A Cleaner Look
Apparel Brands Are Launching Ambitious Supply Chain Projects to Tidy Up an Industry—and the Planet
Models wearing Misha Nonoo clothes
BY STEPHANIE SCHOMER
FASHION HAS A NEW OBSESSION.
The industry is launching projects with an eye on erasing its wasteful, resource-heavy history. Global supply chains make tracing difficult. Producing fabric can be water-, energy- and pesticide-intensive. And many garments from seasonal collections are never sold, so they end up in landfills.
In 2018, it was reported that Swedish fashion brand H&M was sitting on more than US$4 billion of unsold inventory, routinely burning whatever it deemed “unusable.” Around the same time, British luxury house Burberry admitted to burning tens of millions of U.S.-dollars' worth of unsold product, at least in part to preserve the exclusivity associated with the brand. A supply chain that ends in fiery destruction isn't only a drain on a company's bottom line; it can also be a stakeholder nightmare, as fashion fans, environmentalists and shareholders balk at the routine waste of resources.
“Especially among the newest generation of consumers, they are extremely conscious of our environmental issues and are vocal about the need for transparency,” says Sanjeev Bahl, founder and CEO, Saitex, Dong Nai, Vietnam. The Saitex factory produces denim for brands such as J.Crew, G-Star Raw and Everlane. “The environmental impact of how products are made is now being heavily considered when it comes to making a purchase,” he says.
—Sanjeev Bahl, Saitex, Dong Nai, Vietnam
Workers at Saitex, factories in Vietnam
The industry is responding with seismic shifts, according to McKinsey's State of Fashion 2019 report, with improving sustainability and transparency in the top concerns among fashion executives. Those factors, combined with stakeholder interest in and pressure around sustainability initiatives, are driving a groundswell of projects to make fashion more traceable, more reusable and less resource-intensive. In December, at the U.N.'s COP24 climate summit in Poland, dozens of industry-leading brands signed a charter to reduce their aggregate greenhouse-gas emissions 30 percent by 2030.
That operational ambition will be realized largely through supply chain projects. Take on-demand production, for instance, in which stored inventory is eschewed in favor of production that's exactly matched to consumer orders. “It's something the fashion industry has been talking about for a long time, but it requires a total logistical rethinking,” says Lindsey Saletta, COO, Misha Nonoo, New York, New York, USA.
When founder Misha Nonoo launched an initiative in 2017 to overhaul the supply chain for the ready-to-wear line, moving to an on-demand manufacturing model, the project plan centered around evaluating and choosing a factory partner that could ensure cutting, sewing and delivery with a seven- to 10-day turnaround. But Ms. Nonoo quickly realized that, because the new model didn't include housing inventory, it mitigated some of the risks associated with manufacturing in multiple sizes. So the team decided to expand the project's scope, adding new sizes to the brand's offerings.
Ms. Saletta credits communication as a key driver in the project's success. The team sought both guidance and introductions from the Council of Fashion Designers of America, which proved pivotal in identifying the best factory partner. But she also wonders if the change initiative would have been executed quite so smoothly at a more traditional brand.
“One thing I learned working inside larger companies is that it's difficult to implement changes because of the way budget is tracked,” says Ms. Saletta, who previously served as innovation lab manager at Global Brands Group, a fashion licensing business that works with such brands as Michael Kors, Tommy Hilfiger and BCBG. “People are held to quarterly results really closely,” which can build a natural resistance to a large-scale change initiative. “But here, we had the agility to make those changes. And it was still not easy.”
—Lindsey Saletta, Misha Nonoo, New York, New York, USA
In October, Fashion for Good opened its doors to visitors in Amsterdam, the Netherlands. But rather than artwork or historical artifacts adorning the walls, this new initiative is centered around innovations in responsible fashion. The first batch of projects on display included a dress from the Stella McCartney collection that Colorfix dyed using microorganisms (above right), textiles made from the roots of mushrooms by a team at Mycotex and faux leather manufactured from apples.
THREADING THE NEEDLE
When making supply chain upgrades, project leaders must carefully consider when to overhaul and when to make piecemeal improvements with smaller initiatives. Major change initiatives might promise bigger benefits realization, but they also pose a greater risk to operations, and these projects often carry longer schedules, larger budgets and a greater risk of stakeholder resistance.
For instance, in 2017 Kyle Parsons launched a year-long project to overhaul the supply chain for Indosole, a company he founded that produces footwear made from repurposed tires. But the team couldn't handle full-throttle operations under the status quo system while also vetting new partners, testing new technologies and stress-testing new processes.
So, he decided to scale back production during the project's execution phase. In early 2018, the company shifted to the new supply chain, “and now it's taken off,” says Mr. Parsons, San Francisco, California, USA. “With our new factory, we can make 10,000 pairs of shoes a day—so we can deliver to the masses and save more tires. But we needed to be able to execute a lot of trial and error and a lot of formula experimentation to get there.”
At Saitex, Mr. Bahl has taken a more iterative approach, with a series of projects to make its denim manufacturing more sustainable. Project teams have completed a US$2 million upgrade to the water system to maximize recycling—allowing the company to use less than 1 liter (0.26 gallons) of water to make a pair of jeans, compared to the industry average of 10. Another project installed solar-power panels and biomass generators that allow the plant to run on sunshine, wood shavings and coconut husks instead of fossil fuels.
The growing fashion industry is focused on adapting to the shifting business environment.
|Estimated global industry growth in 2019. Emerging Asia Pacific countries and much of Europe are expected to demonstrate the strongest surge.|
The year China is expected to overtake the United States as the largest fashion market in the world
When asked to describe the industry, the top words that came to mind for executives were:
|of fashion companies improved their sustainability scores in 2017, the most recent year reported.|
|of fashion executives used sustainability targets as a guiding principle for nearly every strategic decision they made in 2017—an 18 percentage point jump from the year before.|
Sources: The State of Fashion 2019, McKinsey, 2019; 2018 Pulse of the Fashion Industry, Boston Global Consulting Group, 2018
“We tested a lot of variables through trial and error before we found the best protocols,” says Mr. Bahl. He notes that part of each iterative sprint involved calculating profitability metrics, such as water and energy consumption, so that the team could concretely identify when a project's investment would be recouped.
“We recouped our machinery investment within the first five years,” he says. “And with each project to make a new improvement, we're decreasing that wait time before we turn a profit.”
An iterative approach has also paid off when it comes to denim finishing. Levi's, which sells upward of US$4 billion worth of jeans each year, used to employ thousands of chemical formulations during its denim finishing process. In 2016, the apparel giant launched its Screened Chemistry initiative to study, flag and phase out the most toxic chemicals. The project's ultimate goal is to have all partners and suppliers using only chemicals that have passed screening approval by 2020.
The change effort got an unexpected boost in the form of robots: Levi's innovation center, dubbed the Eureka Lab, completed Project F.L.X. in 2018. The team was tasked with developing a new laser technology that uses infrared light to etch off a very fine layer of indigo and cotton from an individual pair of jeans. This creates a faded finish that would have required sandpaper, manual labor and chemical conditioning. The Eureka team has said it hopes to scale the new technology this year, driving its chemical formulations down to the dozens.
At large apparel brands, attacking ambitious strategic goals through multiple projects is par for the course, says Anna-Karin Dahlberg, corporate sustainability manager, Lindex, Gothenburg, Sweden. Five years ago, the 60-year-old global fashion company committed to using 80 percent sustainable materials and supply chain processes by 2020. But there's no single project or program that could achieve that lofty goal.
“Like everyone else in this industry, we see structural or systemic challenges within our supply chain, and we're struggling in some areas more than others,” says Ms. Dahlberg. Part of what makes supply chain undertakings so difficult is that they often span multiple external partners, and generating buy-in and governance can be time-intensive.
To that end, the team at Lindex has upped communication with factory partners, including on-site visits and face-to-face meetings. “We don't expect the transition to happen overnight, and we're happy to take a coaching approach. We show them tools, projects and business cases to help them understand how projects to save water and chemical use and energy use can save money.” PM