"No man's land", a work by French artist Christain Boltanski - Photographer: Stan Honda/AFP/Getty Images
Supply chains have entered a phase of significant restructuring and the issue of traceability is increasingly important. The incredible impact of the Covid-19 pandemic has highlighted the need to build more resilient and efficient supply chains in all industries to ensure that they are able to cope with future crises and challenges, particularly of an environmental nature. However, even today, it remains difficult to gather information generated during the various stages of a product's manufacturing process. This leads to multiple dysfunctions. It is therefore crucial to improve traceability systems to strengthen the overall visibility of how supply chains work.
This is a considerable task, but new technologies including blockchain and Big Data provide opportunities to develop “modern” traceability. This traceability is key when it comes to guaranteeing supply chains' resilience and performance and it makes it possible for industry players and brands to positively stand out.
The textile industry is a perfect example of this, both because of the nature of the challenges it faces and because of the benefits which optimised traceability is likely to bring.
A supply chain responding to its challenges
Just like all industries, the textile industry, particularly the clothing industry, is based on highly fragmented and opaque supply chains. A low visibility on the second-tier suppliers and beyond, generates dysfunctions which can pose significant risks:
Almost complete opacity in terms of the origins of the component parts and a loss of control regarding specifications;
Substantial costs related to stock management, caused (among other things) by a lack of co-operation between partners;
The significant environmental impact of waste generated by modifications;
Difficulties in meeting the demands for transparency from increasingly exacting consumers;
The proliferation of counterfeits and parallel markets.
The consequences of these dysfunctions can be disastrous (the Rana Plaza scandal was particularly illuminating). They also make it all the more complicated for new and more virtuous models to emerge. For example, how can we guarantee that cotton is genuinely organic and that child labour hasn't been used, when there is no reliable traceability of the supply chain beyond the direct supplier? How can we ensure that the recycled plastic used in sustainable clothing does not come from fraudulent factories which produce plastic bottles exclusively to "recycle" them? How can we ensure that promises made to consumers are kept? These examples, taken from real-life situations, demonstrate the need to establish overall visibility of how the industry works.
Action needs to be taken: how?
Today, the entire industry must reinvent itself. But this will take time. And the textile industry doesn't have time. In the wake of the health crisis caused by Covid-19, sales have stalled (with losses in Q1 of 2020 totalling $70m for Ralph Lauren, $300m for Zara and $1.1bn for Adidas) and supply networks have been disrupted. The future is full of uncertainty and we need to move quickly towards positive change because those who stand out and demonstrate exemplary behaviour will enjoy a head start. Similarly, those who have developed the greatest control over their operations will also be able to recover financially with greater agility.
This is where “modern traceability” comes into play. Its technical characteristics make it possible to unlock access to previously inaccessible data, to supply logistical optimisation models, to strengthen control of specifications and to improve the quality of engagement with consumers. All without an impact on production cycles.
In practice, to ensure that these promises are kept and to ensure a solution which can genuinely be rolled out on a large scale, a modern traceability platform needs to have simple features:
Subsidiarity principle: to ensure that such a platform is simple and realistic in terms of its roll-out and maintenance across an entire supply chain with differences in technological maturity, the platform must avoid creating interdependencies between systems (ERP, WMS) which are already complex. Decentralisation is key to this.
Control and auditability of data: potential differences of interest within a supply chain must be taken into account. Each party is responsible for ensuring the privacy of their data but is also responsible for the data it shares. To this end, all the data provided must be auditable (in terms of its content and its origins) and therefore impossible to forge.
This is the turnkey model at the heart of the solution developed by Tilkal, based on a genuinely decentralised B2B blockchain network. For example, this solution has made it possible to roll out transparency projects in 6 to 12 weeks and to establish end-to-end traceability with more than 120 partners in 4 countries in under 12 months.
Beyond that, the establishment of a decentralised traceability infrastructure between different players helps to build trust between partners. Now, as companies including McKinsey and Kearney have discussed, this criterion is crucial to strengthening the resilience of supply chains.
Once the solution has been rolled out, newly collected data is combined to reconstruct a comprehensive view of products' life cycles and is then analysed to generate new sources of value and benefits for the textile industry, including:
Control of the origins of the component parts of an item of clothing and transparency for the consumer via a QR code included on the product, for example. It then becomes possible not only to provide consumers with a guarantee about the product's origins but to unlock a capacity for growth with regard to second-hand sales and customer service.
Providing a guarantee of product authenticity and guaranteeing trademarks
Developing visibility of stock levels at different points in the supply chain to optimise the production and sales processes.
Studying the textile industry helps us to appreciate the extent of the opportunities offered by new technologies to build more efficient and resilient supply chains. Multiple industries are affected (agribusiness, aeronautics, cosmetics, pharmaceuticals, etc.) and although each one has its own specificities, they are all responding to the same issue. Tilkal aims to establish an infrastructure which makes it possible to embark on and support this transformation in the short and medium term, while building a solid foundation for tomorrow's supply chain.
An article by Guillaume Roger, Sales & Partnership Manager at Tilkal.