What Is Stopping Apparel Firms From Achieving Transparency

Apparel sector plans to increase supply chain transparency by 2027 but obstacles remain
What Is Stopping Apparel Firms From Achieving Transparency

The apparel industry has come under the spotlight in recent years because of sustainability and transparency concerns due to rising external pressure from consumers and governments. Two-thirds (66 percent) of apparel industry insiders see supply chain transparency as an “extremely important” issue, the number is even higher for Indian companies (at 83 percent).

Experts believe the most prevalent barrier holding back the industry from achieving transparency is the high initial investment. Difficulties in obtaining and managing data from other companies in the supply chain is another major obstacle, according to a report by online B2B platform Serai in collaboration with consulting firm KPMG. 

“Greater transparency means that brands will be held accountable, however, it also opens up opportunities to better manage inventories, introduce more agility, and achieve greater collaboration across the entire supply chain,” said Anson Bailey, Head of Consumer and  Retail, ASPAC, KPMG China.

Companies in India stand out in this regard, with 66 percent of the Indian respondents already disclosing their supply chain traceability policy.

Two-thirds of industry respondents (65 percent) were willing to disclose their supply chain traceability policy, as per the report. This proportion is much higher for suppliers in North America (80 percent) and Europe (81 percent). Suppliers in these regions are at a cost disadvantage to suppliers in the Asia Pacific and may use their sustainability credentials to differentiate themselves from the lower-cost competition, the report further stated. 

Corporate reputation, business opportunities, and profitability are three main reasons driving the need to uphold transparency by apparel companies. 

Moreover, experts believe that investment in transparency tools will be crucial for the companies if they do not want to risk losing a competitive advantage, the report found. To move forward, the industry will need to overcome challenges associated with the consistency and quality of data.

“Over 80 percent of the industry plans to have a transparency solution in place by 2027. However, businesses need to act with a greater sense of urgency. COP26 has reinforced the need for companies to find ways to reduce the environmental impact of their manufacturing. This can only be done through full visibility into their extended supply chains. Thankfully, the technology to help already exists. We’ve built a plug-and-play platform that integrates with existing solutions,” Vivek Ramachandran, Chief Executive Officer, Serai.

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