- A more sustainable supply chain model is about five years away, according to executives who represent sourcing value of about $100 billion in a McKinsey Apparel CPO survey, Fashion’s New Must Have: Sustainable Sourcing at Scale.
- The cause for optimism stems from placing an emphasis on four factors: transparency, greater implementation of sustainable materials, tighter relationships with suppliers and revamping best practices for purchases.
- More than 50% of North American apparel CPOs report sustainability and transparency as their top concern. Digitization of the sourcing process is tied for second with supplier base consolidation, according to 35% of respondents.
While the impetus for change is largely consumer-driven, the burden of the transition will fall squarely on chief procurement officers (CPOs) who know sustainability is a necessity, not a luxury.
"Sustainable sourcing at scale is moving form a nice-to-have to a must-have," Karl-Hendrik Magnus, partner at McKinsey, said at the Sourcing Journal Summit in New York City Thursday.
From cotton to hemp to linens, consumers want to know origins, factory conditions and transport modes before purchasing a product.
Procurement professionals are walking a tightrope. They have to maintain the best margins while balancing new metrics for sustainability and securing low-cost alternatives. Two-thirds of survey respondents say they anticipate price increases as they switch to sustainable sources, but with that comes competitive advantage.
Another element in the transition is satisfying consumers and appealing to a conscientious workforce.
CPOs often have no idea whether non-primary sources are ethical, sustainable or green, but are held responsible. "Only roughly 50% of the industry has transparency beyond tier one today,"Magnus said.
Closer supplier relationships are expected to increase visibility into tier two and beyond. CPOs should push for fair wages, ecological awareness and employee well-being throughout the chain, according to the survey. Collaboration among companies is vital. "No single company can solve this on its own," Magnus said.
For procurement professionals dealing with tariff wars, challenges are mounting. The transition to a sustainable apparel supply chain will be arduous and impact purchasing decisions, digitization efforts, margins and the overall job function of CPOs.
Emma Cosgrove contributed to this report.
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