Will it work for the fashion industry?
In April of 2018, after some rapturous reading about blockchain and with stars in my eyes as to its potential for fashion, I wrote an article reflecting my usual optimism for disruptive and innovative solutions (“Blockchain for Supply Chains: A Single, Immutable Truth for Our Future,” which can be found on my blog isourcerer.com). I continue to believe that digitization is a needed solution for the fashion industry and that we can only hope to realize that solution by first recognizing and admitting where we are in the process today.
I recently attended some presentations about technology in the fashion industry, at which the companies who spoke took the attitude that digitization of the fashion industry was as easy as “getting on to the internet.”
I was taken aback by this type of statement. I thought back to my article and wondered: have we made such dramatic progress in digitization during the last 30 months? Did I totally miss it?
After some research and reflection, I believe that the same problems that existed then exist now, and statements like the above by tech companies are, in the least, misleading. Blockchain is only effective when the entire supply chain is digitized. So, what are the obstacles and problems for fashion and like industries (such as accessories, home textiles, etc.) to achieve that goal?
Too Big & Complex
Even if the final manufacturer of the exported product has the capability to digitize their factory (though that’s not likely without major investment in equipment and systems), their supply chains are overwhelmingly analog. The Xinjiang cotton issue is a good example; even if the fabric mill is proven to not use forced labor, what about the final shipper of the cotton yarn? What about the dyer? The spinner? The cotton broker? The cotton producer? Most importantly, do any of these have the capability or the willingness to install technology that will allow them to report their sources and control their supply chains? If so, does their downstream also have the way and the will?
Let’s take a look at a typical apparel product as an example: a cotton yarn-dye shirt made in China, where all the suppliers of the final producer factory are somewhere in China (the situation is more complicated if some parts have to be imported). The product requires supply from yarn dyers, spinners, chemical suppliers, weavers and packers, among others. There are also the matters of thread, buttons, logos, seam tape, collar bands, pins, tissue and plastic bags for shipping — and those are just a few of the necessary resources.
How, in any shape or form, are all of these things easy to track with blockchain? Do you exempt some products from tracking? If so, which ones, and how does that stand up to the principle of traceability?
The truth is that even most of the final producers of the exported article don’t have this technology installed. How many are willing to spend the money to do so? Most factories I have worked with, for example, keep their fabric receipts and inventories in a notebook.
These factories also know that their supply chains are far from digitization and that their supply chains have too many elements to control effectively. A typical yarn dye shirt has 14 to 15 materials and findings to produce the final article, and those suppliers have their own list of suppliers — and that’s true no matter where the shirt is made.
Who Is Responsible?
In today’s world, few are willing to invest the money and disruption that such a conversion will require.
Factories are unlikely to make the effort to change since they are experiencing drastic reductions in business and buyers canceling or refusing to take orders already finished. Suppliers are also affected by the above circumstances.
Do we expect buyers, small or large, to mandate their suppliers to control all of this via digitization? Are they in charge of providing accurate information for presentation when needed? If you are a small- to medium-size buyer, you cannot change the supply chain world. Even if they could find suppliers who had achieved or had potential to achieve digitization, how much more would they have to pay for those services? Even large buyers seem unwilling to spend the multiple millions it would take to solve potential ethical issues or to streamline supply chains.
Taking the Leap
If digitization, as sustainability, is a worthwhile goal in the medium to long term, which of the major retailers or brands is willing to step up to the plate? As I said in 2018, leadership by example is what it’s going to take to get the industry to the next phase.
My conclusion is that we are basically at the same point in digitization of supply chains in low-tech industries as we were two and a half years ago: at the starting gate with an honorable goal. It’s more than likely that we will never get to the point of complete digitization if, in fact, we should even spend time and money on it in the first place.
In every industry, there are leaders. So, let’s see some of the industry giants lead by example; spend some of those profits or C-Suite compensation on something worthwhile. Until that time, I urge industry leaders to look at the reality of digitization today. Those of us who have traveled the sourcing world know what that is. For those who haven’t: don’t buy sales pitches at face value.
