Supply chain professionals in the fashion industry have long understood the importance of knowing their suppliers and, when possible, their suppliers’ suppliers, to achieve transparency and traceability throughout the supply chain.
However, recent regulations—such as the Uyghur Forced Labor Prevention Act (UFLPA), which aims to prevent the importation of goods produced with forced labor from the Xinjiang Uyghur Autonomous Region of China, and the European Union’s Corporate Sustainability Due Diligence Directive(CSDDD), which mandates companies assess and address their environmental and human rights impacts—have intensified the pressure on companies to gain visibility into the highest-risk areas of their value chains.
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Despite these increasing rules and regulations, the current level of supply chain visibility remains relatively low.
In fact, many companies struggle with transparency across their supply chains. A recent survey by software company Tive Inc. revealed that 77 percent of supply chain decision-makers view real-time visibility as essential, yet only 25 percent currently utilize it. This disconnect indicates a critical area for improvement within the industry.
While consumers and regulators push for improved traceability and ethical sourcing, only a small percentage of brands can fully track their products from raw materials to finished goods. This discrepancy showcases a significant gap between the desired level of transparency and actual implementation, as highlighted by Blythe Chorn, managing director of supply chain advisory at accounting firm KPMG.
Chorn notes that the benefits of enhanced supply chain visibility extend beyond mere compliance. “Increased visibility can lead to greater resiliency and improved cost efficiency, which are crucial for navigating today’s complex market dynamics,” she said. “One of the greatest business advantages is how visibility can be leveraged to advance decarbonization through reduced waste, energy and resource use across the supply base, ultimately resulting in more cost-efficient and better managed supply chains.”
By providing a clear view of the entire supply chain, visibility allows supply chain and procurement professionals to pinpoint specific areas where significant greenhouse gas emissions occur—known as emissions hotspots—and identify the suppliers directly contributing to those high emission levels through detailed data on their operations and practices, enabling targeted efforts to reduce overall carbon footprint while improving cost management and resiliency. Because the emissions footprint of the fashion industry is largely driven by activities and suppliers deep in the supply chain, visibility is necessary to know where and with what supply partners to drive decarbonization efforts.