The operational and business benefits of verified and visible supply chains – Sourcing Journal
Over the past year and a half, Covid-19 has thrown many curve balls into fashion supply chains.
More recently, companies have had to deal with logistical upheavals linked to a lack of manpower, closed ports and a shortage of containers and equipment. As shipping times and costs increase, businesses are also faced with longer delivery times and reduced inventory. At the same time, materials like recycled polyester and cotton are becoming more expensive and difficult to come by.
To navigate a situation that seemingly changes on a daily basis, companies need to know their supply chain better, including details about suppliers, factories and the origins of inputs. Physical traceability at the raw material level can help provide this visibility, allowing companies to track and verify inputs as they progress through each phase of production. For example, Applied DNA Sciences molecular tags are placed on raw materials and can then be scientifically tested to prove that a specific garment or shoe was made with the claimed input.
“There will be product visibility and scientific evidence that the product is genuine, made within your supply chain and complies with your brand claims,” said Wayne Buchen, vice president of strategic sales, Applied DNA Sciences.
Monitoring the supply chain seems to be a top priority for many companies, and rightly so. In a recent survey of supply chain executives by consulting firm EY, respondents cited end-to-end visibility as the number one ingredient for success. But at the same time, most do not reach this target, with only 6% of them saying they are “very confident” that they have full visibility.
In the EY study, supply chain visibility was most often sought as a risk prevention and cost reduction strategy. Beyond Covid-19, clothing is particularly sensitive to disturbances, such as pandemics or climate-related events such as flooding or heat stress. An analysis by consulting firm McKinsey & Company found that fashion is the second sector most exposed to potential shocks.
For clothing brands, the strategic benefits of being able to track product journeys include seeing where they might have bottlenecks or vulnerabilities lurking in their supply chains. For example, this could reveal a surplus need for particular subcontractors, or show the potential for more vertical integration. “Streamlining the value chain will reduce lead time, inventory and the product development process,” said Buchen.
As part of their effort for transparency and a single source of truth, many companies are adopting platforms such as enterprise resource planning (ERP) systems. Others are turning to blockchain for data storage. But the value of these tools only depends on the integrity of the data entered. With blockchain and ERP, information can be entered by any party with access, making data less secure.
In contrast, products marked with Applied DNA can be tested to scientifically validate the data. The company’s CertainT portal can be connected to a company’s existing ERP system via an API to download authentication certificates and other test data.
In addition to making supply chains more profitable and smoother, traceability also helps guard against sustainability risks. Since the pandemic, being transparent about environmental and social responsibility is more important than ever.
“Covid-19 has changed the way the world views supply chain traceability and how to prove, not just meet, sustainability goals,” said MeiLin Wan, vice president, textiles at Applied DNA Sciences. “While brands have the ultimate responsibility to be more transparent and accountable for their claims, it’s also about knowing your supply chain and working together. Its a question of confidence. Amid the bottlenecks, consumers have been given more time to research business goals and progress, and they are factoring sustainability into their purchasing choices.
In addition to consumer pressure, market forces and regulations also require brands to know their supply chain beyond level 2, or the fabric supplier. For chemical safety, this includes everything from the REACH Restricted Substance List in Europe to California’s Prop 65. Brands that import into the United States also need visibility to comply with customs and border patrol crackdowns on cotton in China’s Xinjiang Uyghur Autonomous Region. Corporate sourcing strategies often focus on fabrics, but taking a “fiber first” approach can provide more awareness and reassurance of upstream operations.
Along with sustainability, companies must defend their product quality claims. Having visibility ensures that the right inputs have been used, preserving a brand’s reputation.
“Ultimately, the proof is in the pudding,” Wan said. “If you produce a high quality product and have tighter controls and traceability in your supply chain, it can help improve the way you manufacture and authenticate your products. Trust is built on consistency of quality, and what makes consumers love products is that they perform as expected.
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