Supply Chain Traceability in Fashion –What you need to know

Supply chain traceability has become imperative for businesses, especially for retailers and brands in the fashion and apparel industries. Rising consumer demand for transparency and sustainability, coupled with increasing and stricter regulatory requirements, means retailers need supply chain traceability now.

The commercial benefits of supply chain traceability to business are wide-ranging. By implementing effective traceability, businesses are empowered to meet regulatory requirements, improve operational efficiency, boost brand reputation, and make cost savings.

What is Supply Chain Traceability?

Supply chain traceability is the ability to track and trace the entire lifecycle of a product and its components, throughout the supply chain, from raw material sourcing and production, to distribution, delivery, and eventual end of use.

Parts of the supply chain can be tracked in real-time, for example, from purchase order to delivery. And parts can only be traced retrospectively, for example, tracing back from the supply of fabric and components, to the production and creation of the raw materials: fabric and trims > yarn and ink > fibre and pulp > farm and forest.

Why Is Supply Chain Traceability Important?

Traceability is important for a multitude of reasons. Critically it helps businesses take a proactive approach rather than simply reacting to issues as they arise. Let’s explore some in depth reasons why supply chain traceability is so valuable.

Business Quality Control

Supply Chain Traceability allows businesses to ensure that their products meet high standards of quality throughout production and distribution. Should there be an issue, such as a product recall, traceability helps pinpoint exactly where the problem occurred.

Sustainability

Consumers and governments are increasingly focusing on sustainability. Supply chain traceability provides insights into the environmental and social impact of products, helping companies adopt more sustainable practices by ensuring ethical sourcing and minimising waste.

Awareness of end of use practices such as recycling helps consumers and businesses measure the impact of their product on the environment.

Regulatory Compliance

Adhering to both local and global regulations is critical for business operations. Traceability ensures that companies can comply with a variety of laws, such as environmental regulations, labour standards, and product safety requirements, by providing accurate, detailed data on every aspect of the supply chain.

New regulations are rapidly taking shape, we’ve identified 25 active or pending pieces of legislation from the UK, EU, individual European nations, the USA and Australia, there are and will be more requirements for reporting on risks, impacts (and in some cases opportunities) relating to, but not limited to:

• Deforestation
• Human Rights & Modern Slavery
• Use of hazardous chemicals, microplastics
• Product labelling and product lifecycle, circularity, recycling and disposal
• Packaging, including plastics, waste and recycling
• Climate Change
• Sustainability
• Greenwashing (misleading environmental claims)

With nine major European fashion laws set to impact the industry by the end of 2024. compliance with legislation like the EU Corporate Sustainability Due Diligence Directive (CSDDD) will make it increasingly challenging for companies to rely on self-regulation in areas like transparency.

Importantly, supply chain traceability ensures your orders are being fulfilled where you think they are and that your 3rd party auditors are visiting and auditing the right suppliers. With real-time traceability tools like Segura this can be validated by tracking the purchase order through each tier of supply, as each supplier accepts the order through a chain-of-custody. Simple, but extremely effective.

Transparency and Accountability

Traceability promotes openness within the supply chain, enhancing accountability. When every step is monitored and recorded, businesses can take responsibility for their practices and ensure they are adhering to standards of ethics and quality.

Transparency significantly builds trust. When businesses openly share information about the sourcing, production, and distribution of their products, it demonstrates a commitment to ethical practices, quality, and accountability. This level of openness reassures consumers, partners, and stakeholders that the company operates responsibly, leading to greater confidence and trust in the brand.

Mitigating Risk

Traceability enables retailers to pay attention to risk management in the supply chain. Identifying weak points can help prevent issues like fraud, poor quality control, or unethical sourcing practices. Effective traceability confirms the location of your suppliers and tracks orders in real-time. This gives you the power to mitigate the risk of supply chain disruptions, build effective contingency plans should a natural disaster or other supply chain failure occur, and reduce the likelihood of costly disruptions.

Perceived Brand Reputation and Trust

A company that offers transparency in its sourcing and production processes is more likely to earn consumer trust. Consumers increasingly value ethical and transparent companies, making traceability a critical component of a strong, trustworthy brand.

It’s fair to say that trust in brands is heavily influenced by perceived ethical and sustainable values and behaviours. Deloitte reports in its report The Sustainable Consumer 2023, “Most consumers say the commitment of businesses sustainability influences their trust in those businesses.”

And Trust Pilot’s 2023 survey of 2800 UK European fashion shoppers shows that ethical brands have a distinct competitive advantage. “More than four in five customers (82%) reveal they would definitely (31%) or probably (51%) stop buying from a brand found to be lacking ethical standards.” Consumer fashion spending and customer loyalty are won by fashion brands that have committed to good working practices throughout the supply chain, environmentally-friendly packaging and a recycling service.

Evidence from the Journal of Supply Management shows that consumers don't differentiate between individual suppliers within the supply chain. Instead they tend to hold a focal firm responsible for its suppliers' unsustainable practices.

Furthermore, according to a consumer survey in 2020, seventy percent of consumers stated that traceability is important, and they would be willing to pay more for it.

Benefits of Supply Chain Traceability

These are additional benefits of supply chain traceability:

Improved Efficiency

Accurate tracking of suppliers and order helps businesses pro-actively manage order activity and collaborate more efficiently with suppliers, helping them adopt best practices. A single view of supplier activity can also reduce waste, by reducing overruns and bill of material inaccuracies.

Traceability & Cost Savings

By identifying inefficiencies and weak points in the supply chain, businesses can minimise costs related to delays, waste, and overproduction. Oversight of orders brings opportunities to streamline the supplier base and benefit from more robust commercial negotiation.

Better Supplier Management

With traceability, businesses can monitor and assess their suppliers more effectively. This allows them to choose partners that align with their ethical and operational standards and helps in addressing issues like supplier non-compliance and Corrective Action Plans.

Simplified Audits

Traceability simplifies the auditing process by ensuring that all necessary data is readily available and reportable. With clear records of every step of the supply chain, businesses can more easily brief internal and external auditors and be certain of compliance.

Support for Sustainable Practices

Traceability plays a key role in promoting sustainability by giving companies the tools to monitor their environmental impact, reduce waste, and ensure ethical sourcing. This then support corporate social responsibility (CSR) efforts through powerful reporting and business intelligence.

Data-Driven Decision Making

The data collected through traceability allows businesses to make informed, strategic decisions about their supply chain, enhancing overall efficiency and adaptability to market changes.

What Technologies are used in Supply Chain Traceability Solutions?

Technologies to help businesses track and trace their supply chains vary from software tools like Segura, through to physical tags that can transmit the location of orders and inventory.

Software traceability tools

There are several traceability software tools on the market now which all approach the challenge of tracking and tracing fashion and apparel industry supply chains slightly differently. A traceability software system or platform like Segura provides a single source of truth across your supply chain data sources. Our solution is underpinned by the business process that must always happen: to contract with a supplier, a purchase order / bill of materials must be sent, and this also applies to sub-contracted suppliers. Our traceability tool requires this happens via the Segura platform, so that all purchase orders and all subsequent outsourcing in the supply chain is captured in a single place.

Segura’s traceability software is a cloud-hosted, database-driven, SaaS solution that enables our clients to capture data, map it out visually, create any variety of reports and output actions plans based on the data.

Blockchain technology for traceability

Blockchain technology ensures that data is secure and tamper-proof by using distributed databases and ‘decentralising trust’. The main advantage of this technology is that it allows businesses to maintain an immutable record of each step in the supply chain, which is difficult to hack. Its downsides include speed and efficiency, because it requires a lot of storage space and takes time to update. It is also vulnerable to majority attack, which means the data is not controlled a single authoritative source. Segura doesn’t use blockchain technology because we are able to deliver all the benefits of blockchain without the risks.

RFID

RFID stands for Radio Frequency Identification. These technologies physically tag objects with a tiny transmitter to track and identify products and components as they move through the supply chain. This produces a report and real-time insights of an object’s origin, journey and current location and status. RFID textile tags can give insights into stock control and speed the instore checkout process.

Barcodes and QR codes

Many retailers already use barcodes on clothing care labels acting as unique identifiers for each product. Firstly, barcodes and QR codes can help retailers accurately track, monitor, and control inventory levels. Secondly, in terms of traceability this is important in two ways: quality control and legislative compliance.

For quality assurance, if each component from different suppliers has a unique barcode related to the purchase order then as components move through production, manufacture and distribution, the barcodes provide a digital trail. If a quality issue arises, the brand can trace it back to the specific supplier and take corrective action.

For legislative compliance, a finished product might have a QR code printed on the care label for consumers to be able to read more information about the product. This could include information about the components, the location of the manufacturer and suppliers, and relevant green credentials, as required by the EU Digital Product Passport.

GPS

GPS systems provide real-time tracking, allowing businesses to monitor the movement of products during transportation and ensure timely delivery. Again this requires a physical identifier present on the consignment to be able to transmit location.

Steps to Implement Supply Chain Traceability

Achieving supply chain traceability is not just about technology; it requires strategic planning and consistent effort.

1. Define Goals and Objectives: Identify the reasons for implementing traceability, whether it's for regulatory compliance, improving efficiency, or boosting sustainability efforts. Set your short and long-term goals with SMART objectives and deliverables associated with them. Then you’ll be able to measure your progress effectively.
   
   
2. Map Your Supply Chain: Understand every link in your supply chain, from suppliers to distribution networks. Supply chain mapping tools like Segura can help businesses visualise their supply chain and identify areas for improvement.
   
   
3. Choose the Right Technology: Select technologies that fit your business’s needs, such as RFID, blockchain, or a software platform, to track and record key data points.
   
   
4. Data Capture, Management and Integration: Ensure that the right data is collected, is managed effectively and integrated into existing systems for seamless access and analysis.
   
   
5. Train Your Team: Ensure that your team is trained on the new systems and understands how to use them to maintain traceability.
   
   
6. Continuous Monitoring and Improvement: Regularly monitor the effectiveness of your traceability systems and make necessary adjustments to improve efficiency and accountability.

Challenges to Achieving Traceability

Volume of Data

The sheer amount of data collected throughout the supply chain can be overwhelming. It is key to decide carefully about business goal and objectives so that you collect the right data. Businesses need effective data capture and reporting software in place to handle this information and ensure it is usable.

Supplier and Partner Coordination

Achieving traceability requires cooperation from suppliers and partners who may not have the same technological capabilities or traceability standards. Your suppliers are also likely to be receiving multiple data requests in different formats from different customers. You may encounter communication or language barriers in a multi-tier global supplier chain. So, ensuring strong relationships and understanding of shared goals and priorities is critical for success.

An Example of Supply Chain Traceability in Action

UK fashion retailer, River Island has partnered with Segura to enhance its supply chain traceability. By using Segura’s SaaS traceability tool, River Island is able to map its entire supply chain, from sourcing raw materials to final product delivery. This enables the brand to trace every tier of its supply network, ensuring ethical sourcing, compliance with labour standards, and environmental sustainability.

Segura’s supply chain traceability tool has been pivotal to enable River Island to reach the lower tiers of its supply chain so it now has visibility of all its own branded yarn production. Segura’s supply chain data uses information to identify key risk areas for forced and bonded labour and carry out in depth assessments.

In addition, River Island has been able to focus on its suppliers’ water usage, particularly in the production of denim, and has identified all its sites using water, including dyeing and laundry.

The transparency provided by Segura allows River Island to proactively manage its suppliers and mitigate risks, while also offering customers greater assurance about the quality and ethics behind their products. This partnership highlights how advanced traceability can build trust and improve both operational efficiency and brand reputation.

Segura’s Supply Chain Traceability Software

Segura's innovative platform for supply chain transparency, compliance, and reporting is designed to provide retailers and brands with the comprehensive visibility, data, and proof required to fully map their supply chains.

Read more about Segura’s powerful supply chain traceability tools.

About Segura

Segura is the leading fashion supply chain traceability solution, empowering fashion retailers and brands to deliver ethical, sustainable and efficient multi-tier supply chains.  

Segura provides n-tier mapping, transparency, traceability, visualisation, compliance and reporting. Segura sits in the centre of your supply chain management structure creating a central repository for all your supply chain, ESG-related data and evidence, including from third-party data sources.  

With all supply chain traceability data stored on a single platform, our customers get the right evidence in the right place to back up claims and meet regulatory compliance. 

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