Supply Chain Transparency: Why it Matters and Who Leads?

By: Md.Sadaqul Bari & B. Ellie Jin

Supply chain transparency is the disclosure of provenance, sustainability, and product-related information to consumers, governments, NGOs, and others. However, only disclosing this information is not enough for brands and retailers to take responsibility for the whole supply chain. For this, it is required to verify the disclosed information through recording, retrieving, and tracing in a documented form, which is referred to as supply chain traceability. Traceability is now a key interest of apparel companies. Various driving factors might influence the adoption of traceability. The most compelling reason may be various global and government level regulations, such as a Withhold Release Order (WRO) issued by the US Customs and Border Protection (CBP). This order blocks shipments of cotton and cotton products originating from the Xinjiang Production and Construction Corps (XPCC). The CBP’s recent seizure of a Uniqlo shipment has clearly shown the enforcement of this law, which has alerted many apparel companies. 

Given the importance of the supply chain traceability in the apparel industry, it will be important to understand what information companies disclose to consumers and which companies lead the endeavor. Several start-ups are leading in their transparency and traceability issues. One recent study by the authors compared 10 incumbent and 10 start-up apparel brands. Chosen incumbent brands include the top 10 on the Fashion Transparency Index 2021 (click here): H&M, C&A, Adidas, Esprit, M&S, Patagonia, The North Face, Puma, ASOS, and Nike. Ten start-up brands were selected with a keyword search of apparel start-ups, transparency, and traceability:  ASKET, Everlane, Bonobos, Reformation, Amour Vert, People Tree, Pact, Alternative, Tentree, and All American Clothing Co. 

The results demonstrated interesting findings:

• All incumbent brands disclosed the names, addresses, and number of workers of apparel manufacturers. Nine of them disclosed those of fabric makers, dyers, printers, and finishers. Six of them disclosed that information about spinners, and only 2 of farmers, ginners, and cotton traders. None, however, disclosed average salary and work hours for workers in their suppliers’ firms. 
• Compared to the incumbent brands, few start-ups disclosed their suppliers’ names, addresses, and the number of workers from apparel producers to cotton farms. However, some start-ups such as ASKET are more ahead in disclosing work hours and salary than incumbent brands.

ASKET, a Swedish direct-to-consumer menswear brand established in 2015, has a global presence via online and social media channels. ASKET developed its in-house traceability scoring system by adding scores in four categories: manufacturing (30%: all steps from fabric to finished garment), milling (30%: making fabric from raw materials, e.g., spinning, weaving/knitting), raw materials (30%: cotton, wool farms), and trim (10%: sewing thread, zipper, etc.). Sub-processes of each category are traced and rated according to how much is known by visiting or by verified certificates. ASKET allows consumers to trace an individual product’s history starting from cotton growers to apparel producers (click here). 

Another pioneer start-up is All American Clothing Co., an American online retailer and manufacturer founded in 2002. Although the brand started with selling blue jeans, it now produces and sells other items such as t-shirts, hoodies, and shoes, both for men and women. All American Clothing Co. provides a “traceability number” with each pair of jeans. There is a section on the website where consumers can enter this traceability number and trace the suppliers all the way to cotton farmers (click here). However, the traceability program is temporarily unavailable because the cotton mill that helped All American Clothing Co. with traceability is now closed (click here).

Among selected incumbent brands, H&M leads the traceability effort. H&M has started to publish details of each garment on hm.com. Consumers can see the name, address, and number of workers of the factory for each product on hm.com by doing the following: select the product that they want to buy 🡪 click details under the product 🡪 click product background 🡪 suppliers and factories for this product. H&M also posts the suppliers list in a spreadsheet on their website (for more information Click Here). While ASKET and All American Co. are fully transparent by allowing consumers to trace products from farmers to apparel producers, incumbent brand H&M is partially transparent, allowing consumers to trace individual products only to apparel manufacturers. 

In the end, this finding will help other brands to take appropriate action for adapting transparency. Particularly, other brands can learn from above-mentioned leaders what information they need to disclose and how to disclose it.