Speaking exclusively to Just Style from Hong Kong, Ramachandran says Serai was set up to simplify global trade.
“What that translates into, is helping companies learn about who is in their supply chain, collaborate with the supply chain partners and get intelligence on them, or from them. So, it’s a supply chain transparency platform,” he says.
“We also have a SME network for smaller companies who are looking to find new suppliers. So, we’ve got two businesses under the Serai platform. One focused on smaller companies looking to find new suppliers, and one focused on large businesses who want to learn ‘who’s in their supply chain, what are their credentials and how to stay on top of that?”
A B2B digital platform, Serai allows apparel companies to showcase their products and capabilities. It features a traceability solution that allows businesses to track cotton and other raw materials. It aims to help brands and manufacturers access and unify complex supply chain information from multiple sources to gain full visibility over their global supply chain.
Transparency and legislation
Ramachandran explains the importance of supply chain transparency, and how technology can help when it comes to completing audits and proving country of origin for materials such as cotton.
He says: “We are in a world today where brands have to take responsibility not just for their own actions, but the actions of everybody in their supply chain. Now, that’s very difficult to do when you don’t know who’s in your supply chain. Over the last few decades, supply chains have evolved in complexity to minimise cost. And that cost minimisation has been achieved, by and large, but it’s come at the price of transparency.”
“Less than one in five companies actually know who’s in the supply chain and can prove country of origin. Most brands obviously know the manufacturer and they nominate the fabric mill. But, as you go further upstream towards yarn and cotton, in particular, there’s no transparency. And even when they do have anecdotal information as to where the cotton is coming from and who’s in the supply chain, it’s very difficult to actually prove that. The regulations today require companies not just to know who’s in the supply chain, but to have documentary evidence to link suppliers to particular production cycles. And that is a Herculean task if you don’t use technology.”
Many countries are now instigating supply chain acts and regulations. Last month, the ‘Slave-Free Business Certification Act’ was introduced to the US Senate to target forced labour within global supply chains and hold large companies, including those within the apparel sector, to account. Under the Act, large apparel companies will need to conduct an audit of their supply chain. They will have to investigate the presence or use of forced labour by the covered business entity or its suppliers, including by direct suppliers, secondary suppliers, and on-site service providers, and publish the results of the audit on the company’s public website.
Ramachandran points out such acts were not confined to the US: “Germany recently passed the supply chain due diligence act, where German companies with over 3,000 employees need to prove there’s no forced labour anywhere in the supply chain. Within the US itself, the New York Fashion Act was recently introduced to target apparel and footwear companies specifically with over US$100m in revenue. These companies need to map and track at least 50% of their supply chain from farm to home and publish a report that addresses the environmental and social policies, processes and activities.”
He adds the environmental and social responsibilities of supply chains are at the forefront of the regulatory changes his company is seeing with the European Union and Canada also introducing acts and the UK currently talking about a Forced Labour act.
Technology platforms can consolidate information
Serai is designed to consolidate all this information by plugging into multiple databases to make it easy for document management and sharing.
“There isn’t going to be one solution that does everything that a company wants,” says Ramachandran. “You will need a different auditor for labour standards or different audits of carbon emissions. You will have different data in different formats, whether it’s in China or whether it’s in Vietnam or India. So you need a platform that’s adaptable. Thankfully, that technology exists today. So we don’t need futuristic tech. The technology exists today and that’s the basis on which we were set up as a company.
“We believe the future of supply chains…will be a collaborative network. It can’t be done to the suppliers you have to incentivise the suppliers to share data. You have to make it easy for them, but they need to have some skin in the game. The way compliance requirements have evolved in this industry means every plan has come up with its own standards, and suppliers feel like they are jumping through multiple hoops. So, collaborating with suppliers is key. We need to bring suppliers into the fold by recognising their investments in environmental or social standards and raising them by either giving them more business or giving them a lot more certainty around orders.
“We also believe the future of transparency will be based on intelligence. There is so much information that’s available today and the key questions are what do you do with it, how do you act upon it, and what information is relevant? That’s where technology becomes so important.”
Expanding the Serai platform
Even before the pandemic, global trade was complex, fragmented and ripe for disruption, according to Ramachandran. While working as global head of growth and innovation for HSBC Commercial Banking, Ramachandran and his colleagues felt they were spending a disproportionate amount of time trying to digitise trade financing. It was still a world that relied on human interaction and personal networks.
He explains the solution was Serai, a digital platform for apparel manufacturers and suppliers to showcase their capabilities and credentials, make new connections, share more information, and systematically address pockets of inefficiency across the supply chain.
In future, Ramachandran believes the transparency of environmental, social and governance (ESG) requirements and supply chains will become ever more demanding and explains the platform is evolving daily.
“We’ve started with cotton but we’re extending to multiple materials. We started with raw material provenance but we are also expanding into carbon emissions and other criteria. The beauty of a platform like Serai is there’s the flexibility and extendibility because, if we are not careful, we’ll move from a world where everything is done manually to using multiple digital solutions that don’t talk to each other. The risk is that we could go from an analogue world, to a world with digital islands.”
He concludes: “We see Serai as the platform that cuts across all of these islands and makes it easy for companies to not just achieve immediate supply chain transparency goals but do it in a way that’s scalable.”