How retail brands are building more transparent supply chains

Supply chain transparency is essential in the retail industry – and the consumer is at the heart of it all. More and more, consumers – especially millennials – are using sustainability and ESG as a lens to inform their purchasing decisions. Transparency isn’t just about winning over consumers, however. A company's success is directly tied to how resilient its supply chain is and having better transparency can help add flexibility and stability for overcoming disruptions.

While brands recognize this need to increase transparency and are reacting, there’s still a long way to go. Here’s what Eric Fisch, National Sector Head of Retail and Consumer Brands for HSBC, says about how brands can get started on the journey to a more transparent, resilient supply chain.

Many brands have been marketing their sustainability stance for several years, but the concept of supply chain transparency in the apparel industry is only at the beginning. Here’s why:

• There’s no real way right now for brands to represent their environmental impact
• To do that, they'll need good data that goes back through the entire supply chain
• This includes data from large raw materials providers to small niche vendors
• That’s complex when you consider the number of components that go into a garment
• Fabric, buttons, snaps, zippers, lining and insulation, for example, are not sourced from one place

True supply chain transparency will mean getting as much information as possible on each component to show their buyers – and potentially legislators – how their products are made.

Who’s Getting It Right?

• Direct-to-consumer brands that have been purpose-built on sustainability are already very transparent about what goes into their products and have a lot of information on their carbon footprints, water usage, social metrics and more.

Who’s On the Path?

• Although they might not have the depth of data for complete transparency, larger and more established brands are also making sustainability in the supply chain a priority by rewarding suppliers and vendors who reach specific carbon benchmarks.

Where to Begin?

• Start by looking to companies who are already getting it right and who are on the path. Look also for partners who have the experience and footprint to help build a more resilient and transparent supply chain.

The strength of the supply chain has always been important, but the recent shutdown from COVID-19 made it apparent companies needed to do more to add resiliency. Building in transparency will go a long way to helping them do that.

For some, making the case for sustainability and understanding the return-on-investment is the place to start:

The bottom line, however, is that it’s about the bottom line. Successfully building a more transparent supply chain will likely come from a combination of consumer pressure and brands embracing the journey.