Technology within the fashion supply chain has advanced massively over the past decade. Not only is there now the possibility to automate processes that were traditionally very manual, but new techniques have also evolved to make production more sustainable and circular.
Possibly one of the most important technological advances has been the transformation of blockchain technology into a tool for digitising the fashion supply chain. Fashion production is notoriously complex and hidden, and it is here in the shadows where unethical and unsustainable practices still occur.
In fact, anti-slavery.org estimated that each year 40 million people are in modern slavery, with there being over 10,000 cases reported in the UK in 2019.
Blockchain was traditionally for securely transferring assets digitally, but it is now being used as a way to show verified traceability of fashion products to the end consumer, in a bid to eradicate these known but concealed malpractices.
However, while the potential of blockchain technologies has been voiced and solutions now exist, the issue comes with scaling these approaches up across the industry. This is something that PaperTale, a blockchain based technology company from Sweden, is prioritising focus on.
So what are the main issues?
Firstly, as mentioned, fashion supply chains are extremely complex. This is not just regarding their dispersed nature but also rapid sourcing changes and varying management approaches. This means that just one fashion brand could have hundreds of different suppliers which they alternate between in order to meet the specific requirements of a range. Some of these suppliers may be subcontracted – either knowingly or unknowingly – and depending on the sourcing location there may be either direct or indirect contact with them. As implied, extra logistical complexity arises for larger brands who may have their production managed by third party companies and therefore products which may go through several different changes of hand before arriving at their final destination for selling.
How do you offer traceability of this?
For a blockchain solution to be truly scalable across these big supply chains, it needs to be developed in an environment where there is room for mistakes to happen and where tackling subsequent complexities can be addressed. It also requires an effective way of providing knowledge and expertise so that production units can operate autonomously with the new technology.
Just recently, PaperTale partnered up with Crescent Bauhuman (CBL), a large scale denim factory in Pakistan producing around a million units per month; this partnership will see PaperTale’s traceability solution being implemented throughout CBL’s campus (which is home to approximately 8,000 employees), making it the largest scale implementation so far.
The Swedish company has already been integrating its solution in a mid-sized garment factory called OUTSO in Lahore (Pakistan), but for a bigger implementation like CBL, a few things will be critical given the nature of blockchain as a solution:
Automated Data Collection
One of the greatest things about blockchain is that once data has been entered it is almost impossible to change it, making it a great tool for eliminating corruption.
However this also presents some challenges when using it at scale. For example, how do you ensure that all the data is being entered correctly and at the right time?
Despite CBL being very keen to offer PaperTale’s “radical transparency”, as with any new technology, the learning curve to train even just the key people will be steep and so in the outset human error will be almost inevitable. Therefore, to ensure that the information being presented on blockchain about CBL is as true and accurate to the real situation as possible, automating data collection where possible is going to be critical.
Numerous blockchain researchers have presented the idea of using sensors connected to the IoT as a means of data entry onto blockchain (rather than humans), but each also acknowledge the upfront cost and technology gap that may exist to enable this. PaperTale hopes to explore with CBL whether there is a medium that can be achieved on this front so that it’s implementation is affordable but also results in the same true and factual transparency. One element that will be tested in particular is a system that automates the verification of salary payments, which is currently being developed with OUTSO; with around 8,000 employees at CBL, this is the perfect opportunity to test and improve the scalability of this aspect, to show that all workers are being treated fairly and lawfully.
Automation like this could also be important in solving some of the complexity issues mentioned above as, if the technology requires no more effort than standard operations, then it will much more likely be accepted by actors up and down the supply chain.
Integration With Current Systems
According to Baltzarova, “Practically anything measurable, expressed in numbers or letters, can be stored on the BCT platform”.
With this in mind a huge amount of data and information will be generated by each supply chain actor surrounding their products, processes, facilities, transport details and so much more.
Many vendors will already have ERP systems and technologies to log this data and hence streamline operations at their unit – therefore a big part of any blockchain implementation is the development of bridging solutions that can take information from these systems into blockchain.
A further consideration at this point is then how this information is stored on blockchain. Blockchain’s design enables each member to have a public–private key pair which gives them a specific access and involvement level. For example it is possible to create certain channels to which only specific members can get access, and this access may be “read only”, or may enable them to “write” information.
Currently there is little industry-wide guidance on these practical implementation elements for blockchain and so most of the upcoming solutions are taking their own approaches regarding this.
PaperTale claims they are aiming to develop a completely public blockchain solution which will ensure each member is much more accountable for their actions; CBL’s genuine desire to be transparent and showcase the work they have been doing surrounding sustainability is a very encouraging note on this, but it will be interesting to see whether this could become the new standard that the whole industry accepts.
Standardisation in general is actually a much bigger conversation for blockchain and traceability than just who can see what data within a supply chain though. Looking at it from a supplier perspective, having many different customer’s, all of whom are demanding different levels and types of traceability, will never be practical. Equally what will the new industry standards be for calculating / assessing sustainability and social compliance now that certification is starting to fade?
While it is innate for businesses in the fashion industry to keep their procedures concealed, it is clear that the only way to ensure traceability is adopted is to make an open conversation in the community, with the hope that one approach may be accepted. Recently a company called Allbirds actually took a step that very few others have taken and published their life cycle assessment (LCA) tool and encouraged other brands to use this to calculate the carbon footprint of their products. With this kind of knowledge being shared, many more companies will be able to calculate their impacts in a way that was seen as valid by others. PaperTale is about to take a similar step with the ambition of publishing a white paper detailing and comparing their journey and methodology for both traceability and calculating environmental impact with other similar approaches. They plan to invite industry experts to come forward with suggestions to improve their approach, all in the hope that scalability will become a much more achievable target.
However, while these efforts will start changing attitudes in the industry, national and international regulations are still critical for true progress to be made. A particular brand may be keen to adopt a blockchain traceability solution, but if they can’t get all of their suppliers on board because they are having traceability requests in multiple different ways, then what can that brand do?
On this line, the UNECE has just published a recommendation for traceability but given it is only a recommendation, it is unlikely that it will see widespread adoption. Equally any regulations or standards that may be released need to cater to all different types of business, regardless of whether they import, export or distribute products. This will be an undoubtedly difficult task for any regulatory body / government to take given the differences between different economic areas and customs globally, but it cannot be avoided.
Despite these issues, 2022 could be a big year for blockchain traceability, taking it from a suggested solution to an adopted approach. If one large scale implementation is successful, then maybe this is all it will take to give others the confidence to follow suit.