Released in The Interline’s first Sustainability Report, this executive interview is one of a ten-part series that sees The Interline quiz executives from major companies on what the term ‘sustainability’ really means, as well as the integral role they play in supporting brands and retailers in their sustainability strategies.
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- Brands and retailers are increasingly prioritising sustainability as they strive to adhere to upcoming legislation, such as the Product Environmental Footprint initiative in the European Union. Consumers, especially the younger generation, are not only looking for companies to follow the rules but also demanding transparency, traceability, and action.
- Brands can begin their sustainability journey by focusing on several key areas, including compliance with regulations, ensuring accurate material composition and labelling, obtaining qualified certificates for materials, tracing the origin of materials, conducting cradle-to-grave Life Cycle Assessments (LCA), designing for recycling and circularity, and investing in recycling solutions.
- Improved forecasting and planning play a crucial role in driving sustainability initiatives. By leveraging advanced technologies and data analysis, brands and retailers can make more informed decisions and allocate resources more efficiently. This leads to reduced waste, better resource management, and environmentally conscious decision-making.
Do you believe “sustainability” is still a useful term for defining the complex road that fashion needs to travel? What does that word mean to you, and how does your definition manifest itself in your company’s approach to designing solutions for fashion’s most urgent challenge?
The term “sustainability” is broad but it is essentially driven by 2 things:
- Compliance – with government legislation. For all brands and retailers, compliance with upcoming legislation is probably at the top of their list. And Europe is at the forefront. The European Union Commission has an initiative called the Product Environmental Footprint (PEF) which is a series of indicators on how to measure the environmental impact of a product throughout its lifecycle. The EU Commission states in a July 2023 press release, that producers will be “responsible for the full lifecycle of textile products and to support the sustainable management of textile waste across the EU.” There will be separate collection, sorting, reuse and recycling for textiles in the EU. Compliance—including financial contributions based on levels of circularity—will be required by 2025. Stateside, the proposed New York Fashion Act (Senate Bill S4746) requires “fashion sellers to be accountable to standardized environmental and social due diligence policies, and establishes a fashion remediation fund.”
- Consumers – Using our market intelligence and analytics platform, Centric PricingTM, we looked at data in 3 countries—Germany, UK and the US—and analyzed over 8 million products between January 1, 2022 and March 31, 2023. We found that the highest sold-out rates of the group were for certified sustainable goods (which have also grown markedly YOY). Those without any certifications or only generic sustainable criteria, had the lowest average sold-out rates (see graph below). Sustainability is key to meeting consumers’ expectations, especially the younger generation. They are not only looking for companies to follow the rules, but want transparency, traceability and action, and are putting pressure on our customers to do more.
PLM is a fantastic vessel for product-related information. A product’s environmental score comes from the material itself and its production. This means that you need to be able to track the origin and the way it is produced. For example, organic cotton grown in Turkey uses less water due to the way they manage the slope of the fields vs. organic cotton from Punjab, India. This results in different sustainability impacts. Our customers are struggling with tracing the material down to the supplier itself. This is where a tool like Centric PLM can help. As part of the product development cycle, we manage the deliveries from the suppliers along with the certificates. We have had a customer ask us to implement PEF scoring methodology into PLM for compliance with regulations to prepare for upcoming legislation. We did it, saving them so much time and effort, to get their information in order.
Making measurable progress towards one or more sustainability goals can be a daunting prospect for brands, because there’s just so much ground to cover and such a strong mandate for urgency. What do you see as the most common first step that brands can make?
Sustainability is a journey and companies are at different stages along the path. Brands should use the ‘crawl, walk, run’ approach when it comes to leveraging PLM. We’re seeing many companies with sustainability teams working outside of PLM, so the idea would be to bring them into the system to centralize all product data.
The beginning stage or ‘crawl’ could be tracking/managing certifications in PLM. This is easily done on a material level and rolled up to a style level. Then, you can pull an exception report to show which materials have pending certifications and those whose certificates are expiring soon. Simply having visibility to this alone is a game changer—managing it normally takes a lot of time.
When it comes to selecting areas of focus, some relevant places to start are:
- Compliance, first and foremost
- Granular and accurate material composition and labeling
- Qualified certificates for materials, origin tracing, fiber tracing
- Cradle-to-grave Life Cycle Assessment (LCA) analysis
- Design for recycling/circularity
- Investment in recycling solutions
For those companies that are a little further along and have already analyzed and prioritized areas of focus, the next step is to implement the tools and processes to capture a baseline. From there, they can define improvement goals, and finally refine the tools and processes toward achieving those goals.
Some sustainability initiatives are specific to particular categories, but some are applicable to everyone. Perhaps the most universal is the need for better forecasting and planning, because the outcomes of choices made at those stages influence so much of the footprint of operations and individual products. What do you believe needs to change here?
As consumers ourselves, we all know that our unused products have to end up somewhere. But we must consider the unsold goods that end up in landfill as well. The majority of negative environmental impacts happens at the production level of garments— consumption of natural resources such as land to grow cotton, water used in production, water pollution due to dyeing/finishing products, greenhouse gas emissions.
This is about demand management; if we can improve forecasting, we can avoid much of the waste. To do that, retailers and brands must consider investing in advanced technologies that can manipulate volumes of data both up and downstream in the supply chain and integrate merchandising data for a controlled view of the business.
Better forecasting and planning can significantly improve sustainability initiatives by enabling more efficient resource allocation, reducing waste and promoting environmentally conscious decision-making. However, the granular level of data analysis and speed of information delivery required to have an impact is not possible with traditional planning methods and tools.
Better forecasting also leads to a more profitable bottom line. In our market intelligence study we looked at different categories like activewear, denim and footwear. For these, the sold-out rate was directionally higher for sustainable than for non-sustainable products.
Modern retail planning solutions such as Centric Planning™ leverage the power of AI for advanced demand forecasting with KPIs and analytics that alert planners and merchandisers well in advance, to make faster and smarter decisions. Advanced analytics algorithms accurately identify patterns and trends, enabling proactive response to changing demand. What-if scenario planning capabilities permit testing the impact of different strategies on sustainability goals.
The words get used interchangeably sometimes, but a verifiably sustainable supply chain is one that’s built on both traceability (being able to observe and monitor the product journey) and transparency (communicating openly, in the right language for the right stakeholder) about the data gathered from that journey. What role do you see your solutions playing in unlocking that sort of visibility?
PLM allows for full visibility into the lifecycle of the product, housing sustainability-related data alongside material records so that sourcing and design teams can make more ecologically-sound decisions. You can run an-end-of-the-season report and say “we used x amount of BCI Cotton this season,” or “x amount of styles contained BCI cotton.” This hard data can then be used by marketing to be made customer-facing. We’re seeing more brands favoring certifications or vendor compliance over emissions-related data to present to customers because emissions-related data is an estimate.
With an estimated 92% of the industry’s global impacts coming from dyeing and finishing, yarn preparation, fiber and fabric production, certifications are becoming increasingly important for companies with the need to understand what they get from their suppliers. It’s easy to trace your own products, but it becomes more challenging when you have a shirt that is manufactured by someone else on the other side of the world. I think the main challenge and what needs to be improved, is to incorporate the supplier information that’s coming from elsewhere. Your suppliers have their own suppliers and the complexity grows for each level of supplier that is added. It is important to have the right solutions in place because you can’t trace material origins like this in Excel.
There’s a lot of information contained in core enterprise solutions like PLM, but also a lot that lives outside, in platforms like Worldly or TrusTrace, or in other business systems. That data could prove to be the key to sustainability strategies, so how do you suggest fashion business think about bringing it all together in the right way to surface the insights and the objective information they need?
PLM acts as a centralized space that connects to ERP, Pricing, Planning and other solutions, so cross-functional teams can collaborate and share insights. When you add in partnerships with environmental entities like Worldly (formerly Higg), TrusTrace, Green Score Capital, Crystalchain or Fairly Made plus external databases, supplier portals, along with built-in functionalities like certificate and spec management, it all contributes toward a broader continuous improvement strategy that can be refined over time based on data-driven insights. It gives marketing, sales, supply chain and sustainability teams the data to align in making informed decisions.
Real-time data feeds, such as point-of-sale information and social media trends can assist in fine-tuning forecasts and dynamically adjusting inventory levels and product offerings to match actual consumer behavior and evolving preferences. This reduces unnecessary production, raw material usage and enables one to plan only for the logistical output required.
For a lot of fashion businesses, compliance with regional regulations is the priority target, but long-term sustainability is about individual and collective action to rapidly improve fashion’s environmental and ethical credentials. What do you think the future looks like at that whole-industry level? And what does that mean for your roadmap and your customers?
Fashion companies must follow the legislation, so of course, compliance is one of the first things they are concerned with. But to go beyond simple compliance, sustainability is important to consumers who want to feel good about their purchases; they want to have a clear conscience and not have to choose between the pleasure of owning a designer handbag or adding to the world’s pollution. It’s only a matter of time when the sustainability aspect will be the competitive differentiator.
The sustainability maturity model follows distinct stages:
- Capture, measure and compute environmental impacts and metrics against regulatory compliance requirements
- Meet or exceed benchmark compliance targets
- Achieve customer-specific product sustainability targets (LCA / PEF).
- ACT: Optimize product processes for sustainability across the entire product lifecycle
We’re seeing more companies bring sustainability targets into their seasonal line planning alongside their financial and development targets. In the US, the definition of ‘sustainable’ varies from brand to brand due to different eco-thresholds and goals. The materials they are using, the composition, the certifications tied to those materials, if materials are recyclable, and the compliance of their vendors, all factor into whether a style is sustainable.
It is incumbent upon all brands, manufacturers and retailers to do their part to lessen the impact that fashion has on the environment. A good starting point is the EU Commission’s approach to textile circularity; something businesses in all regions can strive to achieve. All of Centric Software’s solutions are market-driven and the market is clearly speaking out that sustainability is important. Through functions like document/certificate management, access to databases and regulations, material and fiber consumption reporting and data tracking, adding in the power of AI, enterprise solutions are enabling companies to meet their sustainability goals and move as an industry toward reducing the environmental footprint.