fashion supply chains tend to start at the product design stage, progress to the manufacturing stage, then to the distribution and logistics stage, ending at the point of retail. There is an alternative perspective of the fashion supply chain, which involves a complex system starting right at the raw material production stage therefore beginning long before the creative design process.
The Supply Chain Tiers
Tier 4: Raw Material Suppliers (sub-suppliers)
Raw material suppliers are those who produce the materials, substances or commodities used in the primary production step of a product. This is the very first step in the development of a product at the beginning of the supply chain. For example gold miners, or leather, cashmere, cotton and silk farmers.
Tiers 3 & 2: Raw Material Processing & Sub-Component Suppliers (sub-suppliers)
Tier 3 and Tier 2 of a supply chain represent Raw Material Processing Suppliers and Sub-Component Suppliers respectively. Both are sub-suppliers of a brand, providing processed raw materials (e.g. processed fibres, yarns, tanned leather) and other components (e.g. embroidery, metal finishings) to a brand’s direct suppliers.
Tier 1: Manufacturing Suppliers (direct suppliers)
Tier 1 suppliers are those who produce the final product for a brand, otherwise known as manufacturing suppliers, final assembly suppliers or more commonly direct suppliers.
Tier 0: The Brand (creative, operations, logistics, retail)
The brand is the key decision maker of the supply chain, and ideally, brands would be able to ensure that all stakeholders who work directly or indirectly for the brand are acting in the interest of the brand – whether it be in terms of price, quality, ethical or sustainability requirements.
Challenges across the Supply Chain
Tier 4: Raw Material Suppliers (sub-suppliers)
Raw material suppliers have strict timings that are often fixed due to agricultural or animal needs (e.g. shearing season for wool, cotton harvesting) or have special “to order” production (e.g. recycled synthetics) which may take longer unless they have volume orders to create stock. Therefore, sustainable raw materials are not always available on demand and the integration of new raw material sourcing into an existing supply chain takes time, advance planning and commitment. Moreover, to identify and develop a more sustainable way to produce a raw material also takes a significant amount of time and investment and may require suppliers to change their conventional business models or their agricultural practices. For example, even though organic cotton can lead to better financial and health prospects, the transition period to organic cotton farming requires three years, education, monetary investment for certification and usually leads to lower cotton yields before the benefits of lower input costs and better financial situations can be felt.
Long-term commitments from multiple players in the supply chain are necessary, not just by the raw material suppliers themselves but also by upstream suppliers and the brand. Such raw material suppliers ultimately cannot change the system by themselves, since their production is intrinsically linked to the demands coming from upstream suppliers and brands in the market.
Tiers 3 & 2: Raw Material Processing & Sub-Component Suppliers (sub-suppliers)
Traditionally, the processing of raw materials and the production of sub-components require large amounts of water, energy, chemicals and so forth, which means large environmental impacts. For example, processing raw cotton into yarn consumes energy and water, which creates air pollution, GHG emissions and water impacts; whilst processing precious metals has a significant impact on water pollution because of the chemicals used in extraction and in the refining process.
Similar to Tier 4, improving processing and manufacturing methods requires a collaborative approach. Tier 2 and 3 suppliers need to work with their suppliers (Tier 4), with their clients (Tier 1) and with the brand (Tier 0) to develop more sustainable practices, while still respecting the quality, timing and other demands of the brand. Actions can range from short-term low-cost changes such as switching to LED lighting, to longer-term projects such as the development of a metal-free tanning process or the phase-out of hazardous chemicals from dyeing processes.
In addition, the suppliers producing processed fibres, yarns, finished fabrics or components are often the ones purchasing the raw materials for their production, and are a crucial link in the supply chain to ensure traceability, transparency and more sustainable sourcing of raw materials. These players in the supply chain need to be willing to ask for and invest in sourcing more sustainable alternatives in order to have a suitable range of materials ready for a finished product supplier or brand to integrate into their final offerings. At the same time, these players are confronted with pressure from a competitive market to offer low prices, high quality, multiple choices and fast turnaround – creating a challenging environment for sustainable sourcing, which requires time and investment as well as commitment and planning for future demands.
In a typical business model, material suppliers keep stock available in order to be able to offer brands a large variety of different materials and fulfil last-minute demands for changes to colour, quality, types of yarns or fabrics. However, without a significant demand from the entire market, the integration of sustainable, often more expensive, raw materials into this available stock is still a risky business proposition for many material suppliers. Therefore, in transitioning to the utilisation of more sustainable materials, brands may find it easier to target materials (fabrics or yarns) that are carried over through multiple seasons in order to have better predictability regarding material choice and volumes.
Tier 1: Manufacturing Suppliers (direct suppliers)
Manufacturing suppliers depend significantly on what the downstream suppliers (Tiers 2, 3 and 4) can provide them to meet the demands of their client (the brand). Since most brands and manufacturing suppliers choose their production materials from Tier 3, unless the Tier 1 supplier is vertically integrated, the main sustainability challenges at Tier 1 are the management of waste, recycling and energy or social issues as well as guarding the integrity of the supply chain at the manufacturing stage.
Tier 0: The Brand (creative, operations, logistics, retail)
However, supply chains are complex systems, made up of multiple stakeholders with different and competing interests, and often brands may only have visibility of its direct Tier 1 suppliers and might have limited or no contact with the indirect suppliers (Tier 2, 3 and 4 suppliers). In fashion brands, supply chains are even more complex since the business may change from season to season, year to year, designer to designer. Material choices are traditionally based on creativity, aesthetics, quality and price, and sustainability is often not a primary consideration.
In order to truly integrate sustainability, a brand needs to maximise transparency and collaboration within its supply chain, from the cotton field to the creative studio and to the boutique. A first step for a brand is to investigate its supply chain, including its direct and indirect operations, to understand where the biggest impacts occur and to identify where change is needed. By measuring and monitoring the entire supply chain on a continuous basis, as Kering does via its Environmental Profit & Loss, a brand can take steps to ensure its operations and products are as sustainable as possible. A brand can also pressure the supply chain, by asking questions to their direct suppliers to obtain greater visibility and by demanding more sustainable alternatives.
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