By Saravanan Parisutham, COO and Co-Founder of TrusTrace
As of 2023, the fashion industry is reported to be producing 97 million tons of waste annually. While the industry is changing rapidly to address this – with the goal of becoming more sustainable, circular, and fair – manufacturers and retailers have been challenged with putting in place the technology and business structures needed to meet new, ambitious ESG targets.
As a result, supply chain transparency and product traceability are more important than ever. A clear understanding and view of supply chain operations is critical to creating real change. With supply chain visibility, brands can comprehensively track and prove where materials are coming from – meeting demands from consumers and regulators – and collect the data needed to support sustainability claims.
The Goal of All-Digital
Fully digitized supply chains are the best way for fashion industry businesses to obtain the information they need to meet ESG targets. They are easily trackable, ensure records are shareable, and allow data to be more easily validated. But, few organizations have the infrastructure needed to achieve an all-digital supply chain – in fact, the industry as a whole isn’t quite there yet either, though it’s an active work in progress.
At the moment, a large part of the supply chain is relying on offline documents – meeting requests for information with emails, excel sheets, and pdfs. It’s a system that is archaic and ineffective at best. Forward-thinking businesses have the opportunity to take supply chain efficiency into their own hands by embracing a hybrid solution, combining existing digital records with processes to transcribe and digitize physical records. Many need to make this transition to move towards top-to-bottom traceability. Taking on this proactive, hybrid approach helps organizations obtain the resources required to meet ambitious transparency and compliance goals, streamlining efficiency and the organization’s ability to create positive change.
Bridging the Gap with a Hybrid Solution
While the industry navigates this transitional period in which both physical and digital records are common, the hybrid model will combine real-time data collection for digital records with processes to transfer hard-copy records into digital format. This process has been done through traditional data entry, but we’re beginning to see more advanced solutions leveraging AI and optical character recognition (OCR) become more popular.
As long as data collection processes can vary from one part of a supply chain to another, with some being highly digitized and others being paper-based, attempts at all-digital solutions will now be able to optimize workflows and could lock businesses into processes that eventually make it more difficult to share data.
Some solution providers are already promoting fully digital solutions, but even the most advanced offerings cannot yet eliminate or automate the analog or physical records present in most supply chains, as that would require every single actor to be connected to the system. Hybrid traceability solutions offer faster, easier access to more data than early digital-only solutions, resulting in time savings for compliance needs and audits.
These realities make the hybrid approach the ideal solution for the near- and medium-term, maximizing use of available tools while avoiding investment in unproven systems or workflows that may become obsolete or be incompatible with industry-driven standards.
Moving Towards the Ideal All Digital Supply Chain – There’s Work to Be Done
Once a fully digital supply chain becomes available, brands will be able to optimize their supply chains further with readily searchable real-time product databases; automated summaries of on-time shipments; historical pricing or volume changes; and much more.
To get there requires full industry cooperation. An optimized, end-to-end digital traceability system must be open-source to enable maximum efficiency and applicability, and an open-source system requires access to third-party records with buy-in from the entire industry.
Before an open-source, all-digital solution can come to fruition, we need to spread the word and educate industry players about the benefits of a digital system to empower streamlined supply chain transparency and traceability. It will also be vital to discuss the approach to data privacy and security, as collaboration requires the trust and assurance of each participant to ensure reliability and fair use of the system.
Our Measured Approach to the Future
Until full digitization becomes standard across the industry, we expect a range of data sharing permissions to persist among different levels of the supply chain, such as small vendors that largely rely on paper and major corporations that are already heavily digitized. Therefore, making data migration easy will be a necessary facet of any future open-source solution. Hybrid solutions that enable direct control over data, including migration assistance, can help companies be prepared to leverage any innovations or new platforms that arise.
An industry-wide solution would likely rely on an independent mediator or “clearinghouse” that sets and upholds universal data standards and processes, as well as providing a centralized location for the open-source data to be shared with verified or certified. But as mentioned, this will take some time, as the industry matures.
At the same time, however, attitudes about collaboration and data sharing are indeed evolving with more solution providers expressing willingness to combine efforts and streamline centralized record keeping to aid access and efficiency for all parties. This cooperation is vital to help us move from reactive to proactive data collection to manage supply chain risk, compliance and impact.
TrusTrace remains committed to sharing knowledge and resources that help organizers realize the benefits of the current hybrid approach. While long term we look forward to supporting the industry embrace the all digital supply chain operations that will help achieve the highest standards of circularity, efficiency, and fairness, a hybrid system provides a genuine and capable standard for fashion industry supply chains for a better tomorrow.
