Transparency is just one of many hot topics in the apparel industry that represents a major challenge and demands attention, planning, and problem-solving to maximise future potential and provide answers for some of today’s most pressing problems.

At the recent annual meeting of The National Council of Textile Organizations (NCTO) in Washington DC, speakers consistently identified the urgent topic of transparency. For sure, there was a focus on sourcing closer to home. But speakers also addressed efforts to enhance supply chains with traceable raw material inputs to bolster sustainability and authenticity claims.

“It’s really simple. If apparel brands and retailers make products closer to home, they will know where their product comes from, because of the transparency in our supply chain,” said NCTO President and CEO Kim Glas. “In addition, we also have companies here in the US that have scientific-data-driven technology that can help brands and retailers track and trace their products.”

Transparency in the apparel supply chain is more important than ever

With trade tensions running high, transparency in the apparel supply chain is more important than ever. Regulations covering the origin of cotton, labour rights, or sustainability policies confront the entire industry daily. That said, more regulations are needed to drive disclosure, as noted in the annual Fashion Transparency Index 2022. Of the 250 fashion brands in the survey, 58% indicated they are tracing one or more raw materials – but less than 10% actually disclosed the raw material fibre (or products), and less than 13% published their raw material suppliers (page 62 of the report).

As such, a key element is how transparency stacks up in an industry where opaqueness is the preferred mode of operation. Of course, multiple approaches to transparency use different technologies, but how should a company decide which is best for their business? Therefore, we first should consider the basics of implementing a transparency programme.

A roadmap for supply chain mapping

Indeed, ensuring transparency in the supply chain is critical for any company to build trust with its customers, stakeholders, and investors. Here are some guiding principles that a company can consider to ensure transparency in its supply chain:

1.     Engaging stakeholders. Stakeholders, such as customers, NGOs, and industry groups, can provide a wealth of market intelligence and intangible industry know-how not captured in newspaper headlines and articles. Reaching out and connecting with key stakeholders can provide valuable insight and feedback and help address concerns about the supply chain or when new legislation, such as Uyghur Forced Labor Prevention Act, becomes enacted. Engaging with your stakeholders can build trust and demonstrate the company’s commitment to transparency.

2.     Mapping supply chains. One of the first steps to achieving transparency is identifying all suppliers, sub-suppliers, and other intermediaries involved in the supply chain. This can be done by conducting a thorough supply chain audit and gathering information about a product’s origin, production, and distribution. Linking the mapped supply chain to authentication data on the physical goods can also provide greater transparency and data integrity.

3.     Setting standards. Once the supply chain is mapped, the company should establish criteria that all suppliers must adhere to, such as ethical labour practices, environmental sustainability, and quality control. These standards should be communicated to all suppliers and periodically reviewed to ensure compliance. Moreover, since the Uyghur Forced Labor Prevention Act (UFLPA) was introduced in 2022, more due diligence regulations from Germany, France, Norway, Switzerland, and many more are also coming into effect this year. Maintaining an operational due diligence plan will ensure alignment with sourcing, supply chain, compliance, and any previously announced or yet-to-be-announced ESG performance goals.

4.     Adoption of enabling technology. Enabling science-based and data-driven technologies- such as DNA and cotton origin fingerprinting using DNA genotyping or isotope or trace element analysis – to check the physical goods themselves before submitting data to a blockchain is a step in the right direction. In addition, supply chain tracking through near-field communication systems or RFID can help increase supply chain transparency by providing real-time product tracking and identifying potential issues. Physical authentication is essential to keeping the supply chain accountable with data integrity.

5.     Conducting audits. Regular audits should be conducted to assess suppliers’ compliance with the established standards. Independent third-party organisations should conduct these audits to ensure objectivity and credibility. For example, some brands work closely with their mills before producing new fabric to audit greige goods before dyeing and finishing. Auditing and testing greige yarn or fabric enable more cost-effective testing of products before they are cut, sewn, and shipped.

6.     Fostering transparency. A company should encourage its suppliers to be transparent about their supply chains, such as the origin of raw materials and the production process. This can be done by incentivising suppliers who demonstrate transparency and holding them accountable for violations.

In short, there is no magic wand or singular approach to address transparency.
By implementing some of these guiding principles, a company can ensure transparency in its apparel supply chain and build trust with its stakeholders. Specificity is critical for companies to support supply chain or sustainability claims.

A case study underscoring the importance of transparent apparel supply chains

Specific technologies and tools available in the market are more important than ever when we consider what’s at stake for companies sourcing inputs unwittingly from regions where forced labour is pervasive. Most notably, cotton and textile production in the Xinjiang Province of China comes to mind. Despite official denials from Beijing, US authorities have deemed the problem so severe that Congress has banned importing any products, wholly or in part, made with inputs from the region into the United States.

Despite these restrictions, however, practical concerns dominate much of the industry dialogue over the Xinjiang restrictions. For instance, how can US Customs & Border Protection ensure that every US import shipment is free of Xinjiang inputs? And more significantly, how will shipments from third countries containing Chinese inputs be policed? And what about products containing Xinjiang inputs blended with inputs from other regions? It’s a nagging but critical problem for importers, government, and domestic industry leaders sceptical of Xinjiang practices and the proliferation of Xinjiang materials outside of China.

To address everyone’s concerns, US Customs & Border Protection has adopted a simple approach to policing shipments: Withhold and Release Orders, and more recently, UFLPA’s “rebuttable presumption” much maligned in importing circles, the importer of record is presumed guilty, and it is your responsibility to prove your innocence. Sure, it’s harsh treatment, but it’s also a practical means of enforcing the law to monitor imports of products potentially containing Xinjiang or other forced labour inputs.

Although this approach represents a blunt instrument, it’s also effective when considering the millions of dollars’ worth of merchandise refused entry into the United States for containing Xinjiang inputs. Yet, there remains the critical concern of how authorities should move beyond blunt instruments to embrace a more focused and effective means of managing suspect shipments without ensnaring innocent shippers.

So, what can be done about apparel sector transparency?

A timely article published in The New York Times explores some options for consideration. As the reporter Ana Swanson explains, “firms are turning to advanced technologies to help answer a surprisingly tricky question: where do products really come from?” Again, the problem of monitoring inputs is front and centre as the article raises the question of transparency:

“Companies in the United States are now subject to new rules that require firms to prove their goods are made without forced labour or face having them seized at the border. US customs officials said in March they had already detained nearly a billion dollars’ worth of shipments coming into the United States that were suspected of having some ties to Xinjiang. Products from the region have been banned since last June.”

We want to echo the concerns outlined in the article and also encourage the industry to adopt various new technologies to help police their supply chains to not only unwittingly aid malevolent parties offshore but to sleep better at night, having confidence knowing what could be done has been done to ensure the exclusion of inputs from Xinjiang better.

By Just Style