As one of the world’s largest tech corporations, IBM is at the forefront of fashion supply chain tracking solutions
Luq Niazi: IBM Global Managing Director
The breakout of blockchain has come with a growing number of applications for the consumer industry, from tracking food safety to certifying luxury items. According to PwC’s 2018 survey of 600 executives from fifteen territories, eighty-four percent said their organizations have at least some involvements with blockchain technology. The possible uses for blockchain technology are still in their nascency, as the research into the field develops and shows that by 2030, 10-20% of global infrastructure will run on the ledger. The main argument for its use is that it reduces cost, increased the search speed within a supply chain and provides transparency, a key metric for businesses and consumers who are more aware of their impact on the climate. IBM is working on providing these solutions to the consumer industries. Global Managing Director Luq Niazi affirms that «All fashion houses and fashion companies, irrespective of where they are in the value system – whether they’re fast fashion or more premium brands – recognize that they’ve got to make a change in being more responsible about their supply chains. This is driven by about half a dozen of the seventeen sustainable development goals. Consumers are starting to expect that. When you bring that need to demonstrate more sustainability against the consumer demand for evidence of your sustainability, that means you’ve got to start to really bring and engineer sustainability into the entirety of your value chains».
Lampoon reporting: IBM hybrid cloud blockchain system
As blockchain is becoming a part of supply chain tracking, the issue of infrastructure change shows that there are multiple ways of creating blockchain systems – from privately owned ones like Aura by LVMH to open-source options like Arianee. Information solutions giant IBM has an alternative option that combines public and private clouds with on-site infrastructure in a hybrid cloud blockchain. The system was initially used in a food trust system to certify sustainably sourced meat and fish products but is applicable to the fashion industry supply chain as well. «If you’re in the store, you can scan the QR code for the organic chicken or the freshly farmed fish and you can see the value chain immediately or what’s occurred and get the demonstration. It can reaffirm other purchases since the system would know what you are putting into the shopping basket, because they will have seen you’ve been buying this product. That way, it can suggest other products. If you can trace food safety data, you can trace fashion supply chains – it’s the same principles for tracing CO2, water, chemicals, or dyes. We have the fabric in the supply chain to be able to do all of that. We are using our food trust platform and the underlying technology – which is a blockchain transaction system for supply chains – and we are evolving to be able to use it in driving sustainability measures throughout the value chain».
BOOST 4.0 project by IBM
IBM have used their hybrid cloud blockchain and the model of their food safety system to help with the counterfeit problem with ‘Made in Italy’ goods with the BOOST 4.0 project. According to a report by dGen, ‘Made in Italy’ counterfeit labels caused a loss of €12.4 billion ($13.4 billion) in 2016 alone. Partnering with the Italian Government who have committed 15 million euros to the project, IBM Italy are working with Italian artisans like the Piacenza 1733 wool mill in Biella to show how the Blockchain Transparent Supply can be used to verify the artisanal sources of the fibre through scannable QR codes on the product. «Brands in the fashion industry are putting more and more of their content and their credentials, or what they’re doing in sustainability onto their digital channels and their social channels, making it much more prevalent». The Italian artisanal market relies on the value of the ‘Made in Italy’ marker to show exceptional quality and localized production. As the growth of the counterfeit market has crippled many Italian brands, blockchain can be used to link to the ongoing sustainability conversation and the interest that consumers have in buying products that have a verified supply chain.
KAYA&KATO partnership with IBM
IBM have also looked beyond luxury markets for blockchain application, focusing on where the technology can be used in sectors that rely on mass clothing use. They have worked with KAYA&KATO, a German workwear brand on innovating their supply chain and including it on the blockchain ledger. The food and accommodation services economic sector employ around 8.2 million people in the twenty-seven EU Member States according to the European Labour Force Survey, making workwear a key part in driving more transparent supply chains across the sector. «It’s all about transparency of the origins of the garments, the fibers that are used and how the products are being used to give information to the consumer in terms of sustainable choices. KAYA&KATO are using blockchain technology to trace all of that through the supply chain». This allows buyers and individual hotels and restaurants to take an active role in supporting responsible production. The applications are also useful when considering that most of the fashion buying power now rests in Asia. The growing number of shoppers in countries like China and India means that sustainability measures like blockchain-backed supply chain tracking need to be applied internationally. As the consumer markets in Asia are far more technologically advanced, using QR codes – a format already used for most payments – would allow for easy integration and a rise in conscious consumerism in the biggest fashion markets. «Overtime it will become more prevalent, as we think about the digital nature of where the share of wallet is – with the millennial generations and the rising populations. We find this true in the east, so if you think about China, India, Asia, Pacific markets, they are digitally oriented and they’re buying even more. The opportunity to integrate all of this information into their buying experience can make big changes because we’re talking about big populations».
The possibilities of a hybrid cloud blockchain network would surpass the need for time-consuming integration into new markets – something that the fashion industry is already slow to adopt. The luxury market has been the fastest, as the supply chains within those systems rely on robust quality inspection. These brands pride themselves on the value that comes with their product in a similar way that ‘Made in Italy’ defines Italian craftsmanship. While the pandemic has sped up innovation within the sector, QR formats that companies and consumers already know make the process simpler, outlining which brands can take on internationally recognized sustainable production certification and which brands still need to orientate their supply chains towards it. The development of new systems shows the growth opportunities for fashion to get more involved with the technology and forever dismantle the outdated supply chains, moving towards a new age of transparency and traceability.
International Business Machines Corporation
An American multinational technology corporation headquartered in Armonk, New York, with operations in over 171 countries. Luq Niazi is the Global Managing Director for Consumer Industries, working to include blockchain technology across supply chains.