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Transparency and Traceability in the Textile and Clothing Supply Chain

Thesis · May 2015

DOI: 10.13140/RG.2.2.16892.74883

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TRANSPARENCY AND TRACEABILITY IN THE
TEXTILE AND CLOTHING SUPPLY CHAIN

Research Work by Sarah Obser

from Überlingen

The topic was elected from the area of “Supply Chain Management” and prepared
at the Faculty of Textile and Clothing Technology of the
Niederrhein University of Applied Sciences in Mönchengladbach

Supervisor: Prof. Dr. rer. nat. Lutz Vossebein

Summer Semester 2015

 I. TABLE OF CONTENTS
1 INTRODUCTION .............................................................................................................. 1
1.1 CONTEXT.............................................................................................................. 1
1.2 RESEARCH PROBLEM ............................................................................................ 1
1.3 STRUCTURE OF THE RESEARCH WORK ................................................................... 2

2 SUPPLY CHAIN MANAGEMENT ........................................................................................ 3

2.1 FROM VALUE CHAINS TO SUPPLY CHAINS .............................................................. 3
2.2 SUPPLY CHAIN MODES .......................................................................................... 6
2.3 THE TEXTILE AND CLOTHING SUPPLY CHAIN ........................................................... 9

3 FRAGMENTATION OF THE TEXTILE AND CLOTHING SUPPLY CHAIN ................................... 11

3.1 KEY DRIVERS FOR FRAGMENTATION IN THE SUPPLY CHAIN ..................................... 11
3.1.1 THE PRODUCT ............................................................................................... 11
3.1.2 SOURCING AND PRODUCTION STRUCTURE ....................................................... 13
3.1.3 ORGANIZATIONAL STRUCTURE ........................................................................ 15
3.2 INDUSTRY EXAMPLES FOR COMPLEX SUPPLY CHAINS ............................................ 15
3.3 THE NEED FOR TRANSPARENT SUPPLY CHAINS ..................................................... 17

4 TRACEABILITY ALONG THE TEXTILE AND CLOTHING SUPPLY CHAIN ................................. 19

4.1 SURVEY FINDINGS ON TRACEABILITY IN THE SUPPLY CHAIN ................................... 19
4.2 CURRENT INDUSTRY PRACTICES ........................................................................... 21
4.2.1 DIRECT BUSINESS RELATIONSHIPS AT H&M ..................................................... 21
4.2.2 LONG TERM RELATIONSHIPS AT G-STAR .......................................................... 22
4.2.3 TRACEABILITY CODE AT SWITCHER ................................................................. 23
4.2.4 THE NETWORK MANAGER REMEI AG ............................................................. 25
4.2.5 CHAINS OF CUSTODY AT THE BETTER COTTON INITIATIVE ................................. 26

5 DISCUSSION ................................................................................................................ 28
5.1 DIFFICULTIES OF TRACEABILITY IN THE TEXTILE AND CLOTHING SUPPLY CHAIN ....... 28
5.2 SOLUTION APPROACHES ...................................................................................... 29

6 CONCLUSION .............................................................................................................. 32
6.1 LIMITATIONS ....................................................................................................... 33
6.2 RECOMMENDATIONS FOR FUTURE RESEARCH ........................................................ 33

7 BIBLIOGRAPHY ............................................................................................................ 34

8 STATEMENT OF AFFIRMATION ....................................................................................... 39

9 ABSTRACT .................................................................................................................. 40

10 APPENDICES ............................................................................................................. 41

II
 II. TABLE OF ABBREVIATIONS

BC Better Cotton
BCI Better Cotton Initiative
BCCU Better Cotton Claim Unit
BMZ Federal Ministry for Economic Cooperation and Development
CC Conventional Cotton
CoC Chain of Custody
CSR Corporate Social Responsibility
DIN German Institute for Standardisation
ETI Ethical Trading Initiative
LCC Low-cost country
NGO Non-governmental Organisation
SC Supply Chain
SCM Supply Chain Management
S&E Social and Environmental
TAC Textile and Clothing

III
 III. TABLE OF FIGURES

FIGURE 1: THE VALUE CHAIN BY PORTER ..................................................................... 3

FIGURE 2: INFORMATION FLOW IN THE SUPPLY CHAIN .................................................... 5
FIGURE 3: INTERNAL SUPPLY CHAIN ............................................................................. 5
FIGURE 4: EXTENDED SUPPLY CHAIN ........................................................................... 6
FIGURE 5: THE FIVE TYPES OF GLOBAL VALUE CHAIN GOVERNANCE ................................ 7
FIGURE 6: THE TEXTILE AND CLOTHING SUPPLY CHAIN ................................................. 9
FIGURE 7: COMPLEXITY OF THE ADIDAS GROUPS’ SUPPLY CHAIN ................................. 16
FIGURE 8: THE BETTER COTTON CHAIN OF CUSTODY .................................................. 26

IV
 1. Introduction

1 INTRODUCTION

1.1 CONTEXT
Due to the labour intensive production processes of garments, most apparel
companies have outsourced their non-core competencies such as manufacturing to
developing countries in order to make use of low labour costs.
While the Textile and Clothing (TAC) industry is often considered being the first
step for economic growth in developing countries (Gereffi and Fernandez-Stark,
2011), the industry is also connected with poor working conditions and
environmental pollution. In the last decade only, tremendous industry disasters
happened such as building collapses, factory fires, the pollution of several rivers as
well as excessive overtime, harassment or child labour throughout the sector.
These continuing disasters have drawn attention on the TAC industry in recent
years. Stakeholders such as civil society, trade unions and media have increasingly
put pressure on companies to take up responsibility of their sourcing and
manufacturing activities in order to ensure better social and environmental (S&E)
standards along their Supply Chain (SC) (H&M, 2015a)
In 2013, Carry Somers founded the Fashion Revolution, an initiative that
emphasises the question of ‘Who made my clothes?’. This initiative has started a
global movement that reached 71 countries until 2015. In Germany, the discussion
of transparent, responsible and traceable SCs in the TAC industry even entered the
political level, when Dr. Gerd Müller, Federal Minister for Economic Cooperation
and Development set up the Partnership for Sustainable Textiles in 2013. Like
many others, this initiative promotes companies’ responsibility for their products’ SC
and calls for more transparency throughout the entire TAC industry. (BMZ, 2014;
FashionRevolution.org, 2015)

1.2 RESEARCH PROBLEM

The relocating of sourcing, manufacturing and logistics abroad has created a

complex, globally spread industry. To manage this global SC network, apparel
companies work with independent contract manufacturers, direct and indirect
suppliers, agents and buying offices in low cost countries (LCC). As a result of this
fragmented industry and the decreased production depth, responsibility of apparel
companies for working conditions in their contract manufacturers’ factories declined

1
 1. Introduction
(Ahlert et al., 2009, p. 749; Doorey, 2011, p. 591). Some years ago, not even the
companies who placed orders asked about a suppliers’ supplier (New, 2010).
Recently, this procedure has changed. Consumers as well as apparel companies
are increasingly aware of the importance of S&E standards in the TAC industry.
(Doorey, 2011, p. 591)
Many companies demonstrate their engagement by emphasising words like
sustainability, corporate responsibility or transparency. But what does this mean?
Until now, auditing is one of the most commonly used practices by apparel
companies to certify a manufacturers’ compliance with S&E standards. In case
corrective action is needed, these apparel companies might support manufacturers
for a short time or commit to long-term business relationships. Whereas this
mechanism might increase transparency about working conditions and enhance
them, it fails to increase transparency and traceability of a products’ manufacturing
trajectory. (Nimbalker et al., 2015, p. 24; Obser, 2015, p. 7)
As not only the question ‘Under which conditions are my clothes made?’, but also
‘Where do my clothes come from?’ is more frequently asked, the need for traceable
SCs and a mechanism to verify a products’ origin evolves. But what makes
traceability in the TAC SC so difficult? And how can this be overcome?
To answer these questions, this research study addresses the question of how to
ensure traceability of a garment along the entire SC from cotton field to coat hanger
and aims to provide a comprehensive overview of selected approaches.

1.3 STRUCTURE OF THE RESEARCH WORK

Chapter 1.1 and 1.2 already highlighted the problem that arises from practice,
which is to be put in a theoretical context. To enable a better understanding from an
outsider perspective, the theoretical concept of supply chain management lays the
cornerstone for this research work in Chapter 2. Based on this framework, Chapter
3 points out the specifications of the TAC industry and how fragmentation affects
traceability of a garment. Subsequently, Chapter 4 will address the research
question of how traceability in the TAC SC can be ensured, by outlining current
industry approaches. In Chapter 5 these findings will be discussed and a final
conclusion as well as a future outlook is given in Chapter 6.

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 2. Supply Chain Management

2 SUPPLY CHAIN MANAGEMENT

As a companies’ business network becomes more global and complex, structuring
and managing this network becomes more challenging, yet increasingly important
to expand business performance. An enhanced business performance being only
one aim, structuring business activities is also essential when developing a
transparent SC. Processes need to be analysed, evaluated and rationalized in a
holistic manner. (Cetinkaya et al., 2011, p. 42; 184 ff., 2011, p. 120 ff.) In modern
literature there are plenty models available to manage the flow of goods from raw
material to consumer. Among business process models like the Supply Chain
Reference Model (SCOR) and Business Process Reengineering, Value Chain (VC)
and Supply Chain Management (SCM) were find to be the most often applied and
most suitable models to efficiently manage the flow of goods and information in the
TAC industry.

2.1 FROM VALUE CHAINS TO SUPPLY CHAINS

The VC model by Michael E. Porter is one of the most prevalent schemes to
structure companies’ internal processes since its publication in 1985. The main
focus of a VC is to economize those internal processes, make them more efficient
and thus not only generate profit but also increase value for the customer.
According to Porter, a VC consolidates all activities of a company that aims to
create and sell products.

Figure 1: The Value Chain by Porter (Porter, 2004, p. 37)

These activities can be divided into two different categories. Activities like logistics,
manufacturing or marketing, which are directly contributing to the value of a product
are considered primary activities. Activities like Human Resources Management,
which does not directly contribute to the value of the product, is considered as a

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 2. Supply Chain Management

support activity. These kind of activities lay the foundation of every company and
are thus vital to perform primary activities. (Porter, 2004)
As apparel companies have outsourced many of their non-core competencies, they
are increasingly concentrating on competencies like product development,
marketing and sales. Contract manufacturers take over production processes and
service providers the logistics part. Even though these activities are contracted out,
an apparel company has to manage and keep track of this globally emerging
network of manufacturers, suppliers and distributers. Therefore a cross-company
view needs to be applied, which goes beyond the companies’ internal VC.
(Bruckner and Müller, 2003, pp. 8–9; Cetinkaya et al., 2011, p. 64 ff.; Fraunhofer
IML, 2010, p. 17 ff.)

When extending the view from an internal VC to a more holistic perspective, many
different definitions can be found in modern literature. Gary Gereffi, who is known
for his many publications on international trade and the apparel industry, is
reluctant when talking about SCs. Instead, he acknowledges the inter-firm network
of a VC and thus describes it as “the full range of activities that firms and workers
perform to bring a product from its conception to end use and beyond.” (Gereffi and
Fernandez-Stark, 2011, p. 4) As industries have become a global interlinked
network and activities can either be executed by one single firm or performed by
multiple firms, Gereffi considers the global dimension of an industry. Therefore he
introduces the theory of global VC and defines them as „...the sequences of value
added within an industry, from conception to production and end use [...] [in a]
globalized economy with very complex industry interactions.“ (Gereffi and
Fernandez-Stark, 2011, p. 2; 4)

In contrast to VCs taking activities within one company into account (Porter) or
global VCs focussing on the value added to a product on a global basis (Gereffi),
SCs integrate all network partners involved in the manufacturing process of one
product and take the material, information and cash-flow along these activities into
account. Even though SCs are mostly illustrated as a linear model they spread out
on globally interlinked industries. (Mohr, 2010, pp. 70–76; Wildemann, 2000, p. 25)

4
 2. Supply Chain Management

Figure 2: Information flow in the Supply Chain (based on Cooper et al., 1997, p. 10)

Whereas material generally flows downstream the SC from supplier to consumer,

information needs to flow down as well as upstream to share relevant data with all
SC partners (see Figure 2). This continuous flow of information is not only important
for a responsive just-in-time production, but also to enable transparent SCs and a
traceable flow of material. Thus, a crucial factor is the availability of information
along the entire SC. Especially at points of intersection information has to be
treated carefully to prevent it from getting lost or not being transferred to the
following or previous step in the SC. (Wildemann, 2000, p. 53 ff)

Another key aspect to enable transparency and traceability in the SC is the

difference between internal and extended SCs. The internal SC (Figure 3)
considers business relationships to direct partners only. The brand-named apparel
company is called the lead firm, as it controls access to the most valuable asset,
the consumer, by whom profit is generated. (Gereffi and Memedovic, 2003, p. 4)
Upstream direct business partners, who deliver the final product, are known as
manufacturer or tier 1 supplier.

Figure 3: Internal Supply Chain (own illustration)

The extended supply chain (Figure 4) considers the SC as one entity rather than a
fragmented island solution of various firms (Wildemann, 2000, p. 25). Thus this
approach goes way further by looking at all direct and indirect business
relationships linked to the product a company creates and sells. These indirect
partners who supply product components and raw material are mostly not
communicated with directly, but via agents or the tier 1 manufacturer. When talking
about a continuous flow of material and information, this can constitute a great

5
 2. Supply Chain Management

barrier. Yet, knowledge about the extended SC is crucial for lead firms, as
stakeholders demand more transparency about where a purchased product comes
from. (Fraunhofer IML, 2010, p. 17 ff.)

Figure 4: Extended Supply Chain (own illustration)

2.2 SUPPLY CHAIN MODES

Having explained the nature of a SC, the different SC modes will be explained. To
better understand the differences in governing SCs, the degree in which SCs are
fragmented and in which the involved parties cooperate is illustrated. This enables
a better understanding of the challenges and possibilities of tracing products back
to its origin, as the number of parties involved in a products’ SC is often linked to
the degree in which transparency is possible. (Ellebrecht, n.d., p. 2)
When tracing back products to their origin, the length of the SC is a crucial factor as
well as the way in which transactions are conducted. SCs with a high number of
independent parties is likely to be more fragmented which leads to a higher loss of
information, higher logistical and bureaucratic complexity and longer lead-times,
whereas the SC of an integrated firm is likely to be more transparent. (Ellebrecht,
n.d., p. 2; Fraunhofer IML, 2010, p. 17 ff.)
Joskow as well as Ellram divided the modes of a transaction, also described as
supply chain structure into three types: Spot market trade/open-market, long-term
contracts/partnership or vertical integration (Benton, 2007, p. 24; Williamson and
Winter, 1993, p. 125), whereas Gereffi clustered the global VC (here SC) into five
different governance types. Each mode varies in terms of the number of involved
SC parties, degree of coordination and power distance. (Gereffi et al., 2005, p. 9)
The reason for companies to make use of several of these modes is explained by
the transaction cost theory of Ronald Coase. He states that companies will
organize transactions inside a firm (hierarchy) until the costs for doing so are the
same than the costs of an open market transaction. At this point, a firm will tend to
engage in a captive, relational and modular SC mode or a market transaction to
keep the degree of coordination and transaction costs low. Additionally, the

6
 2. Supply Chain Management

decision for one mode or another is based on mutual dependencies, the degree of
coordination and monitoring as well as the risk for opportunistic behaviour.
According to these criteria, a company has to find a balance between hierarchy and
market mode in order to minimize transaction costs. Having explained the reason
for the evolution of different SC modes, they are presented, based on the following
figure by Gereffi. (Gereffi et al., 2005)

Figure 5: The five types of global Value Chain governance (Gereffi et al., 2005, p. 9)

The illustrated SC modes are classified based on the changing degree of

complexity and governance of a lead firm in the global SC. From market to
hierarchy mode, a lead firms power and commitment to a supplier increases as well
as costs of changing suppliers. (Gereffi et al., 2005, pp. 3–9)
If a lead firm sources standard products that are produced on stock, it will most
likely carry out a market transaction, without committing to one standard supplier.
As price is the main purchasing criteria, suppliers are kept fully independent to
increase competition among them and keep market prices low. These suppliers are
then changed frequently according to product specification, market situation and
price variation. Due to this lack of long-term commitment to a supplier, agility
increases and so does the size and complexity of the SC network.
In the modular SC mode, when product complexity slightly increases a lead firm
tends to source a product from one key supplier. The supplier is fully independent
and responsible to purchase his input materials but manufactures the products
according to the lead firms specifications.

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 2. Supply Chain Management

If a supplier has a good reputation and relevant skills to manufacture a specific

product, the lead firm might establish a closer relationship to the supplier. Mutual
ties and long-term commitment are characteristics for this relational mode.
When product specifications are complex and need for control is high, lead firms
make use of captive supply chains. In this case lead firms work closely with
suppliers to keep them dependent and avoid opportunistic behaviour. Accordingly,
the overall supplier base is rationalised and complexity decreases which makes
traceability easier.
The most integrated mode is a hierarchical SC, where one single firm takes over all
steps of the SC. This mode is applied if a product is very complex, know-how is
high and is not to be shared with others. As the lead firm performs all stages of the
SC, transparency and the ability to track the SC is very high. (Gereffi et al., 2005)
Whereas SC transparency and traceability might not be difficult in a hierarchy
mode, the question is in how far this is possible in other illustrated SC modes. This
question will be addressed in the company analysis in Chapter 4.

8
 2. Supply Chain Management

2.3 THE TEXTILE AND CLOTHING SUPPLY CHAIN

The TAC SC (Figure 6) encompasses all sourcing-, manufacturing-, and
distribution-processes that are conducted to transform raw material into a garment
and make it available for the consumer. In the SC a network of companies is
involved on a global basis, aiming to deliver a product to a consumer at the right
time, place, quality and quantity. (Ahlert et al., 2009, p. 41; Bruckner and Müller,
2003, p. chap. 2; Fraunhofer IML, 2010)

Figure 6: The Textile and Clothing Supply Chain (own illustration based on Appelbaum and Gereffi,
1994, p. 46)

To manufacture a garment and make it available to the consumer, the raw material
passes through several processes, which are not standardised but change
according to product specifications. In order to make this process easier and more
understandable, the TAC SC can be clustered into five separate networks from raw
material to consumer. (Appelbaum and Gereffi, 1994)
The raw material network, consists of suppliers, providing raw material such as
cotton, wool or silk or natural oil/gas for synthetic fibres for textile companies. The
raw material originates from all around the globe: from cotton plants in India, USA
or China, to wool-farms in New-Zeeland and silk-farms in Thailand. Additionally,
machinery, chemicals and energy are needed to later on spin fibres into yarns.
In the component network yarns are woven or knitted into fabrics, which may be
further finished to provide special physiological features such as increased moisture
absorption, tear strength, water repellence, antistatic or antimicrobial properties.
Additionally, fabrics may be dyed, coated, stained or mercerized to serve a broad

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 2. Supply Chain Management

range of designs and applications. To offer this broad range of properties and
designs, the input of chemicals and dyes is necessary.
Finished fabrics and sewing threads are then sent to the contract manufacturer or
the apparel companies’ own production site to be sewn into garments, packed and
labelled. As some manufacturers in the production network do not own an in-
house finishing/dyeing/printing department and do not offer services like packaging,
labelling, or suffer a capacity bottleneck, a broad network of subcontractors backs
manufacturers at this stage.
In the export network, the assembled, finished and packed garments are handed
over to trade firms like buying offices, agents, or the domestic apparel company
directly and then distributed to wholesale, stores or distribution centres, from where
they reach the end-consumer (marketing network).

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 3. Fragmentation of the Textile and Clothing Supply Chain

3 FRAGMENTATION OF THE TEXTILE AND CLOTHING SUPPLY

CHAIN
When trying to enable transparent SCs in which products can be traced back to
their origin, a continuous flow of material and information across all stages of the
SC is inevitable. The TAC SC being highly fragmented, this continuous flow does
not always exist. Fragmentation in this context refers to the physical separation of
the SC into separate processes and business units (Arndt and Kierzkowski, 2001,
pp. 1–16).
In this chapter, the key question ‘What makes the upstream TAC SC so fragmented
and thus so difficult to trace?’ shall be analysed, enabling a deeper understanding
of why a one fits all solution of a transparent and traceable SC is hard to find.

3.1 KEY DRIVERS FOR FRAGMENTATION IN THE SUPPLY CHAIN

As previously stated, the TAC industry consists of a highly dynamic, fragmented
and multi-layered structure. Three main driving forces can be identified: The
product, the sourcing and production structure as well as a companies’
organisational structure.

3.1.1 THE PRODUCT

To satisfy a broad range of end-consumers who are asking for a holistic shopping
experience, fashion companies nowadays offer consumers a large variety of
models and apply a ‘Fashion for all’ strategy (H&M, 2015b). This incorporates an
eclectic mix of business wear and elegant evening dresses, sportswear and
outdoor jackets as well as underwear and swimwear for women, men and kids.
Shoes, cosmetics and accessories may support the assortment to create a holistic
shopping experience.
Apart from simple cotton T-shirts, garments are rarely made out of one material
only. To improve physiological properties an almost endless combination of
different material is imaginable. A mix of polyamide, angora, wool, silver and
elastane can be found in socks to avoid sweaty feet and sports wear, which
contains polyester, cotton, polyamide and elastane for a better moisture absorption
as well as a comfortable fit. Annually, the sportswear brand Nike alone uses
approximately 80,000 different material for its footwear and apparel products (NIKE,

11
 3. Fragmentation of the Textile and Clothing Supply Chain
Inc., 2014a). To source this amount of different material, a large number of raw
material and component suppliers is necessary. For this reason, lead firms apply an
indirect sourcing strategy. They specify quality and functionality of fabrics and then
hand over responsibility to manufacturers or agents, which purchase materials in
the producing country or close by. Accessories like zippers, buttons, gems or
sequences, which are attached to garments, make this network even more
complex.
Rapidly changing trends and thus a shorter lifecycle of fashion products is
noticeable throughout the industry. Consumers continuously demand for new
products, so companies have to adapt their strategy in order to respond quickly and
stay competitive. (Ahlert et al., 2009; Fraunhofer IML, 2010, chap. 1;2; H&M,
2015b; Lam and Postle, 2006) It seems unimaginable to offer the two classic
spring/summer and autumn/winter collections, like some years ago. The market
situation has changed and so have companies. Instead of the traditional push-
strategy, where garments are produced in advance and then offered on the market,
the market has changed to a buyer-driven one in which a pull-strategy is applied.
Companies focus on the consumers’ needs and offer 12 to 20 annual collections to
catch the latest trends and to satisfy consumers. (Ahlert et al., 2009, pp. 53–57;
NIKE, Inc., 2014b, p. 52)
As a result of these unpredictable, rapidly changing trends and the resulting risk to
make revenue (NIKE, Inc., 2014b, p. 52), companies further fragmented their SC
according to the three fashion genres (H&M, 2015a, p. 64). Basic products demand
for a price aggressive sourcing strategy, making use of economies of scale. These
products are often ordered in large numbers months in advance from low-cost
countries (LCC), following the traditional push-strategy. For fashionable products, a
different strategy has to be applied. Price is still an important factor, but the need
for flexibility increases, as adaptations to the main trend can be necessary at short
notice. Looking at high fashionable products, where last minute changes are
common, flexibility is the key word to minimize risk and ensure revenue. Hence,
man high-fashionable clothes are often manufactured closer to the sales market, to
decrease lead-time and increase agility in responding to trends. (Ahlert et al., 2009,
chap. 2,4; Fraunhofer IML, 2010)
Whenever a new trend emerges or additional merchandise may be offered as a
special sales strategy, the TAC SC needs to be agile and flexible (Ahlert et al.,

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 3. Fragmentation of the Textile and Clothing Supply Chain
2009, p. 56). Therefore various different sourcing and production concepts are
made use of, which will be described in the next chapter.

3.1.2 SOURCING AND PRODUCTION STRUCTURE

For apparel companies it is difficult to predict rapidly changing trends of high-
fashionable products long time in advance. The outsourcing of manufacturing
processes to LCC in Asia or Africa has increased time-to-market tremendously. The
time consuming delivery process constitutes a contradiction as SCs need to be
agile, adaptable and aligned in order to create a competitive advantage on a long-
term perspective (Lee, 2004). To overcome this trade-off, apparel companies have
split up their sourcing and production strategy. (Heiserich, 2010; Liese, 2009, pp.
26–49).
Apparel companies like Zara make use of regional differentiation, which is often
interlinked with a different sourcing/production strategy according to product
specifications. Basic garments are produced globally in countries like China,
Bangladesh or India. They are manufactured on stock in big volumes at low prices.
High-fashionable products are manufactured locally, close to the selling market in
countries like Portugal, Italy, Poland or Romania to decrease lead-time. They
represent the latest trends and thus have to be available in store just in time.
(adidas Group, 2015a; Berg et al., 2013, p. 9; Liese, 2009, pp. 28–49)
Not only the geographical distance of manufacturing facilities but also the number
of suppliers is a key driver for fragmentation in TAC. To name some examples,
H&M works with 1,926 factories (H&M, 2015c, p. 30), Nike with 693 (NIKE, Inc.,
2015) and GAP with 2,000 factories in 50 countries (Ansett, 2007, p. 296). Single
sourcing, where one product is ordered from one supplier may be applied for
innovative or high quality products where partnerships with suppliers are
established and trust is guaranteed. In case of mass products, where price
pressure is high and product specifications are low, companies make use of
Multiple-Sourcing. This increases competition, keeps prices low, ensures flexibility
and reduces risk by dividing it on multiple suppliers. (Ahlert et al., 2009, p. 742 ff.;
Benton, 2007, p. 150 ff.; Fraunhofer IML, 2010; Lam and Postle, 2006; Liese, 2009,
pp. 34–36)
One can assume that for a company to overlook these different sourcing strategies
is difficult as there is often not one central sourcing department, but decentralised

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 3. Fragmentation of the Textile and Clothing Supply Chain
sourcing departments for each product category which might additionally be divided
by each fashion genre. Even though, internal communication is quite easy, the
decentralised structure will increase the number of suppliers and thus time and
costs for bureaucracy and coordination of sourcing, manufacturing and delivery
processes. (Mohr, 2010, pp. 41–49)
As if this is not enough complexity, companies divide their sourcing strategy into
direct and indirect sourcing (adidas Group, 2015a; C&A Europe, 2012, pp. 46–48;
KiK Textilien und Non-Food GmbH, 2013, p. 18). Despite the geographical
distance, companies like Vaude and People Tree work directly with manufacturers
and their suppliers on a long-term basis to ensure a high product quality, Van Laack
even owns production sites. This long-term cooperation increases trust, teamwork
and offers the ability to trace the manufacturing trajectory of a garment easily. Yet,
many apparel companies do not or only to some extend commit to standard
suppliers. They either change suppliers frequently or source products via agents,
buying houses or other middlemen, to stay agile and flexible, even though it
dramatically increases complexity and opaqueness in the SC. (Ahlert et al., 2009,
chap. A2) Being afraid that a buyer could bypass the once established cooperation
and the agent could loose his position, agencies don’t reveal their manufacturer or
supplier names, which is a main barrier for a transparent SC (Amsler, 2015;
Fraunhofer IML, 2010, p. 19 f.; Gereffi et al., 2005, p. 12). Companies are
increasingly aware of this, but apply this strategy because it encompasses great
benefits. Local agents have more experience in the field of production, can speak
the local language and know the domestic market. The buyer can hand over full
responsibility to an agent, decrease his risk and concentrate on his core-
competencies like design, product-development, marketing and sales. (Benton,
2007, pp. 143–145)
Looking at the apparel industry, product complexity is low, price pressure high,
time-to-market crucial and entry barriers for new players in the market low. This
often results in a low commitment of lead firms to long-term corporations with
suppliers (Gereffi et al., 2005, pp. 9–12), the engagement of intermediaries to
reduce risk or incomplete contracts to ensure agility (Williamson, 2013, p. 115-117)
and thus a complex, fragmented and fragile network. A continuous information and
material flow in this network is often lacking, which explains the risk of opportunistic
behaviour that is only revealed when disasters happen that shake the industry up.

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 3. Fragmentation of the Textile and Clothing Supply Chain

3.1.3 ORGANIZATIONAL STRUCTURE

Another key area that influences fragmented and obscure SCs, is a companies’
organisational structure.
When asking for example the sourcing and CSR department for their goals, there is
a striking discrepancy. Whereas the sourcing department wants to source products
at the best price, quality and delivery time (Benton, 2007, p. 155), the CSR
department focuses on S&E standards of suppliers, which might increase costs.
The fact that business departments only concentrate on business goals of their
individual departments is anchored in the companies’ organizational structure.
Employees may not know about the effects of their isolated decisions on other
departments. (ETI, 2008, pp. 11–13) If in an extended SC perspective every
company follows its own goals, without thinking about the effect on the following
stages in the SC, this will harm the entire SC performance, increase delivery time
and costs. (Kuhn and Hellingrath, 2002, pp. 16–17)
Instead of making isolated decisions, a holistic view is required, where one person
is responsible for the entire SC and adopts a holistic view including all processes
and SC parties (Cetinkaya et al., 2011, pp. 25–28). Companies should bear in mind
the reach of their decisions and overcome isolation, as all SC parties aim to create
one product. (ETI, 2008, pp. 11–13; NIKE, Inc., 2014b, p. 55).
To summarize, not only internal processes of a single company need to be taken
into account, but also the influence onto the prior and the next partner in the SC
(Cetinkaya et al., 2011, p. 59). Communication is one means to overcome this
isolation and break the barriers between business departments or SC partners.
(Werhane, 2013, p. 4, 104ff)

3.2 INDUSTRY EXAMPLES FOR COMPLEX SUPPLY CHAINS

The adidas Group
To illustrate the fragmented SC structure, an example of the adidas Group is
given.1 On its website Adidas2 describes its SC as “[…] global and multi-layered,
with many different types of business partners, some of whom are directly
contracted factories, while others are not.” (adidas Group, 2015a)

1
This example shall outline the complexity of global sourcing and manufacturing. It is not the aim to
evaluate in how far the adidas Group is capable to trace back its products.
2
Adidas refers to the entire adidas Group

15
 3. Fragmentation of the Textile and Clothing Supply Chain
Adidas works with 1,200 independent factories located both locally in the selling
market and globally in LCC. According to the disclosed supplier list, products are
manufactured all around the world from Australia, Bangladesh, Canada, Egypt and
Germany to India and Vietnam (adidas Group, 2015b).
The network diagram (Figure 7) illustrates the adidas Groups’ SC structure. Apart
from direct suppliers, Adidas works with agents and licensees (tier 1). These direct
business partners source products from suppliers, subcontractors or additional
agents (tier 2), who then again rely on suppliers, subcontractors and service
providers (tier 3). Adidas fosters direct contractual relationships with tier 1 business
partners, which produce the biggest share of products. Tier 2, 3 and 4 suppliers,
subcontractors or agents have no contract with Adidas, but with the tier 1 business
partner and are therefore only under indirect control of Adidas.
To stay agile, Adidas works with a
limited number of suppliers on a
long-term basis. Temporary
merchandise e.g. for the
Olympics, is manufactured by
additional suppliers on a short-
term basis. (adidas Group,
2015a)
Figure 7: Complexity of the adidas Groups’ Supply
Chain (adidas Group, 2015a)

NIKE, Inc.
The SC of NIKE, Inc. is another highly fragmented and complex one. NIKE, Inc. is a
well-known footwear and apparel company that sells its products worldwide through
own retail stores, licensees and independent distributors as well as online. Its main
business activities are design, product development, marketing and sales. To
concentrate on its core business activities NIKE has outsourced all its
manufacturing operations to independent manufacturers abroad and does not own
any production facilities (NIKE, Inc., 2014b, pp. 47, 55). In 2015, NIKE products are
manufactured in 693 factories across 42 countries employing 1,002,879 workers
worldwide (NIKE, Inc., 2015). These products are made out of approximately
16,000 different materials, which are sourced from 1,500 different material
suppliers. As direct sourcing from this number of suppliers would be a challenging

16
 3. Fragmentation of the Textile and Clothing Supply Chain
task, it is not NIKE who has a direct business relationship to its material supplier,
but the manufacturer. Though NIKE states to consider the use of sustainable
material in product design and then advises manufacturers which material to
choose, finally it is up to the manufacturer to choose their suppliers. (NIKE, Inc.,
2014a) Whether or not NIKE demands information about these textile and
component suppliers and thus tries to bring about a transparent and traceable SC,
could not be found.
Having said that, NIKE addresses the issue of S&E compliance by demanding all
direct and indirect business partners to comply with the companies’ code of
conduct. Yet, NIKE is aware of the difficulty to monitor compliance of almost 700
factories worldwide and the potential reputation risk when not being able to trace
back its own products. (NIKE, Inc., 2014b, p. 55)

3.3 THE NEED FOR TRANSPARENT SUPPLY CHAINS

The 24th of April 2013 has certainly changed the vantage point of the TAC industry,
when more than 1,100 people died when the Rana Plaza garment factory collapsed
in Bangladesh. Labels of retailers were found in the ruins, that didn’t know their
products were manufactured in an illegally heightened building constructed on
swampland. Companies like Joe Fresh, Walmart, KiK or Primark that (aware or
unaware) have had business ties to Rana Plaza have suffered a lot from bad
media. After this incident, apparel companies became increasingly aware of the
image and reputation risk, but also the costs if the origin of a product is not known
(Greenhouse, 2013; Hoskins, 2015).
The effect of disasters like this is noticeable among a broad range of stakeholders.
Greenpeace launched the Detox campaign, highlighting the environmental pollution
of the TAC industry. The Fashion Revolution started (FashionRevolution.org, 2015),
a global movement to raise awareness of societies’ responsibility and as mentioned
previously, even on a political level, the German Federal Minister for Economic
Cooperation and Development demands apparel companies to join the Partnership
for Sustainable Textiles (BMZ, 2014).
Consumers became more critical and the industry became aware of a key aspect:
Apparel companies cannot contract out manufacturing and don’t take responsibility
of incidents happening in order to produce their products. (Ahlert et al., 2009, p.
749) Hence, the demand for transparent SCs rose.

17
 3. Fragmentation of the Textile and Clothing Supply Chain
Transparency in this context can be defined out of two perspectives: Firstly,
transparency is interpreted in terms of sustainability and thus understood as the
knowledge about social, environmental and economical aspects along the SC
(BMZ, 2014; Cetinkaya et al., 2011) Secondly, transparent means the traceability of
products, by providing information about all involved SC parties (Doorey, 2011;
Handfield et al., 2013). When talking about transparent SCs in this research work,
these two understandings are combined, due to the fact that accountability for S&E
conditions in the SC is only possible, if every single involved SC party is identified.

As a result of this literature review it can be summed up that apparel companies

have to change their vantage point from an internal VC to an extended SC
perspective. Therefore they need to enable a transparent flow of information,
accessible for everyone along the extended SC (Benton, 2007, pp. 4–17; Cetinkaya
et al., 2011, pp. 81–88). Another key driver is a corporate culture across
companies, in which mutual goals and common values are established (Cetinkaya
et al., 2011, p. 25pp). These goals should consider not only economical aspects,
but also S&E practices along the extended SC, from the raw materials origin to the
point of sale. If this strategy is then linked to the companies’ long-term strategy and
supported by top-management commitment, the foundation stone for a transparent,
traceable and sustainable SC is set. (Cetinkaya et al., 2011)

18
 4. Traceability along the Textile and Clothing Supply Chain

4 TRACEABILITY ALONG THE TEXTILE AND CLOTHING SUPPLY

CHAIN
According to statutory regulations traceability is defined as “the ability to trace and
follow […] [the flow of a product] or substance intended to be, or expected to be
incorporated into a […] [product], through all stages of production, processing and
distribution.” (European Parliament and the Council of the European Union, 2002,
chap. 1, Article 3, 15)
Creating such a traceability system that enables the availability of data and
process-information about a product or its substances at any point in time (DIN,
2007, p. 6) is not an easy task in a fragmented globally interlinked industry. As
discussed previously, many companies state not to have knowledge or control over
their entire end-to-end SC. A common industry practice to ensure S&E standards is
to conduct audits in manufacturing factories, but this could not prevent disasters to
happen. Accordingly, apparel companies had to start finding more effective
traceability mechanisms. But how can traceability along the SC be ensured?

4.1 SURVEY FINDINGS ON TRACEABILITY IN THE SUPPLY CHAIN

In scope of this research study, an online-survey was conducted to enable a better
understanding of companies’ difficulties and their approaches to create transparent
and traceable SCs. (Appendix A) The results are presented in the following:
The selection of companies resulted from a mix of industry leading companies like
H&M, Nike, Holy Fashion Group, G-Star, Adidas, S.Oliver and smaller companies
that are known for their awareness of transparency in the SC like HessNatur,
Common Works, Format and tigha. The survey analysis reflects this mix of small
and big companies with less than 100 to more than 1000 employees.

Structure of the SC network

Looking today at the SC of the participating companies, their extended SC network
reaches from 50 to more than 1000 manufacturers, suppliers, subcontractors and
service providers. (Obser, 2015, pp. 3–4)
Whereas finished products (83.33%) and fabrics (66.67%) are mostly sourced via
direct business relationships, raw material is either sourced via direct business
relationships (40%), indirect via the manufacturer who announced its suppliers

19
 4. Traceability along the Textile and Clothing Supply Chain
(40%) or via the manufacturer without knowledge about the origin (20%). Looking at
the components like yarn or accessories, 66.67% rely on the manufacturer, who
provides information about the origin and only 33.33% sourced directly. (Obser,
2015, p. 5)
Knowing the involved SC parties is very important for almost all companies, though
it slightly decreased when asking about raw material and component suppliers or
subcontractors further upstream the SC. Only one respondent considered
knowledge about the raw material supplier as not important. (Obser, 2015, p. 6)

Obstacles
Several obstacles were mentioned when tracing products, fabrics, components and
raw material: The several steps a raw material passes trough, the many
intersections and the complexity of the SC. Another respondent mentioned the
missing information from manufacturers and the missing or wrong handling of data
in the internal system as a result of indirect sourcing. The check-up on a products’
origin is then simply neglected due to a lack of time. (Obser, 2015, p. 9)

Solution approaches
Looking now at companies’ opinion about how to overcome these problems and to
enable traceability of products, fabric, yarn and raw material, RFID and a cloud-
based platform to ensure real-time traceability is not considered as being helpful or
implementable. Two out of five respondents consider own production offices in the
production countries to enable closer cooperation with manufacturers and
suppliers. A central IT system where product information is shared between
manufacturer and supplier gained the same score. Three companies consider
vertical integration and four companies trade certificates/CoC to document every
SC intersection, as information mostly gets lost at these intersections. Among all
participating companies, long-term business relationships to enable a closer
cooperation is seen as the best applicable method to enable traceability in the SC.
(Obser, 2015, p. 9) On the one hand, cooperation was chosen as the best tool to
realize economic benefits like decreasing costs and lead-time and increase
flexibility. On the other hand, the increased responsibility for sourcing activities, the
need for information about the origin of product components and a better control of
S&E standards in the upstream SC call for cooperation. (Obser, 2015, p. 8)

20
 4. Traceability along the Textile and Clothing Supply Chain

4.2 CURRENT INDUSTRY PRACTICES

4.2.1 DIRECT BUSINESS RELATIONSHIPS AT H&M

H&M, one of the industries biggest fashion retailers is aware of the responsibility for
its business practices. Like most fashion retailers, H&M has contracted out
manufacturing of its products to about 850 independent business partners. In its’
SC H&M avoids any middlemen and states the importance to know about all stages
of the production, textile and component network. (H&M, 2015a) Further H&M
emphasises the importance of direct and long-term business relationships to its
suppliers. In its Code of Conduct, H&M states: “All suppliers and other business
partners are obliged to keep H&M informed at all times of where each product is
being produced, including subcontracting and homework.“ (H&M, 2010, p. 5)
H&M expects transparency and conformity to this Code of Conduct of all direct
manufacturers. Instead of applying an effective traceability mechanism,
responsibility is passed to the manufacturer, who has to provide information about
indirect tier 2 suppliers. (Obser, 2015) Hence H&M builds on mutual trust, long-term
relationships and auditing of working conditions, environmental practices and
transparency of a manufacturer about his suppliers.
As industry disasters have shown, it is difficult to effectively monitor S&E practices
via auditing. For this reason, H&M conducts unannounced audits and has
established production offices in every sourcing country to work with manufacturers
and suppliers more closely. In how far H&M can find out whether or not a
manufacturer names all its suppliers and subcontractors and thus verify origin of its
products is unknown. However, it has to be acknowledged that H&M is one of few
companies providing information about manufacturers, subcontractors (processing
factories) as well as textile and yarn suppliers (H&M, 2015d). Thereby H&M
enables a deeper view in its SC than many other companies that rely on market
transactions, modular or relational SCs. Yet, the specific connection of a product to
the according manufacturer, textile company and raw material supplier is not given.
This industry example shows that not only small brands, but also some of the
industries’ biggest retailers can take steps to create transparent SCs. Though, to
ensure traceability of each product, in such a huge supplier network H&M needs to
find a mechanism that goes beyond trust and direct business relationships to the
tier 1 manufacturer.

21
 4. Traceability along the Textile and Clothing Supply Chain

4.2.2 LONG TERM RELATIONSHIPS AT G-STAR

Established in 1989, G-Star is a well-known Dutch street wear brand. G-Stars
product range reaches from T-shirts, trousers, dresses and sweatshirts to
accessories like eyewear, hats, scarves and leather items such as belts, bags and
shoes for women and men.G-Star has contracted-out all its production processes
and does not own any factories. To ensure a high product quality, G-Star has
established long-term relationships with a small number of 28 suppliers in 6
countries (Portugal, Morocco, China, India, Bangladesh and Vietnam). In 2014,
suppliers G-Star worked with for at least 10 years produced 50% of the production
volume. When selecting new suppliers, they have to share the same values on
sustainability and quality, be trustworthy and committed to a long-term business
relationship. A local G-Star team in each country monitors compliance to
sustainability standards, ensures a steady dialogue and continuous improvement to
foster trust and skills. Additionally, these teams supervise contractual agreements
like subcontracting, as this is only allowed with approval of G-Star. (G-Star, 2015a)
The question of a products origin plays an important role for G-Star. In June 2014
the company launched a manufacturing map, showing where each product was
manufactured. The customer simply has to press the ‘Where is it made?’ button in
the online shop and is then redirected to the according factory.
In the G-Star Manufacturing Map (Appendix B1), information is provided on product
types, the number of workers and the length of contracts for each factory.
Additionally information is given about certificates and projects that the factory
participates in to improve S&E conditions. The origin of raw-material is not
specifically mentioned, but G-Star works with quite a few vertically integrated
factories, that perform all stages from spinning, knitting, dyeing, finishing and
sewing, to washing, packaging and printing under one roof. (G-Star, 2015b) To
verify good S&E standards along the SC not only in direct supplier factories, G-Star
thrives to include indirect suppliers in compliance monitoring as well. This being a
good start, one has to criticise that these indirect suppliers are not listed in the
manufacturing map. Yet, long-term direct suppliers make up 90% of the production
volume. Due to this limited number of suppliers information is easily accessible.
Thus, G-Star is on a good level towards a transparent traceable SC. However,
detailed information about tier 2, 3 and 4 suppliers should be provided in the future.
(G-Star, 2015c)

22
 4. Traceability along the Textile and Clothing Supply Chain

4.2.3 TRACEABILITY CODE AT SWITCHER

In 1981 Robin Cornelius launched the Swiss brand Switcher, which offers an
assortment of basic T-Shirts, jackets, pants in a broad range of colours for women,
men and kids. During the Rio Conference, Cornelius - whose vision was to create a
sustainable fashion brand - became aware of the unjust S&E conditions in the
textile SC. Since then Switcher strived for a transparent SC in order to ensure
better working conditions. (Switcher SA, 2015)
A 100% traceability of every product being the aim of Switcher, the company has
established long-term relationships with a limited number of 24 suppliers in Europe
and Asia (Dana and Schlittler, 2013, pp. 22–24). To avoid last minute changes in
product designs, products are available in a broad range of colours, but without
prints or fashionable accessories. As a result, orders can be placed early,
manufacturers are able to plan their production capacities in advance and don’t
need to make use of subcontracting. (Fair Wear Foundation, 2014, p. 8)
In 2005, Cornelius founded the company Product DNA SA, a platform to trace back
a product to its origin (Product DNA SA, 2014). One year later he realized his aim
to make all Switcher products 100% traceable and launched the website
www.respect-code.org. From now on, every piece of garment contained a
traceability code printed on the label. On the website a consumer can enter this
code and follow each manufacturing stage from the wardrobe back to the cotton
field, whether the cotton was grown in India, the fabric dyed in Taiwan and the
garment sewn in Portugal. (Switcher SA, 2015)

The website is structured as follows (Appendix B2): On the left hand side, the
product is shown with its H! O   and CO! footprint. The products manufacturing
trajectory is shown in the world map. Details about involved SC parties can be
found on the right hand side. (Respect-Code, 2014)
On the bottom, additional information can be found about the responsible person
for a batch. All factories are listed with contact details, pictures, audit results (field,
audit body, date) and certificates with a link to the online document.
To gather this information one common system is used, which suppliers and
Switcher can access. Suppliers are obliged to provide information about their 2nd
and

23
 4. Traceability along the Textile and Clothing Supply Chain
3rd tier suppliers as well as working conditions and corrective action plans, which is
then published on the respect-code website. (Fair Wear Foundation, 2014, p. 22)

In summary, Switcher manages to trace 100% of its products back to the cotton
field. This is mainly due to a limited supplier base, long-term relationships and
direct contracts with manufacturers. The limited variety of products and number of
styles (about 60-100 per season) makes this process easier than for a brand
offering more than 10.000 styles. A key enabler is also the existence of a SC
manager, who is responsible for the entire end-to-end SC of a product.

24
 4. Traceability along the Textile and Clothing Supply Chain

4.2.4 THE NETWORK MANAGER REMEI AG

The Remei AG is a Swiss based trading company of bio-cotton, yarns and textiles,
which calls itself a ‘network-manager’ (Amsler, 2015). Following the vision of
producing fashionable sustainable textiles, the Remei AG, which acts as an
umbrella brand, has founded the bioRe® foundation. The correspondent quality
standard bioRe® not only ensures the use of bio-cotton and a fair production, but
also transparency from cotton field to store. Therefore Remei AG integrated the raw
material network into its direct business activities. The two subsidiaries bioRe India
Ltd. and bioRe Tanzania Ltd. support local farmers in growing organic cotton.
(Remei AG, 2015a) The Remei AG issues a purchase guarantee, processes the
cotton fibres in nominated spinning mills and then sells this yarn to nominated
textile manufacturers. The finished fabrics are then used for bioRe® products, sewn
according to customer specifications or sold to a customer who takes over the
manufacturing process. (Amsler, 2015)
All material flows are transparent thanks to stable SCs and nominated suppliers. In
order to trace the bioRe® cotton at every stage, every process needs to be
documented. Additionally, suppliers have to establish a separate material flow to
prevent a mix of conventional and bioRe® cotton (segregation3). The Remei AG
takes over all planning, administration and monitoring of the SC. (Appendix B3, B4)
Even though Remei does not use a separate software tool, but Excel sheets, 100%
of its products are traceable back to the cotton field. The formula for success is a
mixture of integration, a stable SC, long-term business relationships, segregation
and the central network management, where all relevant information is kept at one
point. (Amsler, 2015; Remei AG, 2014)
To make all product information available for the consumer, a traceability number is
printed on every garments label. This number can be inserted on the bioRe website
and provides information about every SC party including manufacturers’
subcontractors. (Appendix B3) The Remei AG does not only enable a transparent
SC in terms of traceability, but also in terms of sustainable working conditions by
showing pictures and interviews with workers. (Remei AG, 2015b)

3
Segregation is a Chain of Custody mechanism, which will be explained in the following chapter

25
 4. Traceability along the Textile and Clothing Supply Chain

4.2.5 CHAINS OF CUSTODY AT THE BETTER COTTON INITIATIVE

In a Chain of custody (CoC) each handling and transfer of a physical good is
documented to ensure traceability. Especially in lawsuits CoC are well known,
where traceability of a piece of evidence needs to be ensured. Derived from the
criminal law application sector, CoC can also be applied in other sectors. Whether it
is GLOBALG.A.P. or followfish traced fish, UTZ Certified coffee or Green Palm
certified palm oil, in the food industry CoCs ensure traceability of a physical
substance or good through all stages from raw material sourcing, manufacturing,
and distribution to the sales point in the industry.

In the TAC industry the Better Cotton Initiative (BCI) is one of the most advanced
CoC example, which integrates both perspectives of a transparent SC:
Sustainability as well as traceability. The BCI member list reaches from H&M,
adidas and Inditex to Walmart. (BCI, 2014; Ellebrecht, n.d.)
Figure 8 illustrates the standard Better Cotton (BC) SC. After cotton is grown
farmers send their crops to the ginner where grains are removed and cotton is
turned into cotton bales. The cotton bales are then sent to a trader or directly to the
yarn spinner, who then sends the processed yarn to a fabric mill. BC fabrics are
then sewn into garments and sent to the retailer.

Figure 8: The Better Cotton Chain of Custody (Ellebrecht, n.d., p.7)

Turning now to the question of how traceability is ensured, the BC CoC approach is
explained. At the beginning, every farmer that grows BC and complies with the BCI
standards, receives a licensee number and is assigned a fixed amount of BC he is
allowed to grow. When the ginner purchases BC from a farmer, he has to enter the
farmers’ licensee number as well as the volume of BC into the Traceability System.
Additionally, purchase date, number of bales, type and quality of cotton need to be
inserted for every material input as well as output. The same procedure applies for

26
 4. Traceability along the Textile and Clothing Supply Chain
traders and yarn spinners who have to insert any sale of BC into the Traceability
System in real-time. From this stage, all volumes are measured in a Better Cotton
Claim Unit (BCCU), which is valid in the system until it is claimed from the next SC
stage. Thus, every BCCU can be located at its current stage. When the yarn is
spun and sold to a fabric mill, the following SC parties have to keep track of the
BCCU by issuing output declarations, but do not need to insert a transaction into
the Traceability System.

At the end of the SC, the BCCU can be traced back from retailer to farmer by three
mechanisms: segregation, mass balancing and book & claim. (BCI, 2014;
Ellebrecht, n.d.)
In the first and second level of the CoC, farmers and ginners are obliged to keep
BC and conventional cotton (CC) separate. By this separation, physical traceability
of BC is ensured, which is known as segregation or identity-preservation.
All further stages are allowed to mix BC with CC from the same country but have to
document the exact amount of BC and CC to underlie an administrative traceability
and manage the volume ratios of BC and CC. This mass-balance system traces BC
volumes and ensures that a SC actor does not sell more BC than he purchased.
To meet the overall demand for BC, a trader who made a BC claim can sell CC
instead and then apply this BCCU later on to another unit (book & claim). This CoC
method does not only trace a product, but also supports the future production of
sustainable BC. (BCI, 2014; Ellebrecht, n.d.)

27
 5. Discussion

5 DISCUSSION
As a consequence of frequent disasters in the apparel industry, the demand for a
better monitoring system and a method to trace back garments along the SC rises.
Where it might be easy for vertical integrated companies to track the origin of their
products, this can be a challenging task for non-integrated companies, which rely
on open market transactions, short-term contracts or buying agents.
This chapter will discuss the findings from both, a literature and practical industry
review. The first part will examine the difficulties in tracing garments along the SC.
The second part will then consider the possibilities how to overcome them.

5.1 DIFFICULTIES OF TRACEABILITY IN THE TEXTILE AND CLOTHING SUPPLY

CHAIN
After having analysed the TAC, it can be found that many companies have moved
away from a hierarchical SC, in which processes are vertically integrated under one
roof to more modular SCs. Tracing a products manufacturing trajectory along these
fragmented SCs is hindered by various industry specific reasons.

Firstly, complexity starts at the garment itself. To manufacture a garment, a broad

range of material is used, supplied by a large number of suppliers. Due to the
outsourcing of manufacturing and sourcing these suppliers are spread worldwide.
This has led to highly fragmented and multi-levelled modular SCs in which it is
difficult to reach every involved actor.
Ever changing trends have shortened product lifecycles and increased the price
focus as a garment has suffered a tremendous loss in value. Apparel companies
are therefore constantly searching for cheaper production locations in LCC, where
S&E standards are kept to a minimum. As a result, the supplier base is constantly
changing, mutual trust is hard to establish and there is not much time for complex
investigation on a products origin. (Berg et al., 2013, p. 3; Obser, 2015, p. 9)

Secondly, the change from push to pull markets decreased the possibility of
effective planning for upstream manufacturers and suppliers. To overcome this bull-
whip effect manufacturers make use of unannounced subcontracting which is
difficult to monitor. Corruption, culture and language barriers make communication
difficult and hinder disclosure of all involved SC parties.

28
 5. Discussion
Thirdly, from cotton field to counter a global network of manufacturers, suppliers,
service-providers, subcontractors, agents and middlemen is involved. Indirect
sourcing via intermediaries serves as a mechanism to increase flexibility and
reduce risk by handing over responsibility. Yet, these intermediaries also represent
a main barrier for a continuous flow of information along the extended SC.

Fourthly, it is about the commitment of the lead-firm itself. Non-integrated

companies often settle contracts with solely tier 1 manufacturers and do not apply a
holistic perspective by taking suppliers of fabrics, raw material and components into
account. As a result apparel companies mention the impossibility of finding out all
involved parties due to complexity, indirect business relationships and contracted-
out manufacturing to independent suppliers. (Sarmadi and Körner, 2014;
Wollenschlaeger, 2014) Yet, industry examples have shown how this dilemma can
successfully be overcome.

5.2 SOLUTION APPROACHES

Throughout the TAC industry companies show their commitment in taking
responsibility for S&E conditions in factories where their products are being
produced. (Berg et al., 2013) By trying to find out about the reach of their SC to
bring about change for a more transparent industry in the future.

As a first step, companies started to trace back their products to the manufacturing
level. To name only a few, Nike, G-Star and Adidas have published a list of their
suppliers. While Nike and G-Star published tier 1 manufacturers only (G-Star,
2015b; NIKE, Inc., 2015), Adidas provides the names of subcontractors (service
providers) as well (adidas Group, 2015a).
H&M is the only brand that goes one step further by providing information on tier 2
fabric and yarn suppliers (H&M, 2015d). Yet, the way in which H&M and many
other companies gather this information about their upstream SC has to be
criticised. According to a current industry survey in Australia, most apparel
companies have direct business relationships to manufacturers. When looking
upstream the SC on fabric, raw material and component suppliers, SCs can be
identified as relational and modular, in which companies rely on information from
their tier 1 manufacturer. (Nimbalker et al., 2015, p. 20; Obser, 2015)

29
 5. Discussion
The disclosure of factories does increase SC transparency; yet, it needs more than
publishing a manufacturer or supplier list. To ensure traceability, the connection of
manufacturer, supplier and the according product has to be given. Nike and G-Star
address this aspect in a manufacturing map, where not only factory names are
shown, but also the on site manufactured product type.

Even though, these approaches only cover the production network and fail to
enable an extended SC traceability back to the components and raw material
network, this approach has to be acknowledged as being a starting point towards
traceability in the SC. The following key drivers enable this approach of SC
transparency:

• Shared values
• Dialogue and presence at site
• Direct and long-term business relationships
• Rationalisation of the supplier base

As previously explained, transparent SCs consist out of two parts: sustainability and
traceability. Looking at the sustainability perspective, companies frequently conduct
audits to ensure manufacturers’ and suppliers’ compliance to S&E standards.
Assumed, these audits are conducted due to low trust, why should companies rely
on unverifiable information to ensure traceability?
In its model of master and servant, Williamson identified that only servants can be
told how and when to do their work. In contrast, apparel companies source their
products from independent contractors, which have the freedom of doing their work
in order to deliver the desired output and are not under direct control. (Williamson
and Winter, 1993, p. 29)
Subsequently, the need for a better SC governing mechanism arises. Several
apparel companies were selected, that demonstrate the ability to manage
traceability along the SC by applying a holistic view of the SC. Therefore, they do
not only consider direct business partners like manufacturers, which are part of the
internal SC, but also tier 2, 3 and 4 suppliers of textiles, components and raw
material, who are indirect partners of the extended SC. (Cetinkaya et al., 2011, p.
17f).

30
 5. Discussion
Resulting from the current industry analysis, four approaches can be identified to
effectively trace back garments along their SC.
Firstly, vertical integration ensures traceability, as the entire SC is kept in one
companies’ hand. Every stage will thrive for the same goal, make information
available and thus enable a transparent flow of material.
Secondly, long-term partnerships with a reduced base of nominated suppliers
enable a stable and less complex SC, which is easier to manage. (Berg and
Hedrich, 2014, p. 62) As a result of shared values, communication, trust and mutual
commitment, suppliers are less likely to hide information, engage in illegal
subcontracting or behave in an opportunistic manner. (Werhane et al., 2013)
Thirdly, the example of Switcher and Remei AG showed that information about a
products origin is less likely to get lost, if one person or institution overlooks the
entire extended SC.
Last but not least, the example of BC showed that Chains of Custody enable
traceability of garments, by registered suppliers, traders and retailers engaging in
documented transactions. At the BCI every purchase and sale is conducted via a
common software system, which keeps track of these units. Physical segregation,
mass-balancing and claim units make each product identifiable and traceable
throughout the entire SC.

Taking now the curious and demanding consumer into account, factory disclosure
might not be a very helpful tool, as it does not enable tracing back the one product
he wants to buy. Companies like Nike, G-Star, bioRe and Switcher have
established more user-friendly tools to make this extended SC view accessible.
Whether a barcode is scanned, a sewn-in tracking number inserted online or a
button pressed in the online shop, which is linked to the manufacturing map, the
consumer can follow each step of its garment along the SC.

31
 6. Conclusion

6 CONCLUSION
The research study at hand was set out to analyse why traceability of a garment
seems to be so challenging and how this can be overcome. The research problem
arose from the various discussions in worldwide media and political institutions
about the responsibility of companies and whether or not a transparent SC from
coat hanger to cotton field is realizable.

At the beginning of this study a comprehensive introduction into SCM and the
various SC modes was given, exploring the correlation between business
relationships in the SC and the degree of SC fragmentation. It was found that the
more modular and fragmented a SC is constructed, the more obscure it will be.
Thus, managing the global network of suppliers will become more difficult. In
contrast it is likely to be easier for a hierarchical or vertically integrated firm, that
possesses a stable SC structure.
To elaborate the specifications of the TAC industry, the flow of a garment along the
SC was illustrated. Subsequently, key drivers for fragmentation in the industry were
identified. The complex product, a globally spread fragmented sourcing and
production strategy and the lack of an extended SC perspective were found to be
the main answers to the research question, why tracing a garments manufacturing
trajectory is such a challenging task.
To find approaches how this complexity can be overcome and extended SCs can
be traced was the second task of this research study. Several companies, which
have addressed this question were analysed. In order to back up this analysis, an
online-survey was conducted, elaborating on the challenges and possible solutions
of several apparel companies.

It can be concluded that for such a fast-paced, ever changing industry there is not
one standard solution to enable traceability along the extended SC. Yet, a
continuous flow of information, communication and relationship management seem
to be a key driver. SC governance modes like cooperation, vertical integration or
CoC have shown to enable transparency and traceability along the SC from cotton
field to coat hanger.

32
 6. Conclusion

6.1 LIMITATIONS
This research study has offered a perspective on traceability in the TAC SC based
on theoretical and public available information. As a consequence, the study
encountered a number of limitations, which need to be considered

In this research work, a limited number of selected companies were analysed.

The compiled online survey was sent out to approximately 25 companies, but was
only answered by a little number. From the participating companies, several did not
answer text questions, which would have helped to better understand specific
questions and contexts. In contrast, addressing companies directly via E-mail was
more helpful and should be used for research in the future.

The practical analysis of the research work serves as a state of the art of current
industry efforts, based on information accessible for public.
The discussion about transparent and traceable SCs has increasingly gained
importance only after the Rana Plaza incident on April 23, 2013. As traceability is
not quickly implementable but rather a long-term investment, companies might
already be on their way towards traceable SCs but may not yet have made this
information public.

6.2 RECOMMENDATIONS FOR FUTURE RESEARCH

Being the nature of research studies, they open up spaces and give directions for
further research. This research study has disclosed the possibility of traceability in
the TAC SC from a lead-firm perspective. During the study, several further research
questions arose, which are recommendable to be explored by further research.
To only mention a few, a more detailed survey should be conducted on the
technical tools, enabling traceability. In this context it would be advisable to
investigate the feasibility to implement these traceability tools in manufacturer and
supplier factories in producing countries.
Additionally, this research study does not claim to represent all possible theoretical
modes for traceable SCs. Further research out of an economical instead of a textile
perspective should be conducted, which might open up new approaches.

33
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38
 8. Statement of Affirmation

8 STATEMENT OF AFFIRMATION
I hereby declare that the submitted work has been completed by me the undersigned
and that I have not used any other than permitted reference sources or materials nor
engaged in any plagiarism. All references and other sources used by me have been
appropriately acknowledged in the work. I further declare that the work has not been
submitted for the purpose of academic examination, either in its original or similar form,
anywhere else.

Überlingen, 25.05.2015

Signature of the Author: _________________________________

Sarah Obser

39
 9. Abstract

9 ABSTRACT
This research work aims to answer the question of how to enable transparency and
product traceability in the textile and clothing (TAC) Supply Chain (SC).
After a comprehensive introduction into Supply Chain Management, industry
specific obstacles were identified. An online-survey as well as a company analysis
was conducted, stating obstacles and opportunities for a transparent SC.
The main findings identify closer cooperation, vertical integration and Chains of
Custody could as effective mechanisms to trace back products along the SC. The
findings furthermore suggest companies to foster communication and to apply a
holistic view of their extended SC to enable a continuous flow of information and
bring about transparency and traceability along the SC from cotton field to coat
hanger.

40
 10. Appendices

10 APPENDICES
A ONLINE SURVEY RESULTS.……………………………..………………..….…….42
B TRACEABILITY IN THE TEXTILE AND CLOTHING SUPPLY CHAIN………..…………..50
B1 G-STAR, MANUFACTURING MAP..…………………………..……………………..50
B2 SWITCHER, MANUFACTURING MAP………………………………………….……..51
B3 REMEI AG, MANUFACTURING MAP………….………………………….………….52
B4 REMEI AG, E-MAIL CONVERSATION……………………………………………….53
C DVD WITH ONLINE RESSOURCES..………………………………………..….…….57

41
 10. Appendices
A PPENDIX A O NLINE S URVEY R ESULTS

Quick Report

Firmenname (Wenn Sie den Fragebogen anonym ausfüllen möchten lassen Sie dieses Feld frei)

Text Responses
Untracked Respondent

Untracked Respondent

Untracked Respondent Schöffel Sportbekleidung GmbH

Untracked Respondent H&M
Untracked Respondent

Untracked Respondent hessnatur

Untracked Respondent Holy Fashion Group
Untracked Respondent

Untracked Respondent f
Untracked Respondent format
Untracked Respondent

Untracked Respondent

Untracked Respondent

Untracked Respondent

Ihre Position im Unternehmen

Text Responses
Untracked Respondent

Untracked Respondent

Untracked Respondent CSR Managerin

Untracked Respondent Sustainability Reporting Manager
Untracked Respondent Teamhead Environmental Affairs
Untracked Respondent Referent
Untracked Respondent Team Lead Supply Chain Manager
Untracked Respondent

Untracked Respondent f
Untracked Respondent inhaberin
Untracked Respondent

Untracked Respondent

Untracked Respondent

Untracked Respondent

42
 10. Appendices

Größe des Unternehmens

Unter 100 Beschäftigte 100-500 Beschäftigte 500-1000 Beschäftigte Über 1000 Beschäftigte Standard Deviation Responses

All Data 1 3 0 4
1.58 8
(12.5%) (37.5%) (0%) (50%)

Unter 100 Beschäftigte 100-500 Beschäftigte 500-1000 Beschäftigte Über 1000 Beschäftigte

Von wievielen Herstellern beziehen Sie ihre Ware?

1-50 50-100 100-500 500-1000 Mehr als 1000 Ungewiss Kommentare: Standard Deviation Responses

All Data 2 2 0 2 0 0 0
0.99 6
(33.33%) (33.33%) (0%) (33.33%) (0%) (0%) (0%)

1-50 50-100 100-500 500-1000 Mehr als 1000 Ungewiss Kommentare:

43
 10. Appendices

Wieviele Hersteller, Lieferanten, Subunternehmer, Dienstleister sind in Ihr Beschaffungsnetzwerk

involviert?

1-50 50-100 100-500 500-1000 Mehr als 1000 Ungewiss Kommentare: Standard Deviation Responses

All Data 1 0 3 1 1 0 0
0.99 6
(16.67%) (0%) (50%) (16.67%) (16.67%) (0%) (0%)

1-50 50-100 100-500 500-1000 Mehr als 1000 Ungewiss Kommentare:

44
 10. Appendices
Wie beziehen Sie die folgenden Produkte?
Hersteller
Hersteller
bezieht die
bezieht die
Ware <br>
Ware<br>
Eigene Direkte Über (Informiert Standard
(Informiert Comments:
Produktionsstätte Geschäftsbeziehung Agenturen/<br>Zwischenhändler uns Deviation
uns nicht
<br>über
über seinen
seinen
Lieferanten)
Lieferanten)

Fertigprodukte 0 5 0 1 0 0
1.83
(0%) (83.33%) (0%) (16.67%) (0%) (0%)

Stoffe 0 4 0 2 0 0
1.53
(0%) (66.67%) (0%) (33.33%) (0%) (0%)

Rohware 0 2 0 2 1 0
0.9
(0%) (40%) (0%) (40%) (20%) (0%)

Komponenten<br>
0 2 0 4 0 0
(Garne, Zutaten) 1.53
(0%) (33.33%) (0%) (66.67%) (0%) (0%)

Komponenten

Fertigprodukte Stoffe Rohware (Garne, Zutaten)

45
 10. Appendices
Wie wichtig ist es Ihnen zu wissen welche Akteure in den Herstellungsprozess Ihrer Produkte
involviert waren?

Nicht wichtig Wichtig Sehr wichtig Standard Deviation Responses Weighted Average

Wissen über...<br>Hersteller 0 0 6
2.83 6 3 / 3
(0%) (0%) (100%)

Lieferant von Stoffen 0 1 5

2.16 6 2.83 / 3
(0%) (16.67%) (83.33%)

Lieferant von Rohware 1 1 4

1.41 6 2.5 / 3
(16.67%) (16.67%) (66.67%)

Lieferant von Komponenten <br>(Garn, Zutaten) 0 2 4

1.63 6 2.67 / 3
(0%) (33.33%) (66.67%)

Subunternehmer/<br>Dienstleister 0 2 4
1.63 6 2.67 / 3
(0%) (33.33%) (66.67%)

2.73 / 3

Wie überprüfen Sie die Einhaltung von Sozial- und Umweltstandards in den Zulieferbetrieben und
Subunternehmen?

Direkte Geschäftsbeziehung zu den Wir führen Eine dritte Partei

Eigene Vertrauen in die Angaben Standard
Zulieferbetrieben und Audits auditiert die Weitere: Responses
Produktionsstätten des Herstellers/Lieferanten Deviation
Subunternehmen durch Betriebe

All
1 0 1 3 1 1
Data 0.9 7
(14.29%) (0%) (14.29%) (42.86%) (14.29%) (14.29%)

Wissen über... Lieferant von Komponenten Subunternehmer/

Hersteller Lieferant von Stoffen Lieferant von Rohware (Garn, Zutaten) Dienstleister

Eigene Produktionsstätten Vertrauen in die Angaben des Herstellers/Lieferanten

Direkte Geschäftsbeziehung zu den Zulieferbetrieben und Subunternehmen Wir führen Audits durch Eine dritte Partei auditiert die Betriebe

Weitere:

Text Responses
Untracked Respondent alle punkte treffen zu

46
 10. Appendices

Aus welchen Gründen würden Sie in Zukunft eine Kooperation entlang der Beschaffungskette in
Betracht ziehen?
Bessere Kontrolle
Teilen von Sozial- und Information über die
Kürzere Verantwortung für die Vertrauen
Kosteneinsparung von Erfahrungsaustausch Flexibilität Umweltstandards genaue Herkunft der
Beschaffungszeit Beschaffungsaktivitäten schaffen
Risiken in vorgelagerten Produktkomponenten
Produktionsstufen

All
2 1 3 1 2 4 5 4 4
Data
(33.33%) (16.67%) (50%) (16.67%) (33.33%) (66.67%) (83.33%) (66.67%) (66.67%)

Text Responses
Untracked Respondent Leider verstehe ich die Frage nicht komplett. Zu Frage 8 - wir fuehren primär eigene Audits durch, lassen jedoch unser
Audit-System extern verifizieren durch die Fair Labour Association.

Wie und mit welchen IT-Systemen verfolgen Sie derzeit die Herkunft von
Endprodukten/Stoffen/Komponenten/Rohware?

Text Responses
Untracked Respondent

Untracked Respondent PDM-System

Untracked Respondent

Untracked Respondent Eigene Systeme, FFC, Enablon, See insights

Untracked Respondent

Untracked Respondent Pflege "Country of origin" Produktstammdaten im PDM System -> API Schnittstelle -> Infoweitergabe an ERP System SAP
AFS
Untracked Respondent

Untracked Respondent keine, direkte kommunikation

Untracked Respondent

47
 10. Appendices

Welche Schwierigkeiten treten bei der Rückverfolgbarkeit der Herkunft von

Endprodukten/Stoffen/Komponenten/Rohware auf?

Text Responses
Untracked Respondent

Untracked Respondent Outdoorprodukte sehr Komplex, komlexe Lieferkette

Untracked Respondent Abhängig vom jeweiligen Material. Beispiel Baumwolle: fuer konventionelle Baumwolle gibt es derzeit keine
Rueckverfolgungssysteme, stattdessen werden oft Mischungen auf dem Weltmarkt gehandelt, die in der Wertschöpfung
bis zu 9 oder 10 Schritte durchlaufen können. Wir arbeiten daran dies bis 2017 bewältigen zu können. Bio-Baumwolle
und so genannte Better Cotton ist bereits heute rueckverfolgbar.
Untracked Respondent Teilweise schwer rückverfolgbar, beispielsweise Leder oder Baumwolle, da die Rohstoffe dort gekauft werden, wo zu
einem bestimmten Zeitpunkt das Angebot vorhanden ist.
Untracked Respondent

Untracked Respondent - Falsche, fehlende Angaben vom Hersteller

- Falsche, fehlende Datenpflege im System
- Zugekaufte Produkte von Hersteller werden nicht im eigenen System verwaltet-> fehlende Transparenz
- Aufwändige, zeitintensive Prozesse schrecken häufig vor dem konsequeten Nachverfolgen aller Komponenten ab
(wenige Cloudlösungen im Einsatz bzw. zentrale IT-System zur Produktstammdatenbearbeitung)
Untracked Respondent

Untracked Respondent viel zwischenstufen

Untracked Respondent

Welche Möglichkeit ziehen Sie zur Rückverfolgbarkeit der Herkunft Ihrer

Endprodukte/Stoffe/Komponenten/Rohware in Betracht?

Eigenes
Echtzeit
Produktionsbüro in Ein zentrales IT System
Kooperation mit Handelszertifikate, Austausch von
Produktionsland zur worauf Hersteller und
Vertikale Lieferanten durch wodurch jede Informationen an
RFID engeren Lieferanten Zugriff haben Weitere: Responses
Integration langfristige enge Schnittstelle jeder
Zusammenarbeit mit und Produktinformationen
Geschäftsbeziehungen dokumentiert wird Schnittstelle
Herstellern und verwalten
(über eine Cloud)
Lieferanten

All
0 3 2 5 2 4 0 0
Data 5
(0%) (60%) (40%) (100%) (40%) (80%) (0%) (0%)

48
 10. Appendices

Wie und mit welchen IT-System erfolgt der Daten- und Informationsaustausch mit Herstellern,
Lieferanten, Subunternehmern?

Text Responses
Untracked Respondent

Untracked Respondent PDM-System,

Untracked Respondent

Untracked Respondent Enablon, FFC, See Insights

Untracked Respondent

Untracked Respondent SAP und Excel

Untracked Respondent

Untracked Respondent -
Untracked Respondent

Wo entsteht der größte Informationsverlust entlang der Beschaffungskette?

Text Responses
Untracked Respondent

Untracked Respondent viele Schnittstellen

Untracked Respondent

Untracked Respondent Zwischen Materialhersteller (Fabric Supplier, Leather Supplier) und dem Rohmaterialhersteller
Untracked Respondent

Untracked Respondent An den Schnittstellen zu den einzelnen Supply Chain Partnern

Untracked Respondent

Untracked Respondent -
Untracked Respondent

49
 10. Appendices
APPENDIX B TRACEABILITY IN THE TEXTILE AND CLOTHING SUPPLY CHAIN

B1 G-STAR, MANUFACTURING MAP

(G-Star, 2015b)

50
 10. Appendices
B2 SWITCHER, MANUFACTURING MAP

(Respect-Code, 2014)

51
 10. Appendices
B3 R EMEI AG, MANUFACTURING MAP

(Remei AG, 2015b)

52
 10. Appendices
B4 R EMEI AG, E MAIL C ONVERSATION

Von: Martina Amsler

Gesendet: Donnerstag, 23. April 2015 17:11
An: [email protected]
Cc: [email protected]; Markus Kunz
Betreff: AW: Masterarbeit- Transparenz in textilen Lieferketten

Guten Tag frau Obser

Wir haben uns kurz Zeit genommen. Unten stehend finden Sie die Antworten auf
Ihre Fragen.

Herzliche Grüsse

Martina Amsler

Marketing & Corporate Communication

Remei AG, Lettenstr. 9, CH – 6343 Rotkreuz / Phone (Mo – Do): + 41 41 798 32 15 /

Mobile (Mo – Do): + 41 79 621 75 77

Fax : + 41 41 798 32 00 / E-Mail: [email protected] / Skype: martina.amsler-remei

Von: Sarah Obser [mailto:[email protected]]

Gesendet: Montag, 20. April 2015 17:15
An: [email protected]
Betreff: Masterarbeit- Transparenz in textilen Lieferketten

Sehr geehrte Damen und Herren,

Derzeit studiere ich Textil-Management an der Hochschule Niederrhein und

schreibe meine Masterarbeit in Kooperation mit der Deutschen Gesellschaft für
internationale Zusammenarbeit (GIZ) GmbH in Bangladesch.
Hierfür führe ich eine Studie zur Rückverfolgbarkeit von Produkten entlang textiler
Lieferketten durch.

Da Remei mit der 'Traceability Nummer' genau dies ermöglicht wüsste ich gerne
wie genau die Herkunft ihrer Produkte nachverfolgt werden.

Sie würden mir sehr weiterhelfen, wenn Sie mir hierzu ein paar Fragen
beantworten:

53
 10. Appendices
1. Wie und mit welche Software erfolgt der Datenaustausch zwischen den Partnern
in der Lieferkette (Internet-Plattform, Cloud, Handelszertifikate, RFID, SAP, etc.) ?

Die Handelsfirma Remei AG von fairer Bio-Baumwolle, Garnen und Textilien ist
eigentlich eine Netzwerkmanagerin. D.h.: Sie kontrollieret die
ganze Produktionskette vom Baumwollsamen bis zur fertigen
Textilien. Dementsprechend kontrollieren wir auch den gesamten Warenfluss.

Im Detail gibt die Remei AG den Vertragsbauern in Indien und Tansania eine
Abnahmegarantie für die Baumwolle und muss nun einen Markt für diese finden.
Der grösste Teil dieser Baumwolle fliesst in die eigene Produktion und wird dann
bei normierten Spinnereien weiterverarbeitet. Dieses Garn wird anschliessend an
nominierte Textilhersteller weiterverkauft. Die produzierten Textilien werden
schlussendlich von der Remei AG and den Endabnehmer weiterverkauft.

Um diesen Warenfluss zu kontrollieren hat die Remei AG keine separate Software

installiert. Durch das Tagesgeschäft und das Geschäftsmodel generell wissen wir
wie der Massenfluss abläuft.

2. Werden die Daten über Rohstoff / Stoff / Produkt in einem zentralen Server des
Händlers verwaltet, damit ein Echtzeit- Überblick über die Supply Chain ermöglicht
wird?

Bezüglich der Garnverfügbarkeit muss die Remei AG akribisch planen damit die
Garne zur richtigen Zeit am richtigen Ort und in richtiger Qualität für den
Textilhersteller abrufbar sind. Dies ist eine grosse Herausforderung. Diese Planung
wird von der Remei AG gemacht und werden von der Remei AG auch verwaltet.
Hierzu wird Excel genutzt.

Die Echtzeitdaten für die Stoffproduktion, Färben, Nähen können zur Zeit nicht auf
Knopfdruck dargestellt werden. Die Planung dieser Prozesse obliegt dem
Textilhersteller und werden dementsprechend nicht in einer globale Datenbank
geführt.

3. Welche Schritte müssen in der Produktion durchgeführt werden, um die

Rückverfolgbarkeit jedes Baumwolle / Stoff / Produkt zu ermöglichen?

Die Ware muss bei jedem Prozessschritt zu jederzeit dokumentiert und identifiziert
werden können. Desweitern muss der Lieferant einen separaten Warenfluss für
unsere Ware installiert haben, damit keine Vermischung und Kontamination mit
konventioneller Ware stattfinden kann.

4. Wie wird die Rückverfolgbarkeit gewährleistet, wenn Firmen -Source-Produkte

über Agenten oder indirekten Lohnhersteller (wie Agenturen oft nicht wollen, ihre
Lieferanten zu nennen) ?

54
 10. Appendices
In der Remei AG wird die Rückverfolgbarkeit einerseits durch das
Zusammenarbeiten von stabilen Lieferketten und Nominierten Lieferanten
gewährleistet. Desweiteren müssen alle Lieferanten ein technischen Audit
durchlaufen. Neben dem Qualitätsmanagement, Inputmanagement und
Umweltmanagement werden auch die Rückverfolgung und die Separierung der
Ware des Lieferanten geprüft.

Beim Firmen Source- Produkte über Agenten müssten zuerst einmal alle
Unterlieferanten ausfindig gemacht werden. Diese sollten dann bezüglich
Rückverfolgbarkeit ausgebildet werden und ein gemeinsames
Rückverfolgungssystem implementieren. Falls Agenten im Spiel sind, so werden
diese kaum ihre Lieferanten aufdecken, denn dann besteht die Gefahr, dass die
Aufträge direkt platziert werden und somit der Agent ausgeschalten ist.

5. Welche Kosten entstehen um die Rückverfolgbarkeit zu gewährleisten und von

wem werden sie getragen (Händler, Hersteller, Lieferant ) ?

Alle unsere Produkte erfüllen folgende 5 Werte:

· Biologische Baumwolle
Die Remei AG fördert die Umstellung auf kontrolliert biologischen Anbau und
die kontinuierliche Weiterentwicklung der Landwirtschaft. bioRe® Baumwolle
aus kontrolliert biologischem Anbau; zertifiziertes Garn gemäss EU 834/2007,
NOP und GOTS.

· Faire Produktion
Menschenwürdige Arbeitsverhältnisse für Bauernfamilien und Textilarbeiter sind
Bedingung. bioRe® Sozial- und Umweltstandard in der Landwirtschaft
(Abnahmegarantie, Bauernprämie usw.), SA8000-zertifizierte Betriebe in der
Wertschöpfungskette.

· Ökologische Mode
Beim Färben und Drucken wird auf giftige Chemikalien verzichtet. Dies schützt
die Gesundheit der Textilarbeitenden und verleiht den bioRe® Kleidungsstücken
eine ausgezeichnete Hautfreundlichkeit. bioRe® Inputmanagement und bioRe®
Kontrollsystem in gesamter Wertschöpfungskette implementiert (inkl.
Auditierung, Labortests, Inspektion von Prozessen und Produkten).

· CO2-neutrale Textilien
Die Produktion von bioRe® Textilien ist komplett CO2-neutral, vom Anbau über
den Transport bis zur Näherei.

· Transparent bis zum Anbau

Jedes bioRe® Kleidungsstück kann online mit Hilfe einer eingenähten
Traceability Nummer zurückverfolgt werden: www.bioRe.ch.

55
 10. Appendices
Der Aufwand für diese Werte werden über den Produktpreis abgegolten. Aus
diesem Grund sind unsere Produkte auch teurer als konventionelle. Die genauen
Kosten diesbezüglich sind unbekannt.

6. Remei arbeitet mit relativ wenigen Fabriken auf einer Langzeit-Basis. Halten Sie
es auch für möglich, transparente Lieferketten zu gewährleisten, wenn
Unternehmen ihre Lieferanten häufig ändern bzw. Ware über Agenturen beziehen?

Nein

Mit freundlichen Grüßen

Sarah Obser
_______________________________
Sarah Obser
Helltorstr.19
88662 Überlingen

Mobil: +49 17656521026

Email: [email protected]

56
 10. Appendices
A PPENDIX C DVD WITH ONLINE RESSOURCES

57

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