How transparency will change fashion sourcing

A well-guarded secret and considered to be a recipe for success in the fashion industry have been the network of manufacturers a brand in the fashion industry have employed. Vast amounts of resources have been dedicated to departments focused to locate new manufacturers and manage existing ones. As in all industries the natural state is to guard your investments, not allowing a competitor to gain advantage by it. Why share something you have invested to find and utilize in your company?

Why share something you have invested to find and utilize in your company?

The safeguarding of information is something which have shaped the industry in other aspects as well. Sure, individuals have been collaborating. Technician to technician might have been giving each other a hand but on a brand level joint efforts have been very limited. How many different excel documents for quality control, final inspection, sample checking, testing etc does exist. It′s definitely clear there aren′t many shared ones.

However, the notion of protectionism is gradually changing as the customer demand for transparency is increasing. I believe this will have some interesting effects on the current mindset and practices. Let me first guide you through two events which both recently got released and how this will affect the relationship between brands and manufacturers.

Supply Chain Transparency

In the report Fashion Transparency Index 2019, Fashion Revolution had a closer look at 200 companies and found that 75 of these were publishing information about their manufacturers. Compared to 2017 this is an increase of 118%, or when they 2016 investigated 40 major brands and found that 5 were disclosing the information. This dramatic change So, why is this important?

The main reasons, according to Fashion Revolution, of why this is important is “because it helps NGOs, unions, local communities and even workers themselves to alert brands of any potential human rights and environmental issues in their supply chains. This sort of transparency makes it easier for the relevant parties to understand what went wrong, who is responsible and how to fix it.”

The level of information that is disclosed is of varying quality still. Some only disclose factory names in a long list, others have created interactive maps where you can get a better overview with number of workers and product types they are producing. While there are many more steps before the information is a true support for sourcing it gives an important place to start.

It's still important to point out that the majority (54%) of the surveyed brands either did not respond or declined to participate in the survey from Fashion Revolution.

Product Transparency

H&M is now (since 2019-04-23) leading the way by presenting the name and address of the product manufacturer along with information on amount of workers. Basically, you can check any product on hm.com or go to a store to see which manufacturer that produced a specific product. Besides professional studio taken photos of the products you can find the supplier name, address and number of workers.

This kind of transparency is unheard of before and would be unthinkable 10 years back. According to H&M they do this in order to “show that it′s possible” and to “set the bar for the industry”. “With transparency comes responsibility, which makes transparency an important factor to create a more sustainable fashion industry” states Isak Roth, Head of Sustainability for the H&M Brand.

And it sure does raise the bar for any company aspiring to be transparent. H&M is not the first actor doing this, but the first with scale and reach.

What conclusions can we draw from this development?

This development is disarming information protectionism by opening up and inviting. Instead of competing by secrecy, transparent brands show that it's more to their recipe for success than their manufacturing base. This will change the production landscape for both manufacturers and brands, long and short term.

Manufacturer impact

1. Increased supply chain transparency will facilitate the sourcing landscape and a brand can, with less effort, reach more manufacturers for benchmarking their current quotations. Increased competition will reward ambitious manufacturers and increase pressure on manufacturers who have stalled in their development.
2. The use of internet in retail have made it possible to cater for a longer, more specialized, tail. For instance, it made focusing on selling plus sized shoes easier since you were able to reach a bigger audience. With more transparency and more accessible sourcing it will allow for the same development in production. The need to hedge the business by offering a wide range of products will decrease and give room to go deeper on fewer product types.
3.  As a brand is showcasing their manufacturing base, manufacturers will also be the face of the brand. The demand for presentable partners will become even more important. Manufacturers who seriously puts this on their agenda will be rewarded.
4. As manufacturers gets more spotlight, they can now become the target of NGO campaigns. NGOs traditionally have focused on brands, partially as the supplier network has been complex and hard to reach. With increased transparency it will also be easier for NGOs to target and directly collaborate with the sources. This development might shift, or at least increase, the responsibility NGOs put on manufacturers.

 Brand impact

1. With increased transparency, finding new manufacturers becomes easier. For everyone. The competition for good manufacturers will increase. From have been a buyers’ market, suppliers can become more demanding. Unstable and unplanned buyers will be punished. Strategic and planned buyers will have an easier time to find new collaborations.
2. A brand is not only a buyer but also marketing their manufacturers. Increased visibility is added value. Belonging to i.e. the H&M network will expose manufacturers in a trusted environment with professional footage of their products. Used in the right way this will be important for a manufacturer – it’s definitely a motivator for any manufacturer to work with a global and trusted brand promoting them. Manufacturers will seek attractive buyers who are giving value in other ways than just order quantity.
3. The norm of what is considered to be hygienic level in supply chain transparency is shifting. Eventually disclosing your sources will become the standard, and you need to take a decision whether to deviate from the standard or not. Currently transparency is still a deviation.

To conclude

There is no doubt that transparency will effect the information economy. Connections and information in the production landscape have been a major asset from a brand perspective. The transparency move is disarming and creating a flatter playing field, changing the dynamics of sourcing. At FindSourcing we believe sharing and collaborating are catalysts for creating a better industry. We want to support this.

We see interesting possibilities to display the production information on our platform www.findsourcing.com to be able to map which brands that are producing with which manufacturers. Sign up at FindSourcing and we will let you know once the feature is available or you can send in a request at www.findsourcing.com/quotation and we will support you in finding what you are looking for! At no cost - as sourcing should be. In constant development to ensure the best match.

/ Elias Gr?ndal, Co-founder FindSourcing