Do you ever wonder where apparels have been manufactured that you’re wearing? What sort of journey have they been through?
In the past few decades, the apparel industry has become volatile. Overseas manufacturing delays, frequent changes in demand for materials and products, counterfeit, lost or damaged products are the type of challenges apparel industries face nowadays.
In 2013, the U.S. Customs and Border Protection (CBP), in collaboration with federal and local agencies, conducted “Operation Red Zone.” In this, almost $17.3 million worth of fake sporting apparels like jerseys and ball caps were seized. Though government agencies do their best to overcome counterfeit issues, they only manage to catch a few.
A potential solution required to combat apparel supply chain issues is the blockchain technology.
The blockchain technology can assist the clothing industry to become more efficient and sustainable, by observing every aspect of the product’s lifecycle. It has the ability to tell a customer the authenticity of the cloth, where an item was made, who made it, what chemicals and fabric compounds have been used.
Many enterprises have already started using blockchain to manage their apparel supply chain in a better and efficient way. Let’s understand how blockchain works in the big apparel supply chain.
Blockchain supply chain – Revolutionizing the clothing industry
Stakeholders that can be involved in the distribution of clothing are as follows:
- Brand company
- Logistics company
- Native mobile application for a logistics company, retailer and end-customer
- Web application for a brand company, manufacturer and suppliers
Step 1: Brand company places the order
To place the order to the manufacturer, the company would add the following order details using the blockchain enabled platform:
- Type of the fabric required
- Color choices of the fabric
- Different sizes of apparel
- The quality of the material
- How much quantity is needed?
- Design of the cloth
- A sample sketch pattern of the apparel
The details added by the brand company gets recorded on the blockchain, enabling a manufacturer to view the clothing requirements swiftly and transparently.
Step 2: Manufacturer receives the order
After finding the order details on the blockchain, a manufacturer would further notify different suppliers to send the raw materials for making the apparel.
Manufacturers would send the order details based on the raw materials’ requirement to various suppliers via smart contracts.
The details added by a manufacturer on the blockchain are immutable and transparent, making brand company trace the raw materials requirements and suppliers information.
Once the information is stored, stakeholders can trace back the product’s details using a hash ID.
Step 3: Suppliers receive the order
When suppliers receive the order details, they can send their price quotes to the manufacturer. Once the manufacturer approves it, smart contracts would notify suppliers to process the order.
A supplier would then pack the order and add a QR code on boxes, containing information like fabric name, type and quantity. QR code’s hash ID would be saved on the blockchain, enabling a manufacturer to verify the authenticity of the material inside the box.
For the order shipment, the distribution request would be sent to the logistics company. The goods would be transported through IoT enabled vehicles, enabling the manufacturer to gather details like a real-time location, which is added to the blockchain to bring transparency.
While loading the parcel into the trucks, a logistics company adds the details of cartons like its quantity and weight to the blockchain.
The immutability feature of the blockchain gives goods traceability from supplier to a manufacturer and allows stakeholders to check if the system is compromised somewhere.
Once the IoT enabled vehicle starts its journey, smart contracts would trigger and notify a manufacturer.
Step 4: Manufacturer manufactures the product
Once a logistic company delivers the order to the manufacturer, they can scan the QR code and verify the authenticity of the packed parcel.
A manufacturer makes the product and links QR code with it, containing the details like raw materials used, the supplier’s information, the origin of production, manufacturing date, procedure and quality standards.
Once they get manufactured, the quality assurance team checks it’s quality and adds the certification with the product ID, which is then stored on the blockchain.
The details added to the blockchain is tamperproof and timestamp, enabling every stakeholder to access the manufacturing and QA details transparently.
The manufacturing team distributes the products to the brand company via IoT enabled vehicles.
Step 5: Brand company receives the order
After receiving the order from the manufacturing company, they can verify every piece of product’s detail using hash ID stored on the blockchain.
From tracing back the raw materials to manufacturing procedure and quality checks, they can be assured that the received products are verified and authenticated.
Once the validation is done, they can sign the transactions digitally. Then smart contracts would notify the logistics company to distribute the products to various retailers.
Step 6: Retailers sell the products
The goods received by the retailers can easily be traced back to know its origination, manufacturing details and quality standards followed information with the help of hash ID saved on the blockchain.
Retailers can also maintain their sales records by adding information like no of products available or sold out, along with the stock requirement. Adding details on the blockchain platform can help to build the trust and make the system fair.
Accessing the stored details on the blockchain, auditors and government authorities can verify whether their financial records are accurate and taxes are paid properly on time.
Step 7: End-Customer purchases the product and traces back the whole supply chain
When customers visit the retailer shop, they can scan a tag on any article of clothing and instantly read the authentic story of how and where it was made along with the quality certification.
Customers would choose what to purchase with more confidence if transparency and traceability could be brought into the production and distribution of clothes.
Blockchain made each information of product’s lifecycle immediately accessible to end users. Let the cloth tells its origin and production story, instead of simple “Made in” label. Also, the blockchain doesn’t force supply chain stakeholders to show their commercially sensitive details.
In a nutshell, following are a few advantages of introducing blockchain technology in the apparel supply chain:
Big brands have many partners who are connected in the supply chain. Therefore, it is tough to keep track of every record even for MNC’s. The absence of transparency leads to price and consumer relation problems, which can weaken the name of the brand.
In the blockchain based system, provenance tracking and records keeping are easy as the information of the product can be retrieved through the QR code. The product’s entire history from its origin to its current destination can be traced back using the blockchain enabled supply management platform.
Product’s real-time tracking in the apparel supply chain using the blockchain system can help to reduce the overall cost. Smart Contracts built in the blockchain can automatically speed up the administrative process, deduct the extra cost and offer the security of transactions. The eradication of intermediaries in the supply chain can reduce the frauds and product duplicacy.
Payments can be processed between stakeholders automatically through smart contracts using cryptocurrencies. Also, with accurate record keeping, the efficiency can be enhanced while reducing the risk of lost products.
The blockchain allows the data to be more interoperable. Because, it becomes easier for organizations to exchange details and information with various manufacturers, suppliers, and distributors worldwide.
Identify issues faster
The appealing feature of the blockchain, transparency can help to reduce delays, disputes and prevent orders from getting stuck in the supply chain. The chances of lost or misplacements of the products are rare as they can be tracked in the real-time.
The apparel and the blockchain technology builds a smart environment with transparency and trust for all stakeholders in the supply chain.
Blockchain consultants at LeewayHertz can help companies to make their apparel supply chain secure and transparent by eradicating the inefficiencies and vulnerabilities in the traditional system.