Tuesday, October 20, 2020

Blockchain for Supply Chains 2020: Will this ever work for the Fashion Industries?




 In April of 2018, after some rapturous reading about Blockchain, and with stars in my eyes as to its potential for the Fashion Industries, I wrote an article reflecting my usual optimism for disruptive and innovative solutions: “Blockchain for Supply Chains: A single, immutable truth for our future” which I reposted on my blog www.isourcerer.com . I continue to believe that digitization is a needed solution for the fashion industries; and that we can only hope to realize that solution by first recognizing and admitting where we are in the process today.


Two and a half years later, Blockchain is apparently a renewed opportunity for tech companies to peddle their wares based on the US crackdown on supply chains in China’s Xinjiang Province that (are proven) to employ forced labor.


I recently attended some presentations about technology in the Fashion Industries at which the companies who spoke took the attitude that digitization of the fashion industry was as easy as “getting on to the Internet.” 


I was taken aback by this type of statement. I thought back to my article and wondered, “Have we made such dramatic progress in digitization during the last 30 months? Did I totally miss it?”


After some research and reflection, I believe that the same problems that existed then exist now, and statements like the above by tech companies are, in the least, misleading.


What are the obstacles and problems for digitization of fashion and like industries (such as accessories, home textiles, lower priced kitchen ware) to achieve digitization of the ENTIRE supply chain (which would be necessary for Blockchain to be a fully effective solution)?


1. Supply chains are Analog and Too Big- Even if the final manufacturer of the exported product has the capability to digitize their factory (not likely without major investment in equipment and systems), their supply chains are overwhelmingly analog. The Xinjiang cotton issue is a good example: Even if the fabric mill is proven to not use forced labor, what about the final shipper of the cotton yarn? what about the dyer? The spinner? The cotton broker? The cotton producer? Most important, do any of these have the capability or the willingness to install technology that will not only allow them to report their sources and control their supply chains? If so, does their downstream also have the way and the will?


Let’s take a look at a typical apparel product. In this case, a cotton yarn-dye shirt, made in China, where all the suppliers of the final producer factory are somewhere in China (the situation is more complicated if some parts have to be imported). Let’s list directly product-related ones:

1. Yarn-dyed fabric from the fabric mill. Take into consideration the suppliers of the mill:

a. Raw cotton supplier;

b. Yarn spinner (if not same mill)

c. Yarn dyer (if not same mill)

i. Dye stuffs supplier

ii. Other chemicals supplier

iii. Finishing Chemicals supplier

d. Weaving mill (if not same)

e. Packing materials for finished fabric

(This is just the fabric)

2. Thread

3. Buttons

4. Interlining

5. Collar stay

6. Seam tape

7. Logos or labels

8. Packing materials:

a. Collar band

b. I board

c. Paper under collar band

d. Pins

e. Tissue

f. Plastic bags

g. Clips

h. Tags ie, UPC, brand, store

i. Swiftachs for tags

j. Butterfly clip

9. Packaging materials:

a. Inner cartons

b. Outer cartons

c. Carton tape

d. Carton labels


Did you count? How, in any shape or form, is this “easy” to track with Blockchain? Do you exempt some products from tracking? If so, which ones and how does that stand up to the principle of traceability?



The truth is, that even most of the final producers of the exported article don’t have this technology installed, and how many are willing to spend the money to do so? Most factories I have worked with, for example, keep their fabric receipts and inventories in a notebook. 


These factories also know that their supply chains are far from digitization. And that their supply chains have too many elements to control effectively.

For example, a typical yarn dye shirt has 14-15 materials and findings to produce the final article; and those suppliers have their own list of suppliers.


(Note: The above does not matter which country it is imported from. All have to make the same shirt. What does matter is that certain countries will have to import some materials from other countries, which makes the process even more difficult.)


So, we expect buyers, small or large, to mandate their suppliers to control all of this via digitization? And to have accurate information for presentation when needed?


2. Especially in today’s world, who is willing to invest the money and disruption that such a conversion will require?

Factories? Who are experiencing drastic reductions in their business and buyers cancelling or refusing to take orders already finished?

The Factories’ Suppliers? Who are also affected by the above circumstances, and who would generally have more work to do in controlling their supply chains.

The Suppliers’ Suppliers?

The Buyers? Certainly, if you are a small to medium size buyer, you cannot change the supply chain world. Saying that you could find suppliers who had achieved or had potential to achieve digitization, how much more would you have to pay?

Large Buyers? Are they willing to spend the multiple millions it would take to solve potential ethical issues, or even to streamline their supply chains? They would be on the hook for subsidizing the entire downstream?


So we have can’t and maybe won’t facing us as obstacles to digitization of the supply chains. NOT “as easy as connecting to the Internet” by a long stretch. And stretch are what those claims are.


3. Who is willing to lead by example? If digitization, as sustainability, is a worthwhile goal in the medium to long term, which of the major retailers or brands is willing to step up to the plate? Make no mistake about it, as I said in 2018, this is what it is going to take to get digitization off the schneid (starting point).

4. There are more important things to worry about in the fashion industries, like why people aren’t buying clothes.


This is still a worthwhile goal. As is sustainability. But until something happens that will get them moving, they will be just talk or, at best, small efforts with big talk.


My conclusion is that we are basically at the same point in digitization of supply chains in low-tech industries as we were two and a half years ago. At the starting gate with an honorable goal. And, more than likely, we will never get to the point of complete digitization. IF, in fact, we even should spend time and money on it.


In every industry, there are leaders. Leaders need to lead. Sometimes, however, leadership requires taking money out of your pockets. So, let’s see some of the industry giants lead by example first; spend some of your profits or C-Suite compensation on something worthwhile..


Until that time, I urge you all to look at the reality of digitization today. Those of us who have traveled the world of sourcing know what that is. For those who haven’t, don’t buy sales pitches at face value.


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