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Future blockchain adoption in fashion depends on returns on investments

Blockchain in Fashion Industry

Blockchain technology was introduced to provide immediate, shared and completely transparent information stored on an immutable ledger that can be accessed only by permissioned network members.  The technology is yet to be widely adopted in the fashion industry though stakeholders have been eyeing it for years to trace fashion’s notoriously opaque supply chain. 

Transparency, regulations drive blockchain adoption

As per a Business of Fashion report, to implement this technology in the fashion industry, suppliers along the chain, from cut-and-sew factories to fabric weavers, yarn spinners, ginning mills, and even farmers, need to be transparent in their operations. Post pandemic, transparency has become top priority for brands and retailers. This has given a boost to blockchain projects across the world. For example, UK Fashion & Textile Association (UKFT) and H&M have launched new blockchain projects sometime ago. The dual impact of Brexit and COVID is encouraging suppliers to adopt blockchain in their operations, says Adam Mansell, CEO, UKFT, which launched a tracing project in IBM and others including Next and H&M’s COS brand in August.

The technology is also getting a boost from new regulations by governments across the world. Earlier this year, the US banned imports made from cotton grown in China’s Xinjiang region on accusations of being made by forced laborers belonging to Uighur and other minority Muslim communities. Germany introduced a law making it compulsory for large companies to ensure their supply chains comply with social and environmental standards. The law is scheduled to take effect in 2023. 

These developments have caught the attention of global textile traceability champions. Blockchain-based tracing platform for fashion, TextileGenesis has launched pilot projects in collaboration with the US Cotton Trust Protocol, and a viscose tracing project with Kering and Bestseller. The company has teamed up with H&M for these projects. 

A verified record of garment history

Blockchain provides brands and retailers a verified record of the garment’s history at each step of its production. However, it mandates companies to ensure that the data they receive is accurate, says Nate Herman, Senior Vice President-Policy, American Apparel & Footwear Association. Funded by a research grant from the UK government, the UKFT’s traceability project is endorsed by Future Fashion Factory, which supports innovation in the UK garment sector, and Tech Data, a technology firm. Contrary to the fashion industry’s traditional tracing methods, the IBM project aims to capture information around each step of the chain, adds Keric Morris, Head-Standards, IBM. 

Focusing solely on cotton products, the project is onboarding suppliers in countries like Bangladesh, India, Turkey, and Portugal. It focuses specifically on tracing sustainable and differentiated materials such as organic cotton by using a digital token called Fibercoin, adds Amit Gautam, Founder and CEO, TextileGenesis. The project has enabled H&M to improve supply chain transparency and traceability. 

New tools to ensure accuracy 

To ensure the information logged on the blockchain is accurate, companies are using tools such as forensic verifications that test genetic or chemical markers in material fibers. Companies like TextileGenesis are focusing on organic cotton as it requires a certain amount of effort, and investment to deliver traceability.

Tarun Kumar Agarwal, Production Logistics Researcher, KTH Royal Institute of Technology predicts, many big brands will adopt blockchain in future. However, future development will depend on the returns it generates for brands. In coming years, the top 100 brands will trace most of their products, predicts Gautam. Meanwhile, the rest of the apparel retail market, including domestic retailers in Asia or Europe will continue to remain largely untraceable, he adds.

 

 
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