Sustainable procurement is the effort to integrate environmental, ethical and social factors into the procurement process with vendors and suppliers, and it's a huge investment in time and money. This is a huge investment in time and money. It requires the leadership of multiple departments to find and select sustainable materials, ethical manufacturers, and reduce waste as much as possible throughout the supply chain.
What Are the Benefits of Responsible Sourcing?
The global ethical fashion market is expected to grow from $6.35 billion in 2019 to $9.81 billion in 2025 and $15.17 billion in 2030. To be successful in the future, brands need to learn how to design, source and manufacture more sustainable products. Brand reputation aside, it's important to look at the bigger picture of growth projections for conscious sourcing.
Creativity and efficiency will only take a fashion brand so far before resource consumption becomes an issue. Whether it's carefully selecting suppliers or moving to a zero-waste supply chain, these small steps are the beginning of a larger shift to reduce a company's environmental footprint. While the conversion process is long and arduous, it ensures quality products and brand appeal. It's a long-term investment that pays off quickly by protecting the environment while vastly improving business prospects with higher-turnover customers.
Every year, the supply of eco-friendly clothing increases fivefold, but the market share remains very low, with less than 1% of products launched in the first half of 2019 having labeling certifying their sustainability. While sustainable sourcing has become a strategic priority for brands, its implementation seems rather complicated, as proven by a McKinsey research report highlighting the need for a radical transformation of the fashion industry.
Up to 5% Increase in Costs
A crucial point in the McKinsey report focuses on how to reinvent purchasing practices. Sustainable sourcing has important implications for these practices, from planning to negotiation to ordering. Two-thirds of respondents expect sustainable purchasing to increase costs by 1% to 5%, and most recognize it as an investment for competitive advantage.
The old model of continually shifting from one low-cost supplier country to another is no longer a priority, especially as cost differences between countries have narrowed and as brands must respond to increased consumer demand for sustainable products.
However, there has been insufficient focus by fashion companies to improve processes. There’s considerable scope for improving the cost, speed, flexibility and sustainability of end-to-end product development and procurement processes in the apparel industry, the report states. Starting with the digitization of processes, which proves to be a crucial improvement factor for purchasing managers.
Apparel suppliers around the world will need to source globally over the next five years and consumer demand for sustainable fashion will increase rapidly. At the same time, pressure on margins will require improved process efficiency on the part of companies, as McKinsey researchers concluded.
Innovation Forum’s Upcoming Event on Responsible Sourcing
This two-day business forum by Innovation Forum on the 29th and 30th of March will assess how companies can develop and implement robust human rights due diligence and responsible sourcing policies. We’ll look in-depth into the practicalities of supply chain transformation and what this means for the future of ethical trade.
Through off-the-record debate, expert practitioners will discuss the biggest opportunities for transformation as businesses adapt practices to comply with rapidly evolving legislation. We'll explore examples of ethical, responsible and transparent supply chains that create a positive impact.
The forum will receive speakers from companies such as The Body Shop, Unilever, Ted Baker, Reckitt, L’Oreal and more.