Digital B2B platform Serai by HSBC reveals how it guided a large apparel manufacturer to achieving supply chain transparency.
Serai’s customer is a large textile and apparel manufacturer that owns several production facilities across Asia and is a trusted supplier to major international brands. While the company prides itself on being sustainable in its supply chain, it has struggled with showing this transparently to its customers, Serai said.
The company needed a solution that helped track its vertically integrated supply chain from end-to-end–from cottonseed research to product retailing. It also wanted to show and prove the origins of its products, helping to alleviate concerns about unethical supply chain practices.
Vivek Ramachandran, CEO of Serai, told Sourcing Journal that the challenge of transparency being “is not unique to Asia.”
“Apparel companies globally are facing similar challenges,” Ramachandran said. “Opaque supply chains in the industry make end-to-end traceability difficult. Many large brands have challenges tracing beyond their tier 2 suppliers.”
With Asia being so diverse and home to a majority of the world’s apparel manufacturers and suppliers, the challenge is simply more pronounced in the region, he said.
“A couple of other factors adding to this are the low digital quotient some of the manufacturers have and lack of incentives to be more transparent in their supply chain,” Ramachandran said. “However, this is slowly changing, with many large manufacturers starting to be innovators and pioneers in supply chain sustainability. Serai works with a variety of companies, large and small. Additionally, being headquartered in Hong Kong, we are well-positioned to understand the nuances Asia brings.”
What’s needed
In addition to important features such as real-time reporting and an intuitive interface, Serai said its neutral and secure platform with strong technology foundations were distinguishing factors that helped to set its solution apart from others. A secure and safe platform was an important customer requirement due to the transfer of confidential supply chain information from multiple sources.
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In order to achieve true transparency in the company’s supply chain, it was important that its partners and vendors were on-boarded to the platform, too. Providing incentives for lower-tier suppliers to easily join and share information while remaining flexible enough to manage these relationships and information were key requirements.
Building trust
In a series of workshops, Serai worked closely with the manufacturer to identify critical data points that strategic partners and vendors would want to see. This helped build more trust in the relationship with its customers, and their relationships with end consumers.
“Large companies often have lots of data, but much of it is difficult to access,” Serai said in the case study. “That’s why we needed to build our solution so that it allowed our customer to combine multiple data source systems into a single view, where they and their customers can get easy access to information never before seen.”
The company shares buyer purchase orders, and details of yarn and cotton lots, along with supporting documentation, for each shipment that leaves its factories. These various data sources only needed to be integrated once and shared with multiple parties, in a simple, secure and private way, Serai noted.
“This seamless flow of information and being accessible all in one place helped to strengthen the trust they have with their customers, with the proof of chain of custody of their goods,” Serai said.
Digital transformation
Aside from tracing order flow throughout the supply chain, Serai also helped the firm map upstream suppliers, collect data for compliance needs, track environmental, social and corporate governance (ESG) commitments, and manage supply chain risks. With the data eventually integrated into the Serai platform, the company’s customers were able to filter through shipments of goods based on date, style, shipment ID number and more.
This feature provided the manufacturer and its partners with enhanced visibility into their supply chains. With the digitization of all this data and information, it became easier to analyze the firm’s supply chain processes and eventually identify inefficiencies or opportunities for improvement, Serai said.
“By revisiting the data flow along their supply chain, they were able to identify areas to optimize their own systems, extract useful data and understand the quality of their data,” Serai said. “Such data could eventually help better forecast the material sourcing process and optimize production planning, for instance.”
Ramachandran said the need for transparency is being driven by the brands, which are facing increasing pressure from consumers and regulators to be more transparent in their supply chain.
“This has directly translated into the demand for our supply chain traceability and visibility solutions,” he said. “There still needs to be some education on the supplier side. While brands, being consumer-facing, could face potential backlash for their lack of transparency, suppliers do not have the same huge pressure at this point. However, for the apparel industry to be fully transparent and sustainable, there needs to be buy-in from all parties.”
To that end, Serai has been working closely with clients to educate and onboard their various tiers of suppliers onto its platform, he said.
“Suppliers are worried about juggling multiple buyer requirements, which can vary greatly by geography, as well as disclosing tightly held information such as pricing,” he said. “There has to be a level of trust between buyers and suppliers…There are always questions from suppliers about why this traceability is important, particularly if a supplier isn’t located in a country like the U.S., where regulatory pressure is more prominent. We work with buyers and brands to help articulate their definition of traceability and the minimum data framework needed to reach that definition. Hopefully, this can help create a new standard of transparency in the industry.”
Discussing the importance of system security today given the corporate hacking that’s going on, Ramachandran said as a part of HSBC, Serai has always held security standards high.
“We always remain vigilant against potential threats, but have a security team to ensure we comply with the level of encryption and risk mitigation needed to put concerns about this at bay,” he added.