Brands across the globe are navigating a new sourcing landscape riddled with challenges and complexities. And they’re learning that ensuring compliance and mitigating risks takes true trust and cooperation with partners throughout the supply chain.
At a webinar hosted by QIMA on Tuesday, sourcing experts from Skims, Untuckit, True Classic and the American Apparel and Footwear Association (AAFA) spoke to the need for increased transparency and traceability in the face of new regulations, geopolitical tensions and unexpected headwinds.
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Collaboration across the value chain will be essential as the sector works to adapt to new sustainability legislation, like the EU’s corporate sustainability due diligence directive (CSDDD), which was signed into law last month, as well as its companion, the corporate sustainability reporting directive (CSRD).
AAFA director of sustainability Chelsea Murtha said brands should also be prepared for the regulations taking shape stateside. “The U.S. doesn’t do comprehensive legislation in the way that the EU does, but that does mean that we get a lot of piecemeal things happening in different places, which can make it harder to actually do your job as a compliance professional,” she said.
The U.S. has taken a lead on eliminating PFAS, for example, through about 40 different bills being proposed across different states, she said. She also pointed to California’s proposed extended producer responsibility (EPR) bill, which would compel producers of apparel and textiles to manage their own waste.
“I think this is potentially kind of a sea change for the industry going forward, as I think the idea has always been just to find whatever the lowest standard is and march towards that,” she said. “I’m skeptical that’s going to continue to be a strategy that works.”
“Trying to follow the lowest standard is really not the best practice,” Skims senior manager of product integrity and compliance Priscilla Pacheco said. One benefit for the Kim Kardashian-founded, California-based brand is that it operates in “the most stringent state” in the country when it comes to environmental practices, meaning that it is consistently pushed to stay abreast of regulatory proposals.
The viral shapewear and women’s wear label is also leaning into advanced technology to ensure that stakeholders always have a full view of global risks.
“We’re seeing a lot of cool innovations like AI for demand forecasting blockchain for transparency and traceability efforts,” she said. “I think what really excites me on the social responsibility side is the transparency and traceability risk management tools,” like those from Altana. Pacheco said Skims uses the technology to determine exposures across a number of different standards, “whether it’s the UFLPA or other sanctions—they have many variables you can look into.”
“While it may not be tracing your specific supply chain, you can use it as a first line of defense for onboarding or pre-sourcing and take it from there,” she explained. The compliance lead said she believes a combination of AI and manual processes is necessary for lean teams like hers. AI and blockchain allow “really help to minimize a lot of those manual processes,” she said.
While technology has come to play a more significant role in supply chain management, True Classic vice president of sourcing, product development and production Linda Ollman said visiting suppliers and vendors in person remains an indispensable part of creating and maintaining a responsible supply chain.
“The partnership you have with your vendors, visiting them having face to face—it’s a partnership outside of just the work day, and you have to trust them 100 percent,” she said. “It’s not all about the bottom-line FOB… you want it to be fair for both sides of the partnership.”
Untuckit’s chief product and supply chain officer, Björn Bengtsson, said the men’s shirting brand has been working to diversify its sourcing matrix “so we have coverage for any eventualities.”
The pandemic illuminated a need to “spread your eggs around the world,” he said, rather than keeping them in one basket (usually an Asian sourcing hub). Whether roadblocks spring up as a result of a global health crisis or a war in Ukraine, the lesson is the same, he believes. The industry must lean on partnerships to weather uncertainty.
“At Untuckit we definitely put a great emphasis on having suppliers that are with us for the long haul… If you want resiliency and you want flexibility, you have to do partnerships,” he added, noting that he has never seen an era as turbulent as the past five to eight years.
Because of that, consistency is key. “I think the days of opportunistic sourcing are coming to an end. It’s impossible to drive an opportunistic sourcing machine where you send tech packs to five different factories and you take the best price and the lowest risk,” Bengtsson said.
“The partnership aspect of manufacturing becoming more and more important—that you really know your vendors, and I don’t mean just in the consumption element of it, but you also trust each other,” he added.
“I do agree that having the trust with your supply chain partners, maintaining those open lines of communications, showing them that you’re there as a resource and not just someone to give them a little slap on the hand if they’re if they’re not doing something the way that you want it to… I think it’s all working on a continuous improvement model,” Skims’ Pacheco added.
“It’s making sure that you have those regular check-ins; we have vendor summit once a year,” she said. “We have partners visiting the factories in different countries, and I make sure to keep the lines of communication open outside of audits and the remediation processes—I want to understand what they’re facing.”
