Why the Industry Should Own Its Supply Chain

In light of upcoming legislation , soaring climate change, and revelations of inhumane working conditions , the fashion industry is under pressure. Structural change is needed—at its heart: the supply chain.

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Out of sight, out of mind.

Over the last decades, fashion brands have been outsourcing whatever possible to wherever is cheapest, resulting in an opaque web of suppliers and sub-suppliers. Typically, a piece of clothing goes through many hands and countries before it ultimately lands in a warehouse from where it will be passed on to a customer.

This comes with a variety of concerns. From a climate perspective, long transportation routes cause high emissions. From a social and environmental perspective, it’s impossible to document how employees and the local environment are burdened. And from a customer perspective, we leave them blindfolded disabling them from knowing how their products have been made.

Legislation enters the scene

Incidents are making headlines frequently and clashes between the authorities and brands include fast fashion players like Shein as well as luxury houses such as Loro Piana, indicating that misconduct in fashion’s supply chain is not an exception. Nonetheless, action has been limited. Faced with economic crises, inflation, and market shocks such as the global pandemic, the industry has struggled to maintain margins and, thus, prioritized the bottom line over sustainability initiatives. When malpractices are exposed, brands typically excuse themselves with a lack of oversight, pushing responsibility further down the supply chain.

But the pressure is on: upcoming legislation in the EU and the US will hold brands accountable for their supply chains. Traceability is to equal parts the buzzword of the hour as it is the elephant in the room. Achieving it within the prevalent structure is a massive challenge. But one that needs to be tackled.

Vertical integration: a shortcut to traceability

Perhaps unintuitively, the easiest and most effective strategy is a 180-degree turn. After decades of outsourcing, it’s time to insource. Taking control of their supply chains gives brands the necessary insight into what’s produced where, and under what conditions. An argument that’s often put forward: nice idea but impossible to execute. I argue it’s not. How do I know? At Son of a Tailor, we’ve done it. A bit more than a year ago, we went live with our own production facility in Portugal.

Son of a Tailor specializes in custom-fit, made-to-order menswear. This means that each item is uniquely fitted to the person who has ordered it. Consequently, our supply chain setup differs from that of most brands. But ultimately, no matter what you produce and whether on-demand or for-stock, all brands will need to document a product’s supply chain once the EU Product Passport is introduced.

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Owning at least part of this supply chain makes this much easier as necessary information will be readily available and the brand can introduce processes and structures that serve its individual needs. Beyond compliance, vertical integration comes with three key advantages that apply to all types of brands.

More flexibility

Long lead times and high minimums force brands to take bets far in advance when it comes to what will sell. This guesswork typically leads to mountains of unsold stock which is obviously an issue from an environmental perspective but it doesn’t make much business sense either. Insourcing production removes or at least reduces these constraints. As a result, brands can be more reactive to shifting demand, test new designs more easily, and ultimately, reduce overproduction.

Lower costs

While fashion brands typically have the upper hand in supplier relationships, increasing costs for raw materials and logistics among other factors have increased production costs. Add that with every layer in the supply chain, there’s a profit margin, it becomes evident that by insourcing and consequently, cutting out middlemen, costs can be reduced significantly.

More innovation

Controlling your production allows you to tailor processes to your needs. You aren’t bound by what might have worked in the past or for other clients. Instead, you can innovate new, more effective processes, leading to further cost savings as productivity increases. You start getting into a virtuous cycle because you can now export these process improvements to your suppliers (about 50% of our manufacturing is insourced), providing a positive feedback loop.

Higher product quality

When working with a long tail of suppliers and sub-suppliers, product quality can, at times, be hard to ensure. This leaves brands with two options: either invest in rigorous quality control to sort out everything that doesn’t meet the standard and, therefore, goes to waste, or turn a blind eye and risk unsatisfied customers and potential returns that will, again, cause waste. Insourcing production and, thus, taking control of the manufacturing stage ensures that product quality is a priority from the get-go, leading to higher customer satisfaction and lower waste through defects.

As this shows, vertical integration doesn’t only set brands up for compliance with upcoming legislation, as if that wasn’t enough, it also comes with several benefits from a business perspective. The conclusion should be clear: the best time to get started was yesterday, the second best time is now.

Jess Fleischer is the Co-Founder and CEO of Copenhagen-based clothing-tech brand Son of a Tailor. Fleischer founded Son of a Tailor with the mission to reengineer the clothing industry for the planet and people. Son of a Tailor leverages technology to build a unique demand-driven supply chain and deliver a scaleable, top-notch customer experience. Son of a Tailor is a certified B Corp and member of the UN Global Compact where Fleischer serves as the Deputy Chair of the Danish network.

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