Garment manufacturers producing textiles and apparel for many of the world’s major fashion brands are wasting an average of 25 percent of resources through fabric and garment production, a report published today by Reverse Resources shows. But that cycle can be broken.
Such inefficiency in factories isn’t a waste problem or a lack of brand responsibility, rather, it’s caused by a systemic conflict of business interests and lack of data and transparency between stakeholders in global supply chains, according to the study, “The Undiscovered Business Potential of Production Leftovers Within Global Fashion Supply Chains: Creating a Digitally Enhanced Circular Economy.”
The emerging era of circular economy, along with digitization and transparency trends can unlock a major business opportunity for brands and factories, the study noted.
Existing linear pricing schemes adopted by brands are unwittingly providing an incentive to factories to not share comprehensive and accurate data about leftovers. These pricing schemes “build in” an extra margin for factories to sell leftovers into local aftermarkets. What remains unsold is incinerated or dumped, contributing to environmental and economic inefficiency.
“Better data from factories would facilitate virtual traceability of resources and enable digital interconnections across the supply chains,” Ann Runnel, founder of Reverse Resources, said. “These are crucial for meeting the goals of a circular economy by decoupling economic growth from environmental impacts by resource effectiveness. Material circulation of production leftovers is already established, but it is by default inefficient, corrupt, costly for end-users and out of the control of the stakeholders in the core supply chains.”
The company is developing a software solution for fabric and garment factories to map, measure and create visibility for leftover fabrics and scraps so that these become traceable through their following life cycles.
However, improvements in supply chain transparency and traceability could unlock a major opportunity for growth within the industry. Along with its software solution, Reverse Resources suggests three measures that can create a “win-win business case.”
The measures are adapting a pricing scheme so that factories would have an economic incentive to share leftover information, introducing different business cases to increase the value of leftovers for factories, such as remanufacturing–integrating bigger leftover fabrics back into the same production or increased efficiency of recycling, and using that information to build systems of transparency and traceability that rely on a clear business case for suppliers.
[Read more about textile recycling: Post-Consumer Textile Recycling Gains Momentum in Apparel Sector]
Nin Castle, also a co-founder of Reverse Resources, said after winning the H&M Global Change award in 2015, the company conducted extensive research and pilots into the unexplored area of textile leftovers from fabric and garment production.
“We have seen that actual leftover volumes greatly exceed the amount previously estimated by brands, but there are many hidden opportunities for growth within the fashion industry from these resources,” Castle said.
In the report, Reverse Resources illustrates how the model could help increase the market value earned from factory waste three-to-four times, while simultaneously lowering the FOB price of partially re-manufactured garments. The approach would also reduce the use of new fabrics in production by 3 percent through the integration of leftover fabrics.
The model was validated by a pilot at factories in Bangladesh and leaders are now moving on to test the scaleability of the concept for mass use.
Reverse Resources research indicates that in Bangladesh alone, if different reuse, remanufacturing and recycling methods were applied over time, leftovers available from the country’s garment producing factories could amount to roughly 1.6 billion garments. This would result in a total market value of $4 billion in Bangladesh alone. Re-manufacturing could be applied to about 25 percent of large leftover materials, potentially growing earnings for the factories by three to five times from their leftovers. Similarly, the same applies to other garment producing countries.
Ria Kearney, senior consultant at Made-By, a not-for-profit organization with a mission to improve environmental and social conditions in the fashion industry, said, “The innovative and comprehensive approach Reverse Resources is taking is an essential part of moving the sector towards true circularity and which presents many opportunities for the apparel sector, at every stage of the value chain.”