The compliance catalyst: Navigating the landscape of regulations and standards while developing traceability

Learn how multi-tier transparency can help fashion, apparel and footwear organizations to stay compliant.

Regulatory compliance is a non-negotiable part of doing business in any industry, but that doesn’t mean it’s always straightforward. For those in the fashion, apparel, and footwear sector, a new set of regulations and changes to existing policies could serve to complicate operations over the next few years.

Despite generally positive predictions around growth and performance, those in the fashion and apparel industry face a rising challenge: demonstrating traceability. Previously just a ‘nice to have’ factor, being able to track the origins of materials used to create clothing is about to become essential. Soon, failure to show requisite evidence from each tier of the supply chain could result in fines, reputational damage, supply chain disruptions or the inability to sell products in certain markets.  

However, far beyond avoiding penalties, there is a wealth of opportunity to be unlocked for those that manage to achieve this. The ability to demonstrate responsible, sustainable supply chains and support product claims stands businesses in good stead with increasingly eco-conscious customers, while reducing risk by making decision-making more data driven. 

But what regulations should organizations in this arena be aware of if they want to achieve this? 

Regulations to look out for

Regulatory changes happen frequently, but the following three are perhaps the most pressing for those in the fashion, apparel, and footwear industry.

• EU Digital product passport: This new ruling, soon to be mandatory, requires businesses with European supply chains to create unique identification details for every product. This means that information about the origin of the product, where and how it was made, how it should be disposed of, and more need to be immediately available for every SKU.

This policy stands to massively boost traceability. But in order to stay compliant, businesses will need to implement serialized item or LOT/batch tracing to ensure that this level of precision in tracking can be achieved.

• UFLPA: The Uyghur Forced Labor Prevention Act is a United States federal law that applies to all businesses trading there. Implemented in December 2021, this policy means that the U.S. now makes a “rebuttable presumption” that all goods manufactured in the Xinjiang region of China were created by forced labor. These products are now banned from entering the U.S., and the potential for sanctions to be imposed on any foreign body that knowingly engages with forced labor of this nature. 

This means it’s essential for businesses operating in the U.S. to have solid traceability measures in place, as not being able to prove that a product was not produced via forced labor could have significant consequences. 

• German Supply Chain Due Diligence Act: This new law means that organizations operating in Germany with over 1,000 employees must adapt and update their operations to accommodate human rights and environmental concerns across their supply chains. This involves identifying, assessing, preventing and remedying risks in these areas throughout each arm of their chain, with fines and sanctions possible for those who fail to comply.

Organizations will need to ensure multi-tier traceability in their supply chain to ensure that this is possible, as having a detailed, holistic bird’s eye view of every stage makes it easier to identify areas of concern. 

How can businesses stay compliant?

With those regulations in mind, let’s explore how to get closer to meeting these new standards. 

Ultimately, it comes down to developing multi-tier traceability. Without this, being able to make sustainable product claims and demonstrate responsible sourcing across your supply chain is near impossible. But where should organizations look when it comes to making changes?

A great place to start is modifying your data and intelligence procedures – both crucial factors within the tracing process. Sourcing data about a product’s origin beyond tier one of a global chain can be a struggle, meanwhile processing this information at scale once you finally have it on board is time-consuming and leaves your system vulnerable to human error.

However, through a combination of automating data capture and giving suppliers a single platform to upload information to with traceability software, you can take the strain out of understanding your chain. By reducing manual admin and encouraging supplier participation, you improve the quality of data captured, make it easier to communicate with every part of your chain, and acquire an efficient way to track your product details – thus increasing traceability overall. 

In turn, this serves to bolster sustainability efforts. For fashion, footwear, and apparel businesses in particular, meeting regulatory requirements is critical for showing customers that they can trust your products were made responsibly. With 57% of global consumers stating they have seen false or misleading information about sustainable actions taken by brands in the clothing and footwear arena, being able to prove that your organization walks the walk when it comes to eco-consciousness is key. 

How to get the ball rolling

While multi-tier traceability can be challenging to achieve, businesses in the fashion, apparel, and footwear industry should be mindful that the best time to get started is today. It’s the organizations that act now in starting their journey towards traceability that will be in the best possible position to reap the rewards on the road ahead. 

Why not get started today? Unlock your next steps and discover how to make multi-tier traceability a reality for your organization in our latest eBook, ‘How fashion, apparel and footwear can begin the journey towards traceability and multi-tier transparency’.

Download eBook here.