supply chain can create an opportunity to reshape it to fit the level of agility, visibility, and integrity the market demands.

About our partner: CottonWorks™ is your go-to textile tool for discovering what’s possible with cotton. From fiber and manufacturing education to sustainability facts to fabric inspiration and trend forecasting, cottonworks.com has the information you need to stay in motion. Questions? Contact cottonworks@cottoninc.com.

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