As apparel brands and retailers rebuild their post-pandemic supply chains, now is the perfect time to rethink how they can embed sustainability into their development, sourcing and distribution decisions, says Mark Burstein, president at NGC Software.
Covid-19 has pushed retailers to adopt significant changes in their global supply chain processes. Whether managing excess inventory or closed factories, companies are faced with numerous business challenges as they seek to survive this tough and unprecedented climate. But despite these short-term obstacles, sustainability continues to be a high priority in the industry.
The topic of sustainability has been top of mind for retailers for many years, moving beyond a casual fad to a global trend that can really make or break a business’s bottom line. This is all thanks to consumers, who are pushing companies to practice corporate responsibility. Environmental crises are one of the biggest issues facing the world, and consumers are putting an emphasis on supporting environmentally conscious brands now more than ever before.
In this article, we’ll see that consumer demand for sustainable brands hasn’t changed since the pandemic hit, and that retailers have a real opportunity to use technology to adopt measurable and successful sustainable practices during and after Covid-19.
Consumers want sustainable brands
A Nielsen survey conducted in April 2020 shows that amid the shock and uncertainty the fashion sector is facing, two-thirds of surveyed consumers say moves to limit impacts on climate change are still important to them. Additionally, 67% of respondents consider the use of sustainable materials an important purchasing factor. Consumer demand for corporate social responsibility can be seen across all gender lines and generations, with Millennials and Gen Z leading the change.
To meet this increasing demand, brands should continue to adhere to their sustainability commitments and make progress for change. But how can retailers keep their focus on sustainability now, during the pandemic, and still prove to their customers that they really care about this critical issue?
An opportunity to rebuild the supply chain
The UN Global Compact ranked supply chain practices as the biggest hurdle for companies looking to boost sustainability. This is due to the vast and complex nature of supply chains; with so many moving parts, the issue of sustainability is difficult to address.
That’s why now is the perfect time for retailers to rebuild their entire supply chain with a much greater emphasis on sustainability. Despite the setbacks, Covid-19 has inspired progress for sustainable programmes in the retail space. As fashion brands and retailers create new processes and onboard new factories and vendors during this pandemic, they can also ensure they’re implementing strategies that boost sustainability efforts.
Measure your sustainability efforts
Peter Drucker, the world renowned business consultant best known for his management philosophy “If you can’t measure it, you can’t manage it” now comes to mind, since other thought leaders have extended Drucker’s philosophy to “If you can’t measure it, you can’t improve it,” followed by “If you can’t measure it, it doesn’t exist.”
This mantra is important for every company to consider as they monitor success, including when they are implementing sustainability programmes. Many fashion companies may tout themselves as “environmentally responsible” because they use organic cotton, recycle waste, and provide a list of their tier one suppliers. It’s a good start, but it’s not enough. Initiatives must be clearly measured to provide real evidence and credibility for the work businesses are doing to bring change to this world.
This starts with collecting data about things like the environmental impact of suppliers and factories, how much plastic is being used, the carbon footprint of different types of transportation and so on. Then, companies must certify each point using that data alongside tools such as the Higg Index to create a sustainability map. The Higg Index is a suite of tools that enables brands and retailers to make meaningful improvements that protect the well-being of factory workers, local communities, and the environment. It uses one common language to share sustainability efforts that allow consumers to make better informed purchasing decisions.
Additionally, environmental advocacy groups have paved the way for a more ethical fashion industry, including the Sustainable Apparel Coalition, an industry-wide group of 245 leading apparel, footwear and textile brands, retailers, suppliers and affiliates who are committed to measuring and improving social and environmental impacts. Companies like SgT, LEED and Bluesign can also help certify and quantify a factories’ green initiatives.
With data and evidence, retailers can accurately measure and enforce social and environmental sustainability performance. This allows them to transparently show consumers they’re not all talk, but have measurable action to back it up their actions.
The digital thread
When it comes to saving the planet, companies must track the environmental impact at every facility of every supplier, including all transportation. They must create a sustainable supply chain that follows the journey from “first mile” to “last mile” and beyond. This means everything from the farms to the hands of consumers – for every single SKU.
For example, let’s consider a single cotton T-shirt. Globally, there are thousands of cotton fields, spinners, knitters and dyers. There are also thousands of sewing factories. Plus, there are countless numbers of distribution channels and points-of-sale. The T-shirt must also be transported throughout the supply chain by land, sea or air – all adding up to its carbon footprint.
Retailers must account for every single one of these tiers in the supply chain – a digital thread. This term refers to the linked supply chain tiers that include everything from the source of the material to the consumer. It’s crucial for companies to have a holistic and integrated view across the entire product lifecycle to truly trace the entire connected supply chain.
The power of AI and the Digital Twin
With the infinite amount of options throughout the supply chain, retailers must use technology to evaluate all possible scenarios and determine the best outcomes that will embed sustainability into their development, sourcing and distribution decisions.
A Digital Twin, which is digital replica of suppliers, factors, locations, processes and transportation modes in a supply chain ecosystem, can do just that. Its optimisation engines can process huge amounts of information to evaluate all possible scenarios and determine the best outcome. With Digital Twin technology, companies can identify factors like the optimal supply chain map to minimise carbon emissions, which can lead to reduced spending on carbon assets.
Furthermore, artificial intelligence (AI) is crucial to an optimal sourcing strategy based on a variety of multi-dimensional decisions. Every supplier or transportation change provides a different result for each of the factors in the decision-making process, including price, speed, quality, capacity, risk and now, environmental impact.
With that in mind, it’s important that companies can quickly analyse many sourcing scenarios quickly. These decisions simply cannot be executed with efficiency and speed using siloed data and manual evaluations, no matter how many team members are involved. AI can quickly analyse many sourcing scenarios and determine the ideal sourcing allocation that will achieve the company’s annual goals, including sustainability, revenue, profit and distribution.
Embed sustainability into your future decisions
Consumers are looking to support fashion brands and retailers who care about the issues that matter to them. Only with the right tools, technologies and people can retailers determine the optimal sourcing strategy for their product mix and put that strategy into action. Companies cannot neglect this issue any longer and must continue putting an emphasis on social and environmental commitments.
Now is the perfect opportunity for retailers to rethink how they can embed sustainability into their development, sourcing and distribution decisions. After all, the planet is counting on the fashion industry to do the right thing.