New Report: Fashion’s New Must-have—Sustainable Sourcing at Scale

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The study was based on a survey of 64 sourcing executives from vertical apparel retailers, hybrid wholesalers, and sportswear companies, with a total sourcing volume of $100 billion. Below are the key findings of the report:

  • More sourcing executives now focus on process improvements in their companies, such as sustainability and transparency (56% of respondents), digitalization of sourcing process and related areas (45% of respondents), consolidation of supplier base (42% of respondents), end-to-end process efficiency (41% of respondents) than shifting sourcing countries (20% of respondents). Related, as cost gaps between sourcing destinations are narrowing, apparel companies are shifting from minimizing the price of supply to a focus on customer-centric, agile product development to meet customer demand. Digitalization, such as intelligent sourcing, is one of the most promising areas.
  • Affected by the on-going U.S.-China tariff war, two-thirds of surveyed companies expect their overall sourcing cost to increase in the years ahead, including 37.5% expecting a 2-4% increase and 25% expecting 1-2% increase. However, only 3.1% of respondents expect a significant cost increase (>4%).
  • Echoing the findings of other recent studies, respondents plan to source relatively less from China through 2025. Bangladesh, Vietnam, Myanmar, and Ethiopia are among the top alternative sourcing destinations. Meanwhile, more companies are considering near-sourcing. The biggest challenge, however, is limited fabric production capacity, NOT higher wages.
  • Sustainable apparel sourcing is regarded as a must—70% of EU companies and 35% of North American companies surveyed say “responsible and sustainable sourcing was on the CEO agenda.” Top challenges to achieve sustainable apparel sourcing include “no common, objective industry standard on sustainable sourcing”, “consumers lack a clear picture of what sustainable fashion is all about”, “mixed influence of the sourcing function in company-wide sustainability strategy.” Further, more companies prioritize environmental-sustainability initiatives (issues such as sustainable material, recycled material, traceability, and packing) than social sustainability initiatives (issues such as) fair on living wage and decent work). Additionally, respondents hold competing views on whether sustainability will increase sourcing costs overall. Around 58% of respondents see additional costs for sustainable sourcing between 1% and 5%.
  • Sustainability will play an increasingly important role in how apparel companies select their suppliers. Some surveyed apparel brands and retailers say they have upgraded their supplier ratings over the last couple of years, moving away from viewing sustainability simply as a compliance-based hygiene factor and instead embracing criteria that are more sophisticated.
  • There is also a need to shift from the transactional-based, season-by-season and the low-commitment relationship between apparel companies and their vendors to strategic partnerships between the two. Around 73% of respondents plan to consolidate their supplier base by at least 5% over the next few years. Related, apparel companies increasingly empower suppliers for self-auditing with tools like the Higg Index.

Author: Sheng Lu

Professor @ University of Delaware

30 thoughts on “New Report: Fashion’s New Must-have—Sustainable Sourcing at Scale”

  1. I enjoyed reading this case and the summary points. I appreciate the major call out what sustainability encompasses -both environmental sustainability and social sustainability. With the advancements in education, more and more people are becoming aware of sustainable clothing. This case was interesting because it ties back to what we’ve talked about it class, that many apparel companies are shifting from choosing manufactures that can give them the best price to manufactures that they can trust and build a relationship. In my opinion, the future in sustainability is both the responsibility of the companies and the consumers. By working together, the sustainable aspects will be more apparent and customers will demand sustainability causing companies will need to create sustainable products in sustainable environments or consumers will shift preferences to new companies.

    1. agree totally! I look forward to our industry panel discussion and see what the panelists have to say about their practices to make apparel sourcing more sustainable.

  2. This reading I found interesting and very much “in-line” with what we have discussed in class about the ongoing tariff dispute and apparel companies wanting to build of a relationship with their manufacturers. We discussed, on multiple occasions, how brands want to start building a trusted relationship with their manufacturers to ensure transparency and create a lasting/successful business agreement. It was also comforting to read that more companies are starting to focus more on sustainable practices. I believe this epidemic of sustainability is only going to get more and more important in the minds of consumers so if brands can start implementing eco-friendly practices, it will benefit them immensely in the end regardless of the higher prices these practices entail. I do agree with the statement that brands need to also focus on social sustainability with fair wages, hours and safer working environments in order for consumers to truly value and want to purchase the brand’s sustainable clothing that comes at a higher price.

  3. Fashion sustainability has become very important to me after learning the impact it has on Earth. This reading I enjoyed because it didn’t only mention the environmental impact of sustainability but also the ethical impact of it. I think it is important for companies to have sustainable sourcing and production. The more readily available it becomes, the better off the whole process and the people involved in the process will become. It is exciting to hear that sustainability is predicted to be a large part of why companies choose their sourcing. When the article stated some of the challenges of sustainable sourcing being that “consumers lack a clear picture of what sustainable fashion is all about” although it very much bothers me, I can’t help but agree. Many brands more so “green wash” which gives the vibe that they are environmentally friendly but they usually are not so. I hope the trend within companies that this article is predicting that CEO’s care about is about because they care about the environmental and social impact of their companies sourcing and production and not just because they know that it will be what sells to a consumer.

  4. This was a really interesting overview of the evolution of sourcing today. It will be interesting to see if the costs cut from digitalization and intelligent sourcing will be invested into sustainability as this becomes a greater priority among consumers. The fact that so many more EU companies are focused on sustainable sourcing than American companies is a reflection of the market. We learned in class that the most popular EU brands are much higher end than popular US brands. A consumer willing to pay for a much more expensive apparel product is likely to care more about sustainability than a slight cost difference. North American consumers are more concerned about lost costs and prefer lower end items so fewer companies share this focus. I found it fascinating that the study showed additional costs for sustainability to be between 1 and 5%. I expected costs to be much higher because to be truly sustainable would require a complete change of production line practices. This figure makes me question what is considered sustainable sourcing by these companies. The final point of interest for me is the shift to strategic partnerships. After studying how VF shifted to the third way it is interesting to see other companies following suit. The industry professional from URBN who talked to our class mentioned how difficult it was to ensure compliance through previous methods. Perhaps many countries have adopted this model for this reason.

  5. It is no surprise to me to see the direction of sourcing to shift to be more sustainable. Since the Rana Plaza incident I think this has been a large focus for retailers. It is important to the consumer market where their products are sourced, and how they’re manufactured. Retailers must listen and act on the demands of their consumers. Transparency is something that is being focused on, and is a very key factor in sustainability. By having transparency in their sourcing methods, retailers send a message that they care about sustainability and are moving in the right direction towards becoming more sustainable. I am disappointed that the EU seems to care more about sustainable sourcing and sustainability in general, than the US. We as the US consumers also have the responsibility to step up and demand sustainable brands. We must stop our mass consumption and fast fashion habits, and buy from retailers who are already showing initiative to be sustainable. The consumer and the retailer both have a huge responsibility and role in the future of fashions sustainability.

    1. Don’t be disappointed that ” that the EU seems to care more about sustainable sourcing and sustainability in general, than the US.” Like all survey-based studies, the results can be sensitive to the particular samples selected. For example, one recent study of mine shows that US fashion brands and retailers also attach great importance to sustainability (https://www.usfashionindustry.com/news/research-reports/usfia-fashion-industry-benchmarking-study). On the other hand, it is not enough to see sustainability as a slogan or marketing tactic. Rather, to develop a more sustainable supply chain/sourcing practice requires more and more highly-skilled and detailed technical knowledge and expertise–such as understanding and implementing the regulations, new material development and creating an effective corporate governance structure.

  6. Sustainable sourcing and production is probably the most talked about topic in the fashion industry right now. Consumers have recently started to become much more aware of where their clothes are coming from and how they are made. Especially with all the recent news about global warming and how bad making clothes is for the environment, consumers are trying to do what they can to purchase sustainable clothing. But first, the suppliers need to meet this demand by delivering these sustainable practices to the way they make their products and how they treat their workers. In the years to come, consumers will most likely be buying mainly from sustainable brands, so if a brand is found to not be sustainable, they will potentially lose a lot of business. I believe transparency is a very good tool that certain brands are starting to use, such as Everlane. They show exactly how much each product on their website costs and how they got that number. This creates trust with the customer because they feel good about buying from this company. I think more and more brands will be utilizing methods like this to satisfy the customer’s hunger for knowledge about the apparel they are buying.

  7. I think these points are super interesting. The one that grabbed my attention is that companies are more focused on environmental sustainability instead of social sustainability. I would think that social sustainability would come first because you would want your employees to enjoy working for your company in addition to making sure they are healthy and being treated fairly. In another class, I am taking we talk about the importance of making an employee feel respected and empowered. By doing this they produce more quality work for the company which in the end brings greater profit.

  8. Sustainability is such an important topic in the fashion industry. I found this article as well as these bullet points to be very interesting. One point that stood out to me was how companies tend to prioritize environmental-sustainable initiatives over social sustainability initiatives. I was surprised by this because I believe both types of sustainability are of equal importance. The article mentioned how companies are trying to navigate the world of sustainability as quickly as possible. As stated in the article, “Consumer demand for sustainable fashion is growing rapidly.” An issue the fashion industry is facing is that there is a lack of common language on sustainable sourcing and a lack of a shared set of standards. Different companies have different sourcing strategies, and some emphasize certain aspects of sustainability more than others.

    In this fast-paced industry, there is a lot of pressure for brands to keep up with consumer demands and make progress on implementing sustainable initiatives. We have seen that many companies are shifting manufacturing out of China and into countries such as Bangladesh and Vietnam due to the U.S.-China trade war. Do you think that this shift in manufacturing will impact companies’ sustainability practices in a positive or negative way?

  9. I enjoyed reading this study, and learning not only that companies are embracing sustainability but what distinct aspects of they are looking to incorporate into their sourcing policies. When shopping in the mall, I see many more retailers stressing sustainability in their sourcing practices, but many of the policies and strategies seem to be in the elementary stages and are not yet fully implemented. After reading this study, I am curious to see the direction that other companies will take in the future, and how successful they will be at implementing their new strategies. As someone who was worked in different retail positions, and monitored the consumption patterns of consumers I believe that many of the attributes companies are stressing can greatly help to improve the companies sustainability. This includes using better materials, better packaging, and being more transparent. Additionally, I believe that supplier relations will begin to become more important as more and more companies look to become more sustainable it is important that a level of trust be developed so that the suppliers are compliant and do not cheat.

  10. As a whole, sustainability has become a major concern for most companies. In past years, sustainability was thought of as a waste of time and money. However, with more information coming out about how badly even just the fashion industry is impacting our environment, people are more open to spending more money for conscious clothing. Not only has the fashion industry made a change in the way they are producing their goods, they have also changed their labor laws to be more ethical. After the Rana Plaza tragedy, safety in factories became a number one priority to a lot of manufacturers. As more and more news comes out about sustainability and decreasing fast fashion, I believe more companies will see the importance of being eco-friendly.

  11. I think the idea that environmental sustainability is often regarded as more important than social sustainability is interesting. Obviously with the impacts of climate change the environmental aspects are arguably more urgent, but if you think about it the laborers who are predominately found in less developed nations are also the most at risk to climate changes adverse effects. Weighting environmental and social sustainable equally should be the route manufacturers take because it will build the stronger base for the industry as a whole to move forward on. Paying workers fairly and providing safer working conditions will contribute to greater GDP per Capita and in turn improve standards of living and increase accessibility to education. In turn, improving global education and buying power will allow consumers to see the value of buying responsibly and the means to actually do so. Otherwise, practices like green washing will likely become more ubiquitous and the industry will remain treading water.

  12. Sustainability has seen a recent rise as companies and consumers alike are seeing the importance of its practices throughout the textile and apparel industry. Personally, I highly value sustainability and prefer to shop with companies who implement aspects of sustainability into their products. It seems that most consumers feel the same as I do, particularly millennial consumers who tend to shop more in alignment with their values. Policies and practices of fashion companies are reflecting the issues in sustainability such as labor laws, and environmental impacts. Slow fashion is on the rise as consumers are willing to pay more for products that will last them longer and are more sustainably made. As the importance of sustainability grows, one question that arrises is will retailers such as Forever21, Zara, or H&M fully jump on board of sustainability down the road, or will they stick to their ways and remain fast trendy retailers that value price over ethics?

  13. After reading this article I feel that it is very much cohesive with what we have been learning this semester. Especially after hearing from our panelists last week I really feel educated about sustainability and how it is affecting the fashion world and industry as a whole. I myself value sustainability but unfortunately alike most of me peers do not go out of my to to spend more and purchase investment pieces and tend to go with whats inexpensive and on trend at the time. It is very interesting to me the fact about environmental stability in this day and age when people are so invested in themselves and their social lives. I think that companies, brands and factories should all focus on environmental stability and making the smallest carbon footprint possible to help aid the world toward a healthier future. I know in the past and currently many companies see sustainability as a waste of their recourses and money but I do think that if they are transparent in their efforts toward becoming sustainable and environmentally active they will actually gain customers due to ethics not loose them over price.

  14. Sustainability has for sure became the main focus of both consumers and retailers, as people became more aware of the environmental and social impact the fashion industry has. Consumers are in preference of brands and retailers who practices and manufactures sustainably, to do so, retailers will have to use more environmental friendly fabrics and increase the wages of the workers. Yet this might be a challenge for sustainable retailers to compete with fast-fashion retailers who are manufacturing and selling products at extreme low prices. Therefore, it eventually depends on the consumers whether they are willing to pay the extra price for being environmentally and socially sustainable.

  15. When writing an analysis on the different external forces or factors that can affect the retail fashion apparel industry, one with the strongest impacts is the consumers’ bargaining power. I think that this is reflected not only in terms of their demand for lower prices or that they have relatively low costs to switch or change their purchases from one brand to another, especially if apparels are quite similar. Consumers are becoming more self-aware about their purchases, and one of the most pressing issues that they consider when buying something is the sustainability factor. In this regard, suppliers and manufacturers in the retail fashion industry have been slowly integrating sustainable practices in their production processes to further entice consumers with their goods. While this could likely affect their production costs, I think that the returns would be much greater if they find the most efficient way of integrating such processes.

  16. The key takeaway from this post is that T&A manufactures want to build relationships with suppliers and consumers. Also, the industry is moving towards production of sustainable products which I believe is very good. The issue of climate change and the implementation of eco-friendly products will appeal to a larger market and secure businesses the upper hand in future operations. More companies are going green, thus it is no surprise that the garment industry may choose to become more eco-friendly. I think that the formation of relationships within its supply also ties in with the shift to production of eco-friendly products. Notably, relationship from mutual understanding that can help to pass across the importance of sustainable fashion. It is easier to convince a friend to take up a habit compared a stranger.

  17. After reading this article, I feel strongly that this goes hand in hand with one of the main points fash455 taught us this semester. Sustainability is an extremely vital part of the fashion industry and I enjoyed reading how more companies are prioritizing environmental-sustainability initiatives (issues such as sustainable material, recycled material, traceability, and packing). Throughout my time at the University of Delaware, I have been taught how crucial these things are in our industry and the detrimental factors they can have. I am glad that I am finally beginning to see a change. Sustainability is extremely important to me, but I do understand why people get lazy and want the cheapest garment that is unsustainable when comparing it with an expensive one that is sustainable. If more brands prioritize sustainability, we have a chance of becoming a sustainable industry. We have the tools and technology to make this happen, we just need to make this something we value over everything else.

  18. Sustainability has been a huge topic in many fashion classes, and 455 is no exception. With social and environmental issues becoming more and more relevant, sustainability is something that everyone needs to be educated. One of the points I thought was very interesting was where it says “consumers lack a clear picture of what sustainable fashion is all about.” Many of my friends outside of the fashion major have no idea that the brands they shop from are notorious fast-fashion brands that are bad for the environment, and most likely don’t have the best working conditions for their employees. However, this kind of information isn’t taught in every class. I think this study would be a great source to share with people who aren’t entirely sure what sustainable fashion encapsulates. Another point that was brought up was the social responsibility aspect of sustainability. That is such an important factor that people don’t always think of right away. Sustainability is such a relevant topic today that it should be something taught to more than just fashion majors.

  19. This was a very enjoyable and insightful article to read, as it provided a great analysis on the importance of sustainability to consumers and the impact of that importance on sourcing executives. I found it interesting when the article mentioned that many consumers were unsure of exactly what sustainable apparel is. This speaks to the values of younger generations, knowing that sustainability is paramount to this demographic, and finding a way to clearly communicate to this demographic the sustainable aspect of your brand are two of the biggest factors for success for growing brands. It will be interesting to see how large brands are able to pivot to please sustainably minded consumers, and how they learn from smaller start-up brands.

  20. This reading is very in touch with the topics and discussions we have participated in learning about in FASH455. Specifically, the bullet about sustainability was one I took great interest in. Sustainability has swept the world in relation to the textile and apparel industry and thankfully it has become a very prevalent topic in our classroom. I have really taken notice to the increase in consumer responsibility to taking notice of which companies are most sustainable and truly educating themselves on how their products are made. Discussions ranging from global warming, the Rana Plaza factory in Bangladesh, as well as worker’s rights and compensation have all played an essential role in this movement of more economically and socially sustainable production and manufacturing methods. Transparency has become more prevalent in an industry that once turned its cheek to the ugly truths within the production process. Companies are taking accountability, factories are being improved, conditions for workers and compensation for their labor are becoming more attainable and fairer.

  21. I find the shift towards more sustainable sourcing practices not surprising at all. It also does not surprise me that ethical sustainability has taken a sort of back burner position in terms of issues that the American consumer cares about. From what I have experienced, the American consumer tends to take one initiative and run with it, instead of placing equal importance on the many issues that come from the T&A industry. While reading this study I realized that a lot of the goals that the companies studied were working towards can be fixed by technology. For instance, shorter communication times and digitalization are issues directly fixed by modern technology. Finally, the change from season to season relationships to ones with lesser commitment is a trend that could be predicted based on the unreliability of weather patterns and the consumers desire for “fast fashion”.

  22. After reading this article, it reminded me of what I learned in the last semester of fashion417. Many classmates who have taken this course should know that we have learned a lot about supply chain management and sustainability problems. I think that educating customers about the concepts of sustainability is an important part of sustainable development in the fashion industry. As the reading showed above, most consumers lack a clear picture of what sustainable fashion is all about. In China, even many people in other countries, including the United States, when we mentioned the “sustainability”, people think that its means are only about protecting the environment and using recycled materials. People often ignore that sustainability includes social sustainability initiatives, such as work hours and working conditions. In fact, increasing recognition of corporate social responsibility (CSR) is a core business activity for many fashion companies. Thus, making more consumers aware of the meaning of sustainability will make them more willing to pay for it.

    1. I find it very interesting how aware we are about the products we are buying, consuming, producing and manufacturing. To say there was a time where this was not important to the customer nor the producer. It is beautiful to see sustainability as a major topic and issue to be fixed. In this specific article, there’s a lot of talk about sustainability and how their company can improve in that aspect. In today’s world finding places where to source products that are ethical, finding better textiles to work with and finding ways how to produce products in the most healthiest way all surrounds the idea of being sustainable. Sustainability has been able to create a sense of value that is close to being a deal-breaker for a lot of consumers. It is very important for a company to be sustainable and transparent with their customers and throughout there production cycle. I just find it very intriguing to see how far we have come to improve our ways of creating clothing.

  23. After reading the article, I personally feel related to it. People care about sustainability but do not know what are they purchasing at all. I have to admit that I might do that as well. I am always struggle between low-price, cheap-made cute little thing and higher price sustainable goods.However, combine with the panel talk from last week in our classroom, I realize that fashion industry could not be a 100% sustainable industry to some extent. It is just the nature of the industry and I feel sorry for it. In an industry which controlling cost (long transportation and carbon emission, production within outsourcing)is key, what we could do is try to eliminate environmental impacts and acknowledge people in sustainability practices.

  24. After reading this, I more firmly believe that the shift to a more customer-centric approach was an inevitable situation to occur and that if companies plan to succeed this would be the best way to do so. I think this because in recent years, consumers are becoming more informed than they ever have been in the past. They are also hold the brands and companies that they give their money to, to a different standard because they expect more than what has been given. It’s really become a component that has adjusted the fashion industry as a whole in a very beneficial way. With all that has occurred this focus brings more light to the negative things that were occurring and praises the changes to adjust and focus on the more cognizant way of operating. I also think that sustainability has been talked about as becoming a large focus over the last few years but after identifying the data I see that that impact has finally come. I also agree that sustainability is an important thing to maintain and focus on because as time grows we advance and evolve further. This means that we’re constantly learning new things and identifying places that are being impacted by poor production processes. With knowledge comes change and sustainability is a great change in more ways than one.

  25. It is clear that sustainability is a top priority for pretty much all businesses. But along with the mention of sustainability comes the issue of transparency. I remember in my Fash214 class we talked about greenwashing, when companies actually lie about their sustainability practices to appear more sustainable than they are, and ever since learning about that I have been more hesitant to believe companies facts about what they are doing. Obviously companies can fabricate information so it is important for them to publish actual reports, or for third-parties to conduct research into the truth behind these claims. The study said that a majority of executives surveyed aspire to source at least half of their product with sustainable materials by 2025. A big issue with this is going to be cost. It is certainly cheaper to have factories overseas produce garments at minimum wage, or lower. But the cost of sourcing sustainably will most likely be worth it for businesses because, as the study also mentioned, customers are looking for it so they may be willing to pay more it.

  26. It makes me happy to see the dramatic shift companies are making toward sustainability. As consumers are becoming more and more conscious of where and how their clothing was made, more and more companies are taking measures to ensure transparency and environmental sustainability. Since sustainability isn’t always tangible, it is hard to convince consumers that it is worth it to pay more money for it. However, sustainable practices play a huge role in adding value not only to a product but to an entire brand. If companies continue to pursue more sustainable practices, more and more companies will follow suit and soon we will see big chances in the industry.

  27. This post was extremely interesting. I thought it was interesting that one of the biggest concerns in switching production to countries other than China is actually in regards to limited fabric production capacity, rather than higher wages. I also found it intriguing that more companies are prioritizing environmental sustainability initiatives than social sustainability initiatives. I supposed that it is up to personal opinion to decide which one is of more importance, but to me taking care of people should be prioritized more than anything else. It is scary to think that companies have been okay with paying garment workers so little money for doing laborious tasks in factories with poor conditions. Hopefully having environmental and social sustainability both become important, rather than either being mutually exclusive. Seeing that additional costs for sustainable sourcing would increase costs by 1% to 5% is encouraging, as I think that most people assume that switching to more sustainable sourcing will be very costly.

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