To establishment a sustainable and circular textile industry, future textile professionals need to understand and capitalise on all possibilities of digitalisation to save costs and resources, say Lorenz Wied and Anton Schumann
In the midst of the fourth industrial revolution, textiles are still made from warp and weft. And not a lot is going to change any time soon. What is changing, however, is the demand for increased efficiency and transparency by policymakers, distributors and customers along the global and regional supply chain. The trends towards sustainability and digitalisation are reinforcing the industry's transformation into a vertically organised, sustainable value chain.
We are currently witnessing how digitalisation is changing the textile industry. The trend towards sustainability will continue until consumers become uber confident that the product they are purchasing has been manufactured in a fair, eco-friendly and cost-efficient manner.
Digitalisation brings new business models
Almost 200 years ago, the first industrial revolution began with the steam engine and the mechanical loom. At that time, wool and cotton were the economic drivers, while the fourth industrial revolution is being driven by digitalisation and accelerated communication on the Web.
Several global studies by companies like Boston Consulting, IBM and Cap Gemini have shown that it is innovation in business models that deliver a higher potential for success than product and process innovations. At present, this connection is even becoming increasingly important in the textile industry as a result of ongoing digitalisation and the trend towards sustainability.
A business model, to put it simply, is the way someone engages in business. The streams of data and transparency of supply chains have created new business models in the textile industry. These can provide customers with the information they need to take a 'sustainable' purchase decision. Such business models also manage to bypass intermediaries in the global textile trade through direct communication, allowing control of margins and costs.
Platform systems and hybrid networks in the textile industry are creating new supply chains that were previously unthinkable. Parts of established supply chains are being skipped to put customers and producers into direct contact quickly and easily. Both business-to-business (B2B) and business-to-consumer (B2C) options are now available. Examples include companies such as Spreadshirt in Leipzig, Spoonflower in Berlin and Roostery in Charlotte, California. All three examples are united in the fact that they come into direct contact with end users via the Web and thus used the transparency in the supply chain to ensure their economic success as well as sustainability. In addition, customers can act as their own designers, product developers and suppliers, all through a single platform.
Hand-in-hand: digitalisation in automation
The trends of digitalisation and automation will together change the industry. Even now, a shirt can be produced up to 85 per cent automatically. This means rationalisation and increased efficiency: the goal of every entrepreneur. And today there will probably be no 'seamstress revolution', analogous to the weaver uprising. Our seamstresses are now based in Bangladesh and Indonesia, where their jobs in the controversial factories have made their lives at least somewhat better than before the textile industry moved in.
But the question remains what would happen if automation progressed to the point that the seamstresses in Dhaka would lose their jobs. The textile industry in 19th century Germany tripled its production when the mechanical loom was introduced. As they say, history repeats itself.
Digitalisation promotes sustainability
Does digitalisation contribute to sustainability? Not directly. But digitalisation does create opportunities for ensuring sustainability from the raw fibre to the finished clothes. And if you want to know with some certainty, you can pay attention to sustainability. But can it be reduced to whether the manufacturing company produces as little waste water as possible? Or uses as few 'bad' chemicals as possible? Isn't it also important to know whether child labour is tolerated? This is also one of the important 'duties of care', as German politician Renate Elly Kunast demanded, "that suppliers adhere to safety standards as well as social and ecological standards".
Digitalisation will change the sustainability and resource efficiency in production to such an extent that supply chains and production processes will become more transparent and thus, more sustainable through cloud-based communication systems. This will change both B2B and B2C purchasing behaviours.
Digitalisation and transparency
Major discount chains like Lidl, Aldi and Marks & Spencer have put parts of their supply chains online. Chinese platform www.ipe.com already lists many Chinese and other companies on the supply chain. The site requires that they publish their latest wastewater reports there.
Quality assurance is about to take a digital leap. In addition to reducing costs, saving time is on the agenda. Who wants to wait for print reports to land on your desk? Digital means real-time display on the monitors of those responsible, so that they can approve deliveries. On the other side of the world, in 2010, Marshall Fisher and Ananth Raman described these rapid forms of organisation and supply chains in the book The New Science of Retailing. Sustainable retail also means that supply and demand can increasingly be closely coordinated through digitalisation. This means it will no longer be necessary to produce for the incineration plant.
But putting the supply chain online is only a part of it. Till now, high costs have been incurred to record and document company data down to the level of the individual product. But what end consumers, non-governmental orgnisations (NGOs), associations and labels want is for the production conditions to be made visible. Not somewhere, but visible on the item for sale in the shop, by scanning a QR code that links to the information online. This has been available in the food industry for years. The textile industry is now following suit.
Transparency & sustainability
Customers increasingly want to know about where their food, cosmetics and clothing come from and who is involved in their production. We want to know what we are putting on our skin and what we are eating. Which fibres, chemicals and processes were used? How far has the piece travelled? Were renewable raw materials used and is the product recyclable? In short, we want to know the ecological footprint of the products we use every day. According to the latest report of the Global Fashion Agenda and The Boston Consulting Group, 'sustainable management' and a strategy geared to sustainability leads to entrepreneurial success, as analysed in some of the largest companies in the European clothing industry.
Sustainability conserves resources and is cost-efficient!
Digitalisation opens up options for transparently presenting the origin, ingredients and production routes, i.e., the entire journey of a product. And that will change the perception and the processes of the entire industry. It is not only the desire for sustainability, it is also the control of costs and margins within the global supply chain that is driving the turn to resource efficiency and therefore, sustainability as well.
Sustainability in the textile industry is efficient management in all stages of the process chain and circular processes, such as:
Resource-saving dyeing processes (www.dyecoo.com)
Renewable resources (www.ananas-anam.com, www.bpt.archroma.com/earthcolorsbyarchroma/)
Recycling as USP (such as https://ecoalf.com/de/)
Circular industrial design (such as https://circular.fashion)
The question is not whether it is possible, but whether we understand the need to combine compliance with legal regulations with customer perception and demand (price sensitivity!) to develop sustainable business models. Sustainability in the textile industry is not just a certificate, but an engineering mantra, in line with legal regulations.
But can you have all this at the same cost? Digitalisation is only one tool. But reasonable and efficient consumption is incumbent on us and all players in the value chain, including the entrepreneur.
Communication that extends across the entire supply chain leads to reversed supply chains where supply and demand can meet in real time. This yields previously unthinkable opportunities to react to worldwide demand in a precise and concrete manner (lot size = 1). Demand becomes predictable.
The international internet business platforms are leading to a change in consumer behaviour and in supplier business models. Amazon, as the world's biggest supermarket and the future textile powerhouse, will change the textile industry forever. In a post-brands age, Amazon and other digital business models or platforms will be able to control the B2B and B2C supply chains with data from around the world, and thus establish a cost- and resource-efficient supply chain. Successful platform models reduce transaction costs and the efficiency available within an international supply chain is utilised to its absolute optimum.
The textile manufacturing industry is just at the beginning of its journey towards going digital. This trend is no longer only about smart wearables, but about connected businesses. At the Sustainable Textile School 2018, the pioneers of efficient and sustainable supply chains will present their business models and vision of a connected world managing data for sustainable impact on environment, people and business returns. To establish a sustainable and circular textile industry, future textile professionals need to understand and capitalise on all possibilities of digitalisation to save costs and resources. Only in this manner can the world's oldest industry be fundamentally changed.
About the Authors: Lorenz Wied, senior consultant with Gherzi Textile Organisation based in Linz, Austria, supports companies worldwide in strategic realignment, restructuring, marketing and product development. Berlin-based Anton Schumann is partner and senior consultant with Gherzi van Delden GmbH. In 2017 he founded the www.sustainable-textile-school.com together with the Technical University of Chemnitz.