Traceability tools for textile supply chains

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Traceability tools for textile supply chains

Guidance report by Circular movement and Textile & Fashion 2030

Financed by:

Abstract

We live in a time of rapidly growing demand for accountability, responsibility, sustainability, and transparency from companies. The pressure is high from many external stakeholders: legislators, academia, investors, business partners, media, NGO’s, and the public, all expect companies to be in full control of their supply chains. In this report we offer some knowledge and support for finding the tools that can enable better supply chain visibility and product traceability, to facilitate a higher level of transparency towards external stakeholders and better data input for the sustainable development.

Mapping supply chains, tracking products and materials and collecting and verifying data globally is a complex task. There are no simple answers or quick fixes available, but that is not a reason to wait before starting the traceability work either. Based on the report findings, we offer five initial recommendations to textile companies:

- Legal demands for traceability are approaching fast. Start your traceability work today, either manually or digitally, to be prepared when becomes is a strict requirement.

- Supply chain mapping is the first step of traceability, and it can start off manually. But full supply chain mapping will require both time and engagement, so make sure you put in an effort that makes it worthwhile.

- If your ambition is to map your full supply chains, create product or materials traceability, and comply with the upcoming strict EU regulations, we recommend implementing digital solutions for traceability and supply chain/product data management.

- There are many digital tools for traceability, operating in various ways. We recommend analysing your needs thoroughly before reviewing and comparing tools, to know what you are looking for and avoid getting lost in all options you have.

- Your collected data will eventually be shared both internally and externally. Building a good data structure with accessible databases will help future sharing and limit the amount of manual work.

The analysis in this report is based primarily on four sources: Web searches for traceability-related tools, a textile industry webinar, and communication with tool providers, industry organizations and textile companies. A small base of scientific research was gathered as background to the report.

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Sector analysis: Transparency, Guidance report 2023-07-05 3 Table of Contents About this report.......................................................................................................................... 4 1. Without Traceability, no transparency ...................................................................................... 5 Data sharing: building transparency ................................................................................................... 5 Opaque transparency.......................................................................................................................... 5 2. The traceability tools list........................................................................................................... 6 Main tool types in the list.................................................................................................................... 6 Other, supporting tools....................................................................................................................... 6 Textile standards and certifications.................................................................................................... 7 A need for traceability tool transparency? ......................................................................................... 7 3. Traceability tools – a silver bullet? ............................................................................................ 7 The complex supply chain (Tiers, network)......................................................................................... 7 Four-level traceability?........................................................................................................................ 8 The increased demand for data .......................................................................................................... 9 Traceability tool technologies............................................................................................................. 9 Data verification and reliance on suppliers....................................................................................... 10 4. Traceability and the IT ecosystem ........................................................................................... 11 Product data management – integration and data exchange .......................................................... 11 5. Advice for purchasing traceability tools................................................................................... 12 Defining your traceability tool needs................................................................................................ 12 Questions to ask the supplier............................................................................................................ 14 Learnings from the industry.............................................................................................................. 14 6. Traceability as a driver for sustainability ................................................................................. 15 Sustainability in a textile context ...................................................................................................... 15 Traceability for circularity.................................................................................................................. 16 Climate and traceability .................................................................................................................... 16 7. Traceability in legislation and regulation................................................................................. 17 EU legislation: A new normal ............................................................................................................ 17 DPP: The Digital Product Passport..................................................................................................... 18 References................................................................................................................................. 20 Appendix: Traceability tool types................................................................................................ 21

About this report

This report was written by Peak 63 on assignment by Circular Movement and Textile & Fashion 2030 in spring 2023, to support Swedish textile companies in the implementation of digital systems for traceability and supply chain mapping, a rapidly growing field where new solutions are presented on a weekly basis and new regulations are radically changing the game radically over the next couple of years.

The analysis in this report is based primarily on four sources: Extensive web searches for traceabilityrelated tools, a textile industry webinar on traceability, and interviews and email exchanges with tool providers, industry organizations and textile companies. A small base of scientific research was gathered as background to the report, but since the market for traceability tools is quite new and rapidly growing, and the level of implementation in textile industry is still quite low, we have not found extensive research sources to cite or refer to.

When referring to digital tools for supply chain mapping, product data exchange and building product/data traceability, we have not found a concise, standardised, research validated language. Therefore, there are a several different expressions and concepts mentioned in the report. As a general description of tools that contribute to traceability, we use the term Traceability Tools. This term can be interpreted in a wider sense to include other types of tools and systems that contribute to traceability or have some of the characteristics for traceability integrated.

Financed by:

I want to direct a big and humble Thank You to the all the people who contributed to this report – without you it wouldn’t have happened:

Anett Aldman and the Project team for Circular movement together with the team and knowledge groups at Textile & Fashion 2030, who gave me the opportunity to deep-dive into this interesting subject. Jan Stala, Johanna Sturmhoefl and Sara Sturmhoefl, coworkers at Peak 63, for support, information gathering and analysis work. Lisa Bour Schwarz, RISE, for advice on the EU legislation. Maïtè Angleys, BSI, Katy Stevens, EOG and Boris Fournier, OSV, for good advice early on, pointing me in good directions for my research. Several textile industry representatives for sharing their insights on traceability challenges, tool selection, and implementation of these tools. Participants of the Textile Challenge 8 seminar and respondents of the traceability survey, who contributed openly with their needs, challenges and learnings. Vilmer Ståle, DeLogue, Leonardo Bonnanni, Sourcemap, Shubham Kulreshta and Sebastian Andersson, TrusTrace, and other traceability tool providers for fact-checking and sharing their know-how from this fast-moving sector.

The findings in this report build on all your knowledge and suggestions – I hope I have interpreted and summarized it in a way that represents your views and our shared reality reasonably well.

Big thanks, Joel Svedlund/Peak 63 (Editor)

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1. Without Traceability, no transparency

The requirements for corporate sustainability and responsibility are rapidly growing. With it comes an exponentially growing demands on data sharing, verification of claims and openness. Transparency – to openly share relevant information about materials, supply chain and impacts to customers and other external stakeholders (Doyle, M;, 2022) – is a corporate buzzword that creates huge challenges when trying to implement it in full. To enable transparency, we need a high level of Traceability, defined by the International Organization for Standardization (ISO, 2007) as the “ability to verify the history, location, or application of an item by means of documented recorded identification”, which throughout the textile supply chain means tracking origins, movements and structures of products and materials. And to achieve traceability, we first need to make all parts of the supply chain and their processes visible through Supply chain mapping.

Data sharing: building transparency

Tracking every detail in the full value chain may feel like an overwhelming task for anyone starting out. And it is not very likely that we will ever capture every detail – but the amount of data we need to process, and share is increasing drastically. In the new realm of Digital Product Passports, there will be subsets of your traceability data that needs to be shared with many different parties (read more in Chapter 7). However, totally open-source sharing of traceability data is not a likely route when managing intellectual property, anti-trust regulations and contractual restrictions on disclosure. We come upon the question of what data to disclose to whom and how detailed/verified does it have to be. Priorities will likely be made depending on stakeholder needs:

 Legislators and regulators. With over 30 new EU legislations and regulations developing in the sustainability space until 2030, the demand for verification of compliance through access to value chain data is radically increasing. See chapter 7 for a brief overview. We will need to follow the legal development closely since most of the initiatives at writing, spring 2023, are not on a level of detail to clarify their full requirements on data availability and traceability.

 Reporting on sustainability – whether it is a full GRI sustainability report or separate climate reporting, as soon as you claim impact reductions or other positive effects of your sustainability efforts, there is a need for actual data from your supply chain to verify the claims. The legal obligation to report on sustainability is also covering a growing number of companies, as EU legislation is developing.

 Marketing. Substantiating environmental claims according to new EU legislation will demand more granular data from your supply chains, to cover verification of the environmental and social impact categories you want to communicate about.

 Other value chain actors that need specific data about your product: retailers, recyclers, third-party auditors, who either need the information to carry out their work, or report their part of the value chain impacts, will request either detailed raw data or aggregated results answering their specific questions.

 Customer demands. Driven by influencers, NGO’s, media and a public discourse, there is an increased demand for openness from companies beyond the legally controlled disclosure. How much you disclose and in what format is voluntary and connected to the company policies and market positioning.

Opaque transparency

A “total openness” approach, sharing all available data about a topic on a very detailed level, may sound like a good idea but can have an obscuring effect by over-informing stakeholders and making it impossible for non-experts to sort out what is relevant. Generally, a very thorough selection, processing and explanation of data is needed for verification of any claims made. The new green claims legislation in EU will target this to some extent, requiring that any claim is substantiated and relevant. The data backing the claim will then also need to be selected and processed to verify exactly what is claimed.

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To avoid these problems, a transparency policy is recommended, with guidance on the communication of sustainability claims. This will in turn impact how to build your traceability datasets and what type of processing (aggregation, analysis, verification, explanation etc) of the data is required before sharing information with stakeholders.

2. The traceability tools list

As a help in your search for tools to support your traceability and transparency efforts, we have made a list of digital tools that are known today in the field of supply chain mapping and traceability. At writing, it contains more than 80 tools and offers basic information about their capabilities. Since the field of supply chain mapping and traceability is rapidly growing, this list cannot be considered a full market overview. The information gathered comes from public sources, mainly the tool suppliers’ own websites, there has only been limited verification of the information, and many tools are in ongoing development, why we recommend anyone using the list to do a full review of each considered tool yourself.

Main tool types in the list

We have found several categories of traceability-related tools, which are overlapping and not always with strict or commonly agreed definitions. Here is an overview of the most relevant categories in sustainability-related traceability. See Appendix: Traceability Tool Types for more tool types.

• Supply chain mapping systems are used to discover and manage supplier relationships across multi-tier supply chains. Some of them include transaction records to capture the movement of goods, a foundation for product/material traceability.

• Product/material traceability systems have similar functionality as Supply chain mapping systems, in the most developed cases with the capabilities to link to purchase orders and track multiple materials and processes in detail across complex supplier networks, and in other cases more focused on a smaller subset of targeted materials and processes, through e.g., transaction certificates, for verification of specific claims.

• Physical tracer technologies are the connections between the physical product and the data sets linked to the product. The physical tracers can come in the form of barcodes, QR codes, RFID or NFC chips embedded in the product, for a direct connection from the unique physical product to an online data source. There are also tracers on molecular level which can be added to materials, proving origin or other credentials for raw materials, or authenticity for products.

• Product Data Management (PDM) and Product Lifecycle Management (PLM) systems for managing product and supplier data, with focus on product development. PDM is generally simpler than PLM, with less functionality. PLM manages data during a full product development lifecycle, including versions, variants, and phase-out of products.

Other, supporting tools

There are also other tools, which can collect valuable data for traceability or are on the receiving end of a data exchange with a traceability tool. Some examples of these exist in the list, especially if they have combined the main characteristics described below with some traceability or supply chain mapping capabilities.

• Sustainability management and sustainability reporting tools are collectors of data aimed at impact assessment and reporting, which in some cases have modules for supply chain mapping or traceability. They are, however, mostly receivers of data from the more specific supply chain mapping and traceability tools.

• Sustainability impact assessment tools, based on Lifecycle assessments (LCA) or carbon footprinting software, and social auditing/tracking platforms like Amfori BSCI or Higg FSLM, can be viewed as “sustainability management” but are often regarded in daily working as

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standalone systems, which can both receive traceability data and deliver impact data to PLM and traceability platforms.

• Enterprise Resource Planning (ERP) systems are at the core of any company, managing inventories, purchasing, sales and other operational aspects. Is crucial to traceability with purchase order management and can also be a receiver of more detailed product/traceability data.

• Supplier/vendor management systems – for managing purchasing and logistics in bigger organisations with complex purchasing patterns. Often part of a highly capable ERP. Can contain valuable information for traceability but are not always capable of multi-tier traceability and working on material/process level.

• Supplier risk management tools, which are aimed at assessing business risks, can contain valuable data for the supply chain mapping, but generally not on product traceability level. They can also be a receiver of data from a supply chain management or traceability system.

Textile standards and certifications

Textile standards and certifications stand out as a category of its own. We have collected the most used ones in a separate list. They are often crucial for traceability and verification of environmental benefits, but generally not designed as digital systems for sharing data themselves. Some of the digital tools listed above have certificate management functionality; to register and manage these certificates for verification and validation, as part of the traceability data management.

A need for traceability tool transparency?

An immediate hurdle that grows into a big challenge when surveying the traceability tools market, is understanding what each tool actually does. This is currently made difficult by the suppliers in several ways:

 The language is not standardized: during our market scan we found over 200 marketing concepts, with unclear definitions of their meaning.

 Some categorizations of tools have emerged in our search, but the lines are blurred, and many tools are somewhere in between them.

 Very few of the tool providers have white papers, tech specs, specific feature descriptions or full pricing details clearly written on websites, which is otherwise quite common in more mature software areas like project management, market survey or CRM software.

 Some tool providers offer free trials, but most require the potential customer to book a demonstration just to understand the most basic features, capabilities, and pricing information, which makes information gathering and early sorting challenging.

3. Traceability tools – a silver bullet?

There are very few companies, if any, that have a fully automated handling of sustainability related product data today. Among smaller companies, Excel is still a common go-to tool for all types of data management. In bigger and more established companies, PDM or PLM systems are implemented to manage the development and exchange of product specifications with garment producers. And the large companies have supply chain management software to manage material flows and transports, to handle a complex mix of product lines and production deadlines. In many companies, the input to these systems is still within the company and based on information gathering through email, excel sheets and phone calls.

The complex supply chain (Tiers, network)

When referring to tiers in this document and the tools list, we use the definitions from World Resources Institute (Sandowski, 2019) which can be seen in Figure 1. It is a rough simplification of the

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supply chain where “side tiers” for chemicals and other input resources are not visible. In the real supplier networks, there can be single suppliers spanning over several tiers, suppliers covering only specific parts of a single tier and intricate relationships of sub-suppliers, transporters and agents which needs to be uncovered in the deeper supplier mapping and traceability work.

Four-level traceability?

According to the TrusTrace Traceability Playbook (Doyle, M;, 2022), traceability efforts can be described on three levels, where you need the lower levels to reach the next (see Figure 2).

1. Supplier mapping – to establish names, addresses and basic data about the full supply chain. Can be extended with many types of sustainability and compliance data for deeper insights.

2. Product traceability – to connect supplier data to each product type and create the structure for a product’s full supply chain, understanding the full complexity of the supplier interactions.

3. Material traceability – to connect the flow of materials and components through the supply chain to each product on purchase order level.

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Figure 1. Definitions of Tiers in the textile value chain according to World Resources Institute. Figure 2. Three-level traceability based on definitions by TrusTrace (Traceability Playbook, 2021), with an added fourth suggested traceability level describing the additional demands for circularity outlined in Digital Product Passport works.

Ingredient/process traceability

In our work, we have found upcoming legal requirements, research (Schenten, 2019) and practical needs that point towards a fourth level of traceability which further supports product safety and circularity: Ingredient/process traceability – which includes chemicals as material ingredients and possibly also data on processes and process chemicals (see Figure 2). In the chemicals management area, there are tools for chemical inventory management which to some extent can offer aggregated information for risk assessment. However, to connect these chemicals to a specific product, there is more work needed and we have so far not found a fully functional solution covering all four traceability levels. The EU Digital Product Passport may in the future offer some guidance on traceability of chemical ingredients for recycling purposes.

The increased demand for data

Even if the first level of traceability, supply chain mapping, is fully achievable using excel and email as your main tools, you will most likely benefit from a digital solution already at this stage. Especially when considering keeping records updated and in sync with an active sourcing work.

Additional needs for digital solutions: According to the tool provider Sourcemap, making an extended supply chain mapping generally means that you increase your original list of suppliers by factor 5-10 when including sourcing agent structures, second sources, local sources and sub-suppliers that are generally hidden in your main tier 1-2 suppliers’ purchasing patterns. From a due diligence and risk assessment perspective, this extended supply chain mapping can uncover many issues that need your attention.

For product traceability, the first steps are also possible to take manually but when considering product updates, variants and keeping track of full product lines, the need for digital tools and automation will quickly be evident.

When going into material traceability, which is matched with your purchasing orders to create traceability on batch level or even unique product level, the complexity will demand digital solutions and system integration to avoid endless work hours of just entering and transferring data. The human factor in input and transfer errors will also be a data quality issue when the data flow increases.

Traceability tool technologies

From the material communicated on tool provider’s websites, it is not possible to establish with certainty what functionality and features each tool offer, or what technologies they are built on. A few examples of technical terms we have come across are:

 Cloud-based services, with both data and software running on servers located outside of your offices. Two service models are often referenced:

 Software as a Service (SaaS), a full-service model where the customer gets both back-end and front-end from the service provider.

 Platform as a Service (PaaS), database services where the customer is responsible for the software interface, connecting to the platform to make data usable.

 Artificial intelligence, or machine learning, is in some tools used to increase data accuracy, adaptability and enable managing complex analysis questions within large amounts of data.

 Internet of Things (IoT) is mostly referred to when describing physical tracers like RFID or NFC tags sewn into products.

 Blockchain, a distributed ledger of linked data blocks which enables data authentication with time stamps and encrypted certificates. With peer-to-peer design as foundation, it is often claimed to be more versatile, open, and secure than server-based database solutions.

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 Graph Database, one of several database types. It is structured with data nodes and links/relationships rather than a data matrix, offering the ability to store large amounts of diverse data and perform analysis of complex relationships between data points.

Traditional relational databases are still used as backbones for some traceability solutions but have limitations both for multi-tier input and the complexity/relations of the collected data (RippleNami, 2021). A few years ago, when the traceability tools started emerging, blockchain was heavily promoted as “the” solution to many traceability needs, offering a verification possibility and adaptability where traditional database solutions fall short. There have been critics which claim that large-scale blockchain implementation in complex supply chains can create inefficient and costly data management, as well as high energy consumption because of cryptographic calculations and duplicated data. Today, the approach is often pragmatic with a combination of technology solutions that will optimize the performance, and many systems have data sharing and verification functionality supported by blockchain. Hybrid solutions, with blockchain and hosted database services, are promoted by some and has its pros and cons.

Generally, these technology terms and concepts are not put into a context where it is understandable how the tool is structured and what that means for the users. To understand a tool’s functionality and what technology it is built on you need to get in contact with each tool provider for in-depth dialogue. In the EU Digital Product Passport development, minimum requirements on data carriers (i.e., physical tracers) and data services for digital product passports will be determined.

Data verification and reliance on suppliers

To limit each company’s workload and move the data input as close as possible to the source, a perceived ideal for traceability by many is to have each part of the supply chain submitting their own data directly into the traceability tool themselves, or through integration between their systems and the tool. Some of the traceability tools are already set up for this collaborative approach. But there is currently no industry alignment on what data to collect or the data collection formats/methods. This provides a series of challenges, which are yet to be investigated deeper in practice, but can be outlined in two main bullets:

1. It creates an enormous workload for each supplier, reporting into multiple systems with different data and input methods. Automation and standardization are needed for them to manage this task.

2. The brand needs to rely on their multi-tier suppliers entering the correct data; or they need to set up very rigorous large-scale verification processes. How far non-verified data stands up to legal requirements is still unclear.

There is a high probability that verification of traceability data will become a major issue when legal demands on e.g., green claims and carbon accounting are established. There is hope from the industry that the required level of validation will be clarified in new EU legislation and regulations, like the Digital Product Passport. Traceability tools, traditional certificates and validation through audits will play important roles in solving this problem.

There are already a multitude of certificates and standards in the textile industry. Certificate management, to register and keep track of product/material certificates, is an important feature in a traceability system, both for verification of claimed properties and as a chain-of-custody verification when tracing materials on batch level through transit certificates. Traceability tools that include certificate management will enable more automated follow-ups. There is, however, a challenge with the current certifications in relation to traceability: They are generally not very transparent themselves and do not offer information on e.g., upstream suppliers and their practices. So, while

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they can be important for verification, they do not always support your supply chain mapping and traceability efforts.

4. Traceability and the IT ecosystem

Since supplier, product and material data is already available in many internal systems. With added datasets for traceability, impact assessments and other sustainability data, there will be several systems exchanging data and a need for integrations and standardisation of data formats.

Product data management – integration and data exchange

As can be seen in Figure 3 and Figure 4, supply chain management and product/material traceability are a part of the product data management. There is a strong need for integration, automation and standardization of data formats, input methods, APIs, and other interfaces where these systems interact with each other or with people. At writing, there are only a handful of tool providers who have clearly stated that they have developed integrations with specific other tools. Some claim to be prepared for integrations, often based on public APIs which demand development and configuration work by the tool provider, or consultants, to work in reality.

Abbreviations explained:

ERP = Enterprise Resources Planning

HIGG = Higg Index (worldly.io)

FEM = Facilities Environmental Module

FSLM = Facilities Social and Labour Module

Mgmt. = Management

PDM = Product Data Management

PIM = Product Information Management

PLM = Product Lifecycle Management

ZDHC = Zero Discharge of Hazardous Chemicals (roadmaptozero.com)

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Figure 4. A more comprehensive picture of interacting tools and data flows, including some external data sources and recipients of data. This illustration can be further expanded with demands for circularity related data by downstream value chain stakeholders. Figure 3. The internal tool/systems structure and data flows, as described by the product/purchasing team of a textile company.

When assessing the potential for integration and data exchange, it may also be good to refer to the EU Digital Product Passport development since that will to a large extent define the standards for data sharing between stakeholders and hence will likely also be a good foundation for the internal data management.

There are efforts in the industry to build data sharing standards – these are a few examples of current work in that direction, with references to digital product passport development:

 CIRPASS is one of the major multi-stakeholder development projects for a digital product passport, supported by EU and referenced by many actors (https://cirpassproject.eu/).

 The Traceability for Sustainable Garment and Footwear initiative by UNECE has developed traceability standards and implementation guidelines (https://unece.org/trade/traceabilitysustainable-garment-and-footwear), as well as a Sustainability Pledge where actors can join forces for improved traceability (https://thesustainabilitypledge.org/).

 GS1 is an international non-profit association, dedicated to global standards and solutions to improve the efficiency and visibility of supply and demand chains. The GS1 system of standards include the well-known EAN codes and are widely used around the world. (https://gs1.se/en/standards-and-services/traceability/)

 Sustainability Data Exchange Project (SDEX) by sporting goods industry organisations EOG and BSI, developing a sustainability data exchange protocol between brands and retailers. Contact EOG, responsibility@europeanoutdoorgroup.com for more information.

5. Advice for purchasing traceability tools

In this section, we have collected shared learnings from brands, tool providers, industry organizations and other stakeholders. Supply chain mapping and traceability is a quite young technology area with many dependencies - not only on the IT infrastructure but also on corporate structure, data needs, strategic decisions, partner relations and internal policies that dictate how the company operates.

Defining your traceability tool needs

When purchasing a business-critical IT system such as a supply chain mapping or traceability tool, it is highly recommended to both research options and define needs and constraints thoroughly. To get a broad view requires that people from different functions and departments of the company actively contribute with their input. Below are a few findings we have collected from other companies in search of traceability solutions and through information gathering from the tool providers.

Goals and policies affect your traceability tool purchase

Internal policies, e.g., regarding methods and criteria in sourcing, can provide fundamental criteria for the traceability tool choice. Firstly, it is important to establish what key challenges you are addressing when looking for a supply chain mapping and traceability tool, and to create a priority order so you can assess the offers based on your internal needs, rather than having the tool provider’s sales pitch telling you what you need. The increased legal demands can guide your goal setting, but your internal setup and sustainability ambitions also defines your level of commitment and approach to different aspects of traceability and transparency, which in turn affects your requirements on chosen tools.

Example: Matching tools to your workflows

One of the interviewed brands chose to not use a common traceability tool because it has a “top-down” data structure, starting with a product’s bill of materials (BOM) and creating a tree structure upstream the supply chain. Their sourcing is based on

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very strict sustainability criteria, starting with a long onboarding and approval processes “bottom-up” where the material suppliers are first approved as a company, then their materials before they are nominated and can enter a BOM. This has led them to look for a system or two parallel tools which can work independently with the BOM structure/product traceability and the supplier and material registers, to manage the onboarding process.

Textile specific vs generic traceability tools

Should you choose textile-specific traceability tools or more generic traceability tools? This does to large extent depend on your line of business and what product segments you are active in. If textile products are all you do, then textile-specific tools can have some advantages by being structured for your needs and ideally having prepared integrations with other textile-specific tools. But integrations are still not very well developed, so you will need to assess them for each tool.

If you have products of mixed textile and non-textile materials, or a mixed portfolio of textile and hard goods products, you may find that some textile tools can be too narrow in product/materials/process scope for you. Some tools are very strictly built around textile definitions of materials, referring to fibres and processing steps only found in textiles. Using them for other product segments, materials or processes may prove challenging.

Example: Advantages of a broader-scope tool

There can also be a positive carry-over effect in development speed and market spread for the more generic tools. One of the interviewed brand representatives, who have assessed several tools, stated:

“Systems coming from non-textile backgrounds seem to be pivoting quicker than the textile counterparts. Example: Tilkal is very flexible across food/drink/ cosmetics, and now also very strong in textiles. Such a platform gives us more optimism to capture our complicated products (i.e., tents, skis, etc) in the future, than the platforms who are stuck in thinking about yarns and dyeing. This also applies to

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Figure 5 shows an overview of their data structure based on the onboarding process. Figure 5. Data processing flowchart for traceability. In this company, the onboarding process of suppliers and materials requires registering suppliers in the systems many months or even years before their materials appear in a Bill of Materials (BOM) or enters the market.

Higg and OAR (now named OS Hub) who are doing well to pivot away from ‘textiles only’.”

Questions to ask the supplier

Below we have collected a set of questions to use in interaction with a potential traceability tool provider. You will need to adapt the question to your situation and need.

Data management

 Who can input data into the tool/system? Is it only within the brand, or can upstream and downstream partners also input data for a product, material, or process? Does the collaboration go beyond direct partners, i.e., multi-tier traceability with direct input at the data sources?

 What level of granularity does the system allow in traceability – supplier, article number, production batch or unique product?

 What solutions for consumer communication do the tool provider have – to make traceability data or aggregated impact data part of consumer-facing transparency?

 Preparation for circularity: How do they provide sharing of consumer-facing data (product data, materials, care & repair, second hand services, etc) as well as important supply chain information needed for the end-of-life treatment of the product (garment collection, recycling facilities, etc.)?

 Do they have some kind of impact assessment in the system? What impact categories and what impact data sources are they using?

Legislation

 Legislation and regulation development as a factor for tool choice: which national, EU and non-EU regulations are already integrated in the tool?

 Is the tool provider proactively working with new regulations in e.g., EU projects and government stakeholder dialogues, or passively waiting for the new legislation development? Do they have a method for assessing and implementing new regulations?

Partnerships, collaboration

 Ask for a list of their “ecosystem” partner organisations (i.e., EOG, Textile Exchange, etc) and platform/system integrations. Some tool providers are more embedded in your industry than others. If several providers offer the same services, the preference will most likely be one who is embedded in your current industry setting.

 Ask for a list of key customers. It can give you some confidence and reference to their target customer. It can also indicate their business approach – each market segment is different in terms of customer size, brand/product value, product complexity, circularity approaches and main impact drivers. If it is a generic tool with customers from other industry sectors, they may still have some of the other parameters in common with you.

 Ask for their approach to systems integration, data exchange and standardisation

Automation of data management is a crucial point, both internally and externally. A supplier or retailer need to manage data exchange with hundreds of brands with different systems, so this is important align, through projects like CIRPASS, partnerships and joint standards.

Learnings from the industry

Based on an industry workshop with follow-up survey and interviews, the industry status in 2022 can be briefly summarized in four points:

 Key drivers for data collection are legal requirements, sustainability reporting and internal risk assessments.

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 2/3 of the survey respondents claim traceability to Tier 2, but only 1/4 of the survey respondents collect data further upstream.

 Getting data from Tier 3 and 4 is also listed as the main challenge in traceability, followed by the volumes of data needed to collect.

 Excel is still the dominating tool for supply chain mapping and traceability, followed by PLM/PDM systems.

In our interviews we found more detailed learnings about implementation of systems, which has built a foundation for Chapter 3, 4 and 5. Specific tools were mentioned as examples in these interviews, but the knowledge of these tools is still low due to short time in service or lack of headto-head comparisons, why we have not been able to draw any conclusions about the performance or handling of specific tools.

6. Traceability as a driver for sustainability

Traceability is not an end goal, but a means to get accurate data for follow-up, analysis of effects, more in-depth sustainability efforts and communication of both challenges and achievements. All traceability work must be related to the company’s overarching sustainability challenges, goals and strategies, not to get lost in unnecessary or inefficient data management.

Often, the raw data collected in a supplier mapping or traceability system is not direct sustainability impact data but can be used to calculate or assess different impact categories like social impacts, water, chemicals, climate or biodiversity. Many of the current tools have some kind of impact data, either primary or secondary (Figure 6).

31 of 80 tools in our study claim to make sustainability impact assessment, in these impact categories:

 Working conditions (18)

 Climate (energy & emissions) (16)

 Water use (10)

 Waste (10)

 Chemicals (7)

 Land use (4)

 Biodiversity (3)

For example, a supplier may not themselves have calculated their GHG emissions for your production but can often give you the energy source and consumption which simply can be converted to CO2e values with a climate emissions factor. In some traceability systems, there is in functionality for either collecting sustainability data directly or calculating it from other traceability data with built-in emission factors and algorithms.

Sustainability in a textile context

It is of course important to know which relevant impacts to target when using traceability tools in the sustainability work. For each specific supply chain, the impacts and risks may vary why a sustainability risk assessment can help sorting out the hotspot impacts and the key supply chain actors. For textile-specific supply chains, there are a few impact categories that stand out.

Climate: The textile industry has a close connection to oil and polymer industries for synthetic raw materials and chemicals, as well as energy-intense production in countries with a high dependency of coal, oil, and natural gas. Global transports by air, sea, road, and train add to the greenhouse gas emissions.

Land use and biodiversity: For plant-based and animal-based textile fibres, natural rubbers, leathers and in the transition to more bio-based feedstock for synthetics, there is a growing pressure on agriculture and forestry with risks of land-grabbing, monocultures, and soil depletion.

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Figure 6. Impact data that can be collected or calculated by traceability tools.

Social impacts and working conditions: Textile processing and garment production still requires a high amount of manual labour and craftsmanship in many parts of the supply chain, with a need for traceability and auditing to verify working conditions and safety and health for textile workers.

Water and chemicals: Processing, from raw material to finished textile, is energy, water and chemical intense, making these areas key impact categories when implementing traceability. Chemicals may be one of the most challenging areas of traceability since they enter the supply chain at every level, come from many different sources and are often hidden in secret formulation recipes or used under confidentiality agreements.

Waste, emissions: In every supply chain step, there is production waste and particle, aerosol or liquid emissions that needs to be monitored. Waste has a big impact on local ecosystems and can be an indicator of efficiency and productivity. Emissions can also be linked to effects on local ecosystems and health among workers and in the local society.

Traceability for circularity

Traceability for circularity can increase the demands on data drastically (see Chapter 3 for details). This is also reflected in the Digital Product Passport development on EU level (see Chapter 7). We have identified four data requirements that may raise the bar:

- Tracing on ingredient- and process level (for e.g., better recycling)

- Tracing to unique product item (for service, usage, rental etc)

- Data accessible in full value chain (both upstream and downstream)

- Unique physical tracers for each physical product

Climate and traceability

Climate is currently one of the strongest driving forces for many decisions in the sustainability teams. The demand for actual climate-related supply chain data is introduced immediately when considering communicating impacts and environmental benefits towards consumers, to assure that the benefits are directly linked to the product and its current supply chain.

The embodied carbon emissions in materials and products are among the first data that will become fully mapped throughout the supply chains. The most accurate carbon emission numbers, however, need both traceability on a detailed level and calculations according to strict international rules, and backed with LCA data and emission factors. Standards like the GHG protocol and ISO 14025 for LCA methodology are keys to achieve this, together with backing databases for scientifically sound emission factors and LCI data. Very few will for a foreseeable future be able to make climate calculations on this level and will have to resort to a mix of actual traceability data combined with more generic emission factors and best-practice estimates. It is recommended to get expert guidance when setting up climate calculations for the first time, through an initiative or expert consultant.

Out of 80 traceability tool presentations:

 16 mention Climate as an impact category

 7 mention Energy use as an impact category

Figure 7. Climate impact data in traceability tools

The mix of actual data, generic database factors and standardized methodologies can provide some challenges in terms of the amount of work needed to fully verify a climate emission statement e.g., in a marketing claim or corporate report in accordance with stricter legislations on green claims. They can also offer a challenge to correctly represent the actual situation, because geographical or process specific data is missing. When calculating impacts and environmental benefits, there is always a simplification and an uncertainty factor to include. With the use of natural fibres such as cotton, wool or lyocell, the complexity increases because of factors that are not currently well integrated in the LCA methodology, such as biodiversity and ecosystem effects from

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different agricultural methods which can have big impacts on carbon uptake or release as well as water and nutrient retention. More work is needed in this area.

7. Traceability in legislation and regulation

The textile industry has until today had quite low legal demands for verification of origins, product integrity and ingredients in EU, considerably lower than other industry sectors like electronics. With the upcoming EU Green Deal, and the EU Textile Strategy, the textile industry will be affected in mainly three ways by new legislations and regulations (Delogue, 2023):

- A broader responsibility for all products put to market, with a legal obligation to consider the afterlife of them. This is a radical move towards a circular economy.

- Traceability of every component and production step of a product, to ensure upstream control of impacts and enable informing downstream stakeholders about the best recycling options.

- A new, circular approach to design. Versatility, long product life, sustainability, repairability, reusability & recyclability. Plus, stricter regulations on raw material extraction, environmental impacts, and chemical use.

From a traceability perspective, there are so far four key aspects that both EU and US authorities are pinpointing in their development of new regulations (Bonanni, 2023)

1. supply chain mapping - the requirement to know and locate all stakeholders in the product supply chains back to the raw material origins.

2. traceability - collecting sufficient supporting evidence to prove the authenticity of the supply chain and eliminate risk of fraud, counterfeiting, adulteration, or unauthorized subcontracting.

3. independent verification - validation of all supplier-provided data against trusted third-party tools and datasets to identify compliance risks proactively.

4. continuous improvement - establishment of problem escalation and corrective action plan documentation.

EU legislation: A new normal

With over 30 new EU legislations and regulations coming into force in the next 5-7 years, a new normal for consumer goods industries will be established. Below are four key legislative initiatives with a brief description of how they are linked to traceability. They all have various implementation timelines, why it is recommended to read more at:

https://environment.ec.europa.eu/strategy/circular-economy-action-plan_en

EPR: The Extended Producer Responsibility

EPR targets industry waste and makes brands responsible for the environmental impacts of products put to market. The data needed for compliance includes material composition, the emissions and waste throughout the product life cycle, the recyclability, and reusability of the product and method of disposal.

CSRD: The Corporate Sustainability Reporting Directive

CSRD requires large businesses and publicly listed small companies to report on environmental and social matters, which will be subjected to audits. It is recommended to start ahead by collecting environmental, social data and governance data in a structured way, to be prepared for audits when the CSRD enters into force.

CSDDD: The Corporate Sustainability Due Diligence Directive

CSDDD establishes a duty to identify, eliminate and prevent negative environmental and human rights impacts within a company and its value chains. For large companies it includes climate

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reporting in line with the Paris Agreement. Supply chain data requirements include greenhouse gas emissions, water, waste, hazardous chemicals, sourcing, and production of raw materials as well as details on the working conditions of suppliers and subcontractors.

ESPR: Eco-design for Sustainable Products Regulation

ESPR focuses on circularity and use of resources, with demands on durability, recyclability, reusability, upgradability, and reparability, as well as recycled content and environmental footprints. Collecting and sharing product data on these characteristics will be required for compliance with the ESPR. To increase transparency for consumers and the whole industry, a Digital Product Passport (DPP) will be introduced for all items.

DPP: The Digital Product Passport

A DPP is a digital dataset, specific to a product, with the purpose to present relevant information about the product through each lifecycle step and contribute to a more sustainable production and consumption. The exact types of data to share in the DPP will depend on requirements from legislations like ESPR and will vary by product type. Since DPP is a general standard which will be applied to a wide range of products, a specific framework for textiles will most likely need to be adapted once the general framework is established.

The DPP idea is to assign each unique product (or product batch) a unique ID, which can be accessed through a physical tracer which is attached to the product – e.g., a QR code, NFC, or RFID tag. A standardised protocol enables automated data distribution between different actors in the value chain. There will not be a central registry for DPPs but a requirement to follow the standard and make relevant data available to the stakeholders that need it.

The DPP data will primarily focus on enabling circularity. In the development work for DPP, some data requirements have been suggested and will be decided through stakeholder dialogues.

 composition information

 repairing information

 social compliance (uncertain)

 certificates such as GRS, bluesign or GOTS will most likely not be a minimum requirement, since it needs to be feasible for all sectors, but certificates will be important as verification where available.

The legislation about DPP will be implemented in the EU between 2025 and 2030, with textiles as one of the first product categories. The DPP framework will be a crucial set of requirements for any traceability system when finished, as it will determine some of the legal demands for traceability.

When searching traceability tool providers’ information about DPP and asking customer service representatives, four common types of responses emerged. In Table 1, we list the four responses and our interpretation based on the DPP development status in spring 2023.

Information/response Analysis/recommendations

1. No info on website / no response

Not finding anything in their communication about DPP should raise a warning flag to anyone investing in traceability for future legal compliance.

2. ”We are fully DPP compliant…” Full DPP compliance is very hard to promise today since the standard is not fully developed. It is likely that they do not understand the full extent of DPP implementation.

3. ”We have people following DPP closely to be ready”

Indicates a serious, but maybe not the most proactive approach. Can be followed up by asking for details about their DPP monitoring.

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4. ”We are part of the [CIRPASS] project, pushing DPP development”

Indicates a leading position in the traceability field from a legal perspective. They will likely be first in line when trying out DPPaligned standards, functionality and integrations. Table 1. Level of DPP information from a tool provider, with suggested interpretation.

The CIRPASS project has more resources for anyone wanting to understand more about Digital Product Passports and the requirements for supporting tools. A report/list of “DPP-oriented reference architectures” was published in July 2023, containing several tools in our list. It can be found on this page: https://cirpassproject.eu/project-results/. A more thorough definition of DPP can be found here: https://cirpassproject.eu/factsheets-and-publications/

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References

Bonanni, L. (2023, 03 12). Traceability tools overview - the system provider perspective? (J. Svedlund, Interviewer)

Delogue. (2023, 01 16). EU Directives Impacting the 2023 ESG Fashion Agenda. Retrieved from Delogue: https://www.delogue.com/blog/esg-fashion-legislation-2023/ Doyle, M;. (2022). Trustrace. Retrieved from The Traceability Playbook for Fashion Supply Chains: https://trustrace.com/traceability-playbook-fashion-supply-chains

ISO. (2007, 07). ISO 22005:2007 Traceability in the feed and food chain — General principles and basic requirements for system design and implementation. Retrieved from ISO: https://www.iso.org/standard/36297.html

Kumar, V. H. (2017). Developing a framework for traceability implementation in the textile supply chain. Systems, 5(2), 33. RippleNami. (2021, 10 12). Overcoming Traceability Obstacles. Retrieved from RippleNami: https://ripplenami.com/overcoming-traceability-obstacles/ Sandowski, M. (2019, 06 25). Apparel and Footwear Sector Science-Based Targets Guidance. Retrieved from WRI: https://www.wri.org/research/apparel-and-footwear-sector-sciencebased-targets-guidance

Schenten, J. (2019). Traceability as driver for more sustainable chemistry in the Global Textile Supply Chains. Current Opinion in Green and Sustainable Chemistry, 19, 87-93. Retrieved from https://doi.org/10.1016/j.cogsc.2019.08.003

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Appendix: Traceability tool types

Certifications

An independent entity certifies a product, service, or system by issuing a written statement (a certificate) stating that it complies with certain requirements. It is the official attestation or affirmation of qualities of a product, person, or an organization. Often, but not always, a form of external evaluation, instruction, assessment, or audit offers this validation.

Code of conduct

A contractual document between direct supply chain partners, establishing a business governance framework between them. Generally covering topics including Human rights, Working conditions, Health and safety, Environmental impacts and measures, disclosure, and anti-corruption measures.

Contract Lifecycle Management (CLM)

Enterprise Resource Planning (ERP)

Physical tracer technologies

Contract lifecycle management (CLM) handles contract processes: initiation, authoring, process and workflow, negotiation and approval, execution, ongoing management and compliance, and contract renewal.

Enterprise resource planning (ERP) is used by a company to manage key parts of its business such as accounting, manufacturing, sales, and marketing.

Any additive or forensic technology that serves to authenticate the presence of a specific fibre and/or material in each product. Forensic tracers mainly focus on verifying the geographic origin of natural fibres and have less supply chain burden for the user compared to their additive tracer counterparts. Additive tracers have more supply chain burden, but more versatility for the user. They can provide traceability verification of the middle tiers of the supply chain and can work more proficiently with synthetic fibres than their forensic tracer counterparts.

Product Data Management (PDM)

Product Lifecycle Management (PLM)

Product development focused system for managing product and supplier data. Generally simpler than PLM, with less functionality.

Product development focused system for managing product and supplier data during a product development lifecycle.

Sourcing/Procurement software identify, evaluate, and qualify new suppliers

Supplier risk management software

Supply chain management software

Sustainability management system

Sustainability reporting software

Textile communication standard

Supplier risk management is the process of identifying, assessing, and controlling threats to an organization's capital and earnings that are caused by the organization's supply chain.

Supply Chain Management (SCM) is an integrating function that is primarily in charge of connecting key business operations and business processes both within and between organizations to create a cohesive and effective business model.

A sustainability management system (SMS) is a systematic approach that provides guidelines for an organization to evaluate, manage, and improve sustainability by optimizing on resource use.

Environmental, social, and governance (ESG) goals, along with a company's progress toward them, are disclosed and communicated through sustainability reporting, typically in accordance with a predetermined standard, such as GRI.

A tool to harmonize all product data into pre-defined categories, making it machine-readable and automating exchange between different systems.

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