Page 68 - Retail World March 2021

TECHNOLOGY REDEFINING FASHION’S SUPPLY CHAIN FOR THE SUSTAINABILITY ERA As we move further into the new year, key conversations around the future of retail are increasingly focused around one topic: sustainability. EBy Accenture Retail Lead for Australia & New Zealand Michelle Grujin. ach year, more than 150 billion Brands must also ensure that garments are manufactured suppliers have their own sustainability across the world (Vogue, April strategies and be open to sharing their 2016), with global consumer initiatives so that collective return can spend on fashion each year equating be measured. By treating sustainability to the GDP of 126 of the world’s poorest countries. Unfortunately, the environmental damage at each step of the fashion supply chain from production to consumption has resulted in the sector becoming the second largest industrial polluter in the world, behind (pre-Covid) only aviation (The New Daily, April 2020). During the World Economic Forum’s virtual meeting of ‘The Davos Agenda 2021’ in January, Accenture CEO Julie Sweet discussed how companies that embrace technology and sustainability will be two and a half times more likely to be tomorrow’s leaders. As one of the world’s largest industries, fashion is well positioned to pave the way, and this begins with redefining the supply chain. According to apparel industry research conducted by Accenture, to fully transition into a sustainable industry and make meaningful change, it’s critical for brands to leverage technology to implement transparency, collaboration and traceability across the value chain. Transparency is also becoming a key metric for investors, who are increasingly looking for hard data points on how organisations are managing social and environmental risks in their operations. Better navigating sustainability requires taking an end-to-end approach to supply chain management, beginning with a genuine desire to collaborate across all elements – from strategy and design to production, manufacturing and distribution: the entire product lifecycle. Here are some recommendations for implementing responsible value chains. Strategic thinking To have lasting impact and continuity, sustainability strategies must map back to the company’s purpose, be authentic to brand values and be tactically measured against business growth. as an equally measurable factor to cost, lead time and quality, a brand can credibly monitor and ensure compliance across the supply chain. Delivering value that makes economic sense In committing to sustainable supply chain practices, brands need to be more aware of how their decisions will impact the business ecosystem holistically. For example, if garments take too long to reach a store, the retailer could miss a crucial sales window. To avoid this, retailers are exploring new go-to market models, where they ship small batches of experimental products to test demand and ramp up production quickly if necessary, exposing retailers to less markdown exposure and potentially landfill. The negative consequence of this model is that it puts immense pressure on manufacturers, which must compete for work based on lead time and price – opening up the potential for last-minute sub-contracting and overwork, and a feeling of lack of loyalty from the top of the supply chain. Technology is an essential solution to the disconnect between manufacturers and brands: advanced AI could better predict demand as well as reduce stock, minimise waste and assist businesses to better manage their working capital. Fashioning friendships Both brands and suppliers must invest in developing strategic relationships across the extended supply chain and commit mutually to trust and transparency. Some ways for brands to incentivise collaboration across the supply chain include cultivating relationships through partnering on community and industry initiatives, improving payment terms, and initiating collaborative planning amongst partners. Align on standards Broad industry synchronisation on common standards of sustainability is crucial to ensuring every player in the supply chain across the globe is compliant and working towards sustainability goals. Out of style: upgrade the legacy systems To capture value as well as ensure its validity, it’s crucial to ensure legacy systems across the supply chain are upgraded. Data collection on sustainability across the supply chain is rather new, and legacy systems aren’t capable of managing traceability requirements. This results in suppliers not meeting the lead times needed to source sustainable material. The solution is to centralise accessibility to data across the supply chain, with a new role for data oversight. Better data analytics can also help identify issues such as child labour, and track industrial issues laterally. While the process of implementing a traceable and transparent value chain can be challenging, the economic and ethical value of doing so has never been more clearly understood – and the benefits to be reaped are boundaryless. About Michelle Grujin Michelle is the Managing Director of Retail for Australia and New Zealand at Accenture and has more than 20 years of hands-on experience in the retail industry. About Accenture Accenture is a global professional services company with leading capabilities in digital, cloud and security. Combining unmatched experience and specialised skills across more than 40 industries, Accenture offers strategy and consulting, interactive, technology and operations services. 66 RETAIL WORLD MAR, 2021