This is the second issue of QC’s series on the Digitization of Fashion. While in the first article we talked about how the Internet of Things is changing the way we engage with fashion, this week we will look into how blockchain can take transparency, traceability and accountability to the next level.
Over the past months, the term blockchain has been buzzing around a lot on the fashion scene. Before I looked into it, I had some vague idea that it must refer to a tech innovation somewhat related to big data, but in my mind I could only picture Diane Lockhart’s (The Good Wife) and Diana Trout’s (Younger) amazing collections of necklaces.
In truth, blockchain is one of the tech innovations that has the most promise to bring full supply chain transparency to fashion… if the industry can find a way to reorganize the supply chain in a way that’s compatible with the blockchain.
How blockchain works
Blockchain technology first appeared following the 2007 financial crisis that revealed a flawed system whereby banks and public institutions could neither be trusted to be transparent as regards to their transactions nor develop a proper regulatory system to efficiently track and manage financial transactions. Developed to automatically and safely manage the exchange of cryptocurrencies, the blockchain database can keep track of every single transaction between all individuals. With every new transaction, data miners check the entire chain to ensure the accuracy of the information and validate it. Once the information is saved, it becomes immutable.
While blockchain is still mainly used in the financial sector, it is more and more being developed to improve transparency in the supply chain across industries. The key elements to understand about how blockchain technology works are that it’s immutable, decentralized, public and transparent. A ‘block’ contains a limited amount of information which, when it is sealed, cannot be altered, deleted or hacked. As opposed to other data centers, the specificity of the blockchain is that it is not located on a single server but collectively on all the servers of all of its users. The entire data history of the blockchain can be accessed from anywhere, anytime by anyone and could – unless a global catastrophe took down the internet – never be destroyed or shutdown. For that reason, it is the safest way to store data.
Blockchain: the ultimate insurance of transparency and traceability
Still, it is not quite clear how blockchain applies to fashion. What does the industry have to gain exactly from using this technology? The answer is simple: complete and utter transparency. Because no one party is responsible to verify the supply chain data shared, there is no conflict of interest or power imbalance susceptible to affect its accuracy; and, since it can never be altered it can never be challenged.
But the concept relies on a big “if”. If blockchain is used at every stage of the production cycle, from the earliest stages of textile production (say cotton harvests for example) to the sale of the final product, we can have a complete set of information on where, when, how and by whom each product was designed, manufactured, shipped and sold. It would answer every question the customer might have about the product from its actualcarbon footprint to its authenticity.
Aside from transparency in the supply chain, blockchain could also help reduce the volume of waste and dead stock by making available all the metadata related to a product, including where it is stocked. This would make it easier for retailers to track rare items in the luxury sector for instance. It would also help keep track of which companies are making greater efforts to reduce waste and excess production, providing consumers more accurate information to assess the sustainability of each brand.
Transparency: a strength and weakness
Complete transparency should also mean, by extension, complete accountability. With blockchain technology as the norm, there would be no question of whose responsibility it is if working conditions weren’t up to par, if a supplier sub-contracted to a third-party company, or if a shirt was actually made in China, not in Italy.
The main difficulty to overcome, in order to normalize the use of blockchain technology in the fashion supply chain, is paradoxically the fear of transparency, especially in the luxury sector. As an industry that thrives on being ahead of trends, investing in a technology that is designed to be completely open-source is a dangerous bet. It would require that everyone, or at least every major player, get on board – including every company working at any point up or down the supply chain. It is therefore not surprising that the companies that have invested in the technology are few and using it at an experimental level and not a systematic level.