Conversations: Paul Magel, President, Business Applications Division Goup, CGS Inc.

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.

For more on sustainability in fashion, download the full Sustainability Report 2023 completely free of charge and ungated.

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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?

Sustainability is a relevant term. Retailers, brands, suppliers and consumers are paying attention to global working conditions and fashion’s environmental impact. Sustainable processes and practices, benefiting workers and the planet, are vital to reputation, trust, sales, and profits. All are interconnected.

Sustainability means doing business ethically and efficiently. The two go hand in hand with effective environmental, social and governance (ESG). An efficient company is one that reduces waste, conserves resources, and retains customers and suppliers through strong, ethical leadership and operations management. CGS supports customers with process improvement and technology solutions to manage fundamental business processes while meeting high ethical standards and achieving great efficiency.

Perhaps the biggest roadblock facing brands today is building a clear picture of their supply chains. This has its roots in the opaque nature of fashion’s multi-tier, multinational sourcing networks, but also in the fragmented platforms that are used to hold and manage key processes and critical data, and whose users span suppliers, buyers, sellers, auditors, and other stakeholders. How feasible is it to consolidate all that and start to build visibility in a single platform?

For millennia, trading partners have maintained transaction records. Buyers know to whom they sell. Sellers know who supplies them. Supply chain opacity is not an insurmountable challenge. Quite the opposite. It’s a matter of researching and verifying chain-of-custody handoffs, capturing this information in a centralized technology solution, and keeping it updated. CGS supports our customers in building a digital twin of their physical supply chain. It doesn’t have to be difficult, drain resources or strain teams and suppliers.

There’s a lot of talk around traceability in the abstract, but the specifics are proving harder for a lot of brands to pin down. Having the capability to trace the journey of a product is not just a case of mapping your supply chain, for example, but also tracking material lots as they move downstream, tracking purchase orders and individual items, and objectively verifying both transactions and the impact of each stage of transformation. What do you believe are the concrete essentials brands and retailers now need to start building a data-backed chain of custody, rather than making a generic promise of traceability?

Integrated ERP and PLM are essential. Product information, including raw materials, suppliers, capacity, and workflow data, resides in PLM from style inception to finished product. ERP manages purchase orders, final costing, bills of materials, bills of lading, payments, order management and other functions. These solutions can be configured to track and trace raw materials, multi-tier suppliers and processes at lot and item levels. Companies have a business control centre to manage all business processes, including ESG activities and chain-of-custody documentation.

A major catalyst for many sustainability strategies is legislation. From the US to the EU, what are the key social and environmental responsibility regulations that brands need to be ready to comply with? What does it look like to comply with them, and to be ready for a new age of disclosure and reporting, practically speaking?

The U.S. Uyghur Forced Labor Prevention Act (UFLPA) has been an ESG compliance catalyst since going into law December 2021. Major retailers including the world’s largest, Walmart, quickly issued their own mandates for supplier ESG responsibilities, including documented chain-of-custody information about their extended supply chains. If passed into law, the New York Fashion Sustainability and Social Accountability Act will have major repercussions for supply chain visibility and disclosures. Meanwhile there are fast-changing government regulations and guidelines, such as restrictions on polyfluoroalkyl substances (PFAS), long used for textile water repellency. Understanding and communicating with customers and suppliers about these evolving rules is one thing, and it’s hard enough. Centralized data management, technology-supported supply chain mapping and automated reporting are keys to keeping up with ESG compliance — with accuracy, scalability and adaptability to inevitable legislative changes, new laws and customer requirements.

There are numerous other third parties, standards, solutions, auditors and agencies that brands can potentially work with to enable lifecycle impact assessments (LCAs) and calculate or validate other environmental and social metrics. Whether brands are working with these to give them the right data layer for creating digital product passports, or to prepare for future legislation, how important is it to have them integrated into existing enterprise solutions?

It is very important to integrate third-party LCA metrics, audit findings, vendor scorecards and other data into a company’s core business solution. This information can be linked to existing materials, suppliers, product development steps, manufacturing processes, costing and workflow management.  Then companies are not reinventing the wheel; they are augmenting what they have. Without this integration, internal teams and suppliers will be bogged down with redundant data entry. Also businesses face risks for errors, visibility gaps and speed-to-market slowdowns.

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?

With natural disasters in the daily news and more consumers mindful of ESG issues, ESG isn’t a short-term fad for fashion or any other industries. Businesses need to build a big-picture ESG strategy. This should not happen in a vacuum but rather be planned and executed with continuous process improvement across all business operations, such as day-to-day product development, quality and order management. CGS is prepared to partner with customers to forge their long-term ESG plans, aligning that roadmap with the right processes and technology solutions to achieve their core business priorities and adapt to change.