Almost every brand and retailer has a public sustainability strategy – whether it’s shown on their customer-facing eCommerce storefront, or relegated to a corporate portal. An ethical and environmental statement is essential.
For mission-led brands, sustainability is often a founding principle. For retailers, the drive for greater transparency usually comes from heightened consumer appetites for insight into how their products are being made. And across business types, CSR and ESG frameworks are being put together because investors feel a change in the wind, and want to put their money into companies with values that will stand the test of time, and operations with reduced exposure to reputational and regulatory risk.
Whatever the reason, it’s difficult to find a brand or a retailer that does not have an open commitment to minimizing its impact on the environment and promoting ethical treatment for its workers.
But in practice most of those commitments stand on shaky foundations.
Consider a company that stakes a bold claim to carbon neutrality, for example. That brand might declare itself “green” because it uses recycled ocean plastics in a capsule collection, or because its head office has been redesigned to incorporate sustainable lighting, heating, or water reclamation and drainage systems.
Or consider an alternative: a company that makes basic t-shirts or backpacks with organic cotton, rather than the more heavily-harvested alternative, and sells those products as being sustainable.
In both cases, the top-level claim falls apart if we scrutinize anything deeper than the first tier of the people and processes that contribute to it. The company with eco-friendly offices and reclaimed ocean plastics might also rely heavily on carbon-intensive air freight to get products to market on time – an impact that is not offset elsewhere in its operations. And the brand producing the organic t-shirt might find that between the farmer and the factory sits a dyeing operation that uses water-hungry synthetic dyeing processes and deposits the effluent into the rivers of an at-risk community.
These are hypothetical examples, but they are representative of just how complicated the picture becomes – for both products and processes – when we peel back even one additional layer of a typical sustainability statement.
For any given garment, shoe, or accessory to evolve from design to finished product, and then reach consumers, it passes through many different gateways. Its raw materials begin life as plants or animals on a farm, before making their way through a spinner or tannery, on to a mill, to a factory, through a port and a distribution center, and into the retail network. And so on.
That flow from gateway to gateway, tier to tier, is what I call the digital thread. And when we start to really follow it, a lot of brands and retailers who were previously proud of their sustainability commitments start to lose confidence. Because those tiers, which do not factor into most sustainability decisions, are where so much of the environmental and ethical harm caused by fashion supply chains comes from.
So it follows that those tiers are also where a lot of regulatory attention is being focused. From the UK’s Modern Slavery Act to Germany’s proposed Supply Chain Act, governments and NGOs are shining their flashlights beyond the first tier of the value chain. And this is creating a significant problem for brands and retailers, because a lot of what happens in the tiers below the closest one, happens out of their sight and therefore out of their control.
In fact, whether it’s fabric dyeing or raw material sourcing, many essential processes are going completely unmonitored – with their impacts not being assessed or recorded at all. So when it comes to making their own corporate statements, or declaring compliance with external regulations, fashion businesses are finding themselves stuck with the perennial problem of not being able to change what they cannot measure.
This has become a particularly thorny problem in 2020, as COVID has disrupted supply chains at every tier, the world over. Companies of every size have faced sudden shocks as they realize just how much exposure to risk their supply chains present – and how much of that risk originates from outside the immediate relationship between brands and their factories. While the most visible result of this disruption was cancelled orders, late shipments, and a lack of new products to introduce to channels, the root cause was often found elsewhere.
In these circumstances, it’s become essential for brands and retailers to obtain far greater insight into their product’s lifecycles than just their material composition and manufacturing location. As a result of both the pandemic and the pre-existing trend towards sustainability as a key purchasing and investment criterion, businesses now need a new kind of traceability and visibility – from first mile to last mile, and from fiber to consumer.
But it won’t just be more difficult to deliver that level of visibility without technology. It will be essentially impossible.
At every tier of a product’s journey to the consumer, there are countless possible outcomes, different paths, and multiple decisions to be made. In the nearest tier alone, a cotton t-shirt might be made in one factory while a line of denim products might be made in another, and accessories in another still. Each of those factories will have its own capacities, lead times, environmental standards, and specializations. Then consider the tiers below manufacturing: material sourcing, dyeing, distribution and so on. The digital thread from product origin to ownership will vary depending on contracts, sub-contracts, seasons, costs, and a wide array of other different variables.
This, in a microcosm, is the primary issue that’s working against the fashion and retail industry’s sustainability and digital transformation goals today. The different permutations of process and partners – the different kinks in that digital thread – blended across a brand’s entire range and its full suite of partners, from tiers 1, 2, 3, and even further down, is effectively limitless.
Tackling that issue needs to be a two-stage process.
First, data from each of those tiers needs to be gathered. This means everything from raw material provenance to the carbon impact of a particular factory running at full capacity. This is the only way to obtain visibility into processes beyond the proximate activities of sewing and assembly.
Second, that data needs to be centralized, interpreted, and then used to derive new insights and drive better-informed decisions. This is the only way to turn raw information into the level of action needed for brands and retailers to make confident declarations of compliance and sustainability.
Until recently, only the first of those two problems had been solved. With the right technology partners, audit structures, and other data gathering techniques, it’s currently possible to access the raw data for almost every different variable along the digital thread. But without the right systems to aggregate and analyze those data points, it has been difficult for brands and retailers to discover more than superficial insights.
Given the world we now operate in, this second problem needs to be solved quickly. As a brand or retailer you need to be able to accelerate your decision-making, respond to changing market conditions, and adapt to an evolving environment without compromising your ethical and environmental standards.
At Logility, we have devoted a lot of attention to making this level of real-time decision-making possible. From our rich heritage in both PLM and supply chain solutions, we understand how the right combination of software and hardware can collect and centralize essential data from every stage of the value chain. And from our experience of building intelligent systems that allow businesses to translate that centralized data into actionable insights, we know that equipping stakeholders at every level of product design and development with the right tools to understand the impact of their decisions is going to be vital in 2020 and beyond.
This is why the Logility platform employs machine learning, allowing users to quickly model multiple sourcing scenarios that take account of every possible permutation of the digital thread, and enabling them to assign greater weight to the priorities that matter to them – such as sustainability. For any single product, Logility offers the ability to choose one or more key constraints – from delivery time to ethical standards – and to then compare one scenario against another.
This, I believe, is the only way that the truth about any product’s impact can be known, and it is also the only way that organizations like yours can substantiate their sustainability pledges in the kind of detail that is going to be required by consumers and regulators in the very near future.
With that level of insight and intelligence in place, it will be possible to create a comprehensive sustainability statement that your business can stand by – whether the key metrics to be measured and improved occur at the last mile, the first, or anywhere in between.
About the sponsor: Accelerating the digital supply chain from product concept to customer availability, Logility helps companies seize new opportunities, sense and respond to changing market dynamics and more profitably manage their complex global businesses. The Logility Digital Supply Chain Platform leverages an innovative blend of artificial intelligence (AI) and advanced analytics to automate planning, accelerate cycle times, increase precision, improve operating performance, break down business silos and deliver greater visibility.
Logility’s SaaS-based platform transforms sales and operations planning (S&OP) and integrated business planning (IBP) processes; demand, inventory and replenishment planning; global sourcing; quality and compliance management; product life cycle management; supply and inventory optimization; manufacturing planning and scheduling; retail merchandise planning, assortment and allocation.