In his latest piece for WhichPLM, Yotam Solomon (resident Expert here at WhichPLM) discusses a new age of sourcing – an age in which materials could become fully reusable (if we work collectively as an industry to achieve new C2C standards), sourcing can be done through imagery software, and AI can combine with social media to create consumer-to-consumer conversation for the first time.
One of the biggest issues in today’s manufacturing industries is the wide chain of sourcing and distribution. Materials and components are sourced from all around the world, creating a complex map of operations. This is important, not just because of the environmental implications but also because it increases costs and raises prices, as freight can allude to 30% of a single product cost. Today our industry is obsessed with growth, while people are eager for materialistic consumption. This trend works well for big corporations as they carry obligations to increase sales for their shareholders, while disregarding business ethics. At the same time, consumers are eager to purchase more than ever and tend to buy in excess. This directly affects the way modern products are sourced and not how they should be sourced and resourced.
Since shareholders demand sale increases, as an industry we make baby steps to achieve better sustainability standards and cradle-to-cradle (C2C) manufacturing. Companies are beginning to realize that updating their mission statements and business plans to allow for ethical conduct and sustainability standards will ultimately lead to higher profit margins, freight cost reductions, and increase in sales. Domestic and local manufacturing will become an essential part of production of goods, allowing companies to comply with new regulations, reduce costs, sustain local labor, and support a triple bottom line. At the same time, corporations will minimize waste by reusing renewable products instead of recycling only a small portion of items. There is a potential incentive for fashion companies to have merchandise returned by customers for reuse. This incentive does not exist yet as fashion products cannot be fully recycled or reused. Material innovation will allow for reusable components and processes that will enable companies to easily reuse products and generate monetary value while reducing waste and ultimately eliminating waste completely.
Although we are far from resourcing and reusing fashion goods, there is a great potential that can be achieved with appropriate development. Simple products are produced with many materials, chemicals, dyes, and in some cases adhesives. These components come from all over the world, creating an enormous supply chain map and an even bigger footprint. Materials are shipped back and forth around the world until they reach their final assembly location, at which point they are sent across the world yet again to a retailer or directly to a customer. Even more troubling is the fact that manufacturing a simple shoe can take up to 100 different materials. The unfortunate reality is that, in most cases, materials and chemicals are synthetic and therefore far from renewable or fully recyclable. It is my job to develop new material innovation solutions to replace synthetic and harmful materials. I am developing sustainable C2C solutions for plug-and-play manufacturing by matching performance metrics, texture, look, and feel standards. Materials could become fully reusable if we work collectively as an industry to achieve new C2C standards.
The global supply chain is a highly complex web of resources, which is why most manufacturing companies have extensive sourcing departments to handle procurement and production logistics. Some materials, such as minerals and fibers, are derived from natural habitats; these natural materials are extracted and collected from all around the world. The natural elements must be shipped around the world as they are only farmed in specific regions. On the other hand, materials that are made synthetically have the potential to be made regionally. Unfortunately, the manufacturing of conventional synthetic materials involves waste and therefore is mostly done in developing countries. Developing countries offer cheap labor and lack environmental laws and regulations, unlike developed countries where manufacturers would be heavily penalized for the release of toxins to the environment. In some cases, developing countries have destroyed their environment by producing these synthetic goods. One example is China, where new environmental laws and export taxes have been created to reduce pollution. The fact that some manufacturing countries are changing their exporting and environmental laws only creates more difficulty for sourcing companies as renewable materials and C2C production is not yet available in western countries.
Sourcing is also affected by trade agreements, tariffs. Exporting and importing regulations determine if companies will manufacture domestically or abroad. United States politicians claim that they are focused on re-shoring, which contradicts the purpose of the Trans-Pacific Partnership (TPP) free trade pact. The deal, forged between 12 countries, is meant to stimulate trade by reducing tariffs and other costs associated with imports and exports. Most critics see the TPP as a further elimination of local jobs and even more offshoring production. Creating a sustainable and renewable material based production will not only allow industries to farm locally, but also produce, process, assemble, and finish products domestically. Companies aim to maximize profit and tend to offshore their production in order to yield higher profit margins. In the United States, fashion production labor has plummeted, except for growth in customization-based jobs. Investing in C2C innovation will create standardization that will allow companies to offer local labor and engineering positions. Governments can transform sourcing and increate local work forces by creating incentives for domestic companies.
Sourcing can also be done through imagery as software can identify data based on imagery that is captured for user interaction. ‘Edited’ is a data analytics company specializing in fashion. Its software has been recognizing apparel products in images, resulting in classifying products. ‘Edited’ has generated a data bank including 60 million fashion products collected from over 30 countries in over 35 languages. This data can all be analyzed and searched with the click of a finger. By allowing consumers to conduct business directly with other consumers, sourcing through imagery is already transforming how business is done.
The final piece of a consumer-to-consumer conversation is chat bots. These allow message exchanges in many forms, such as images. Today, 40 million people on the Chinese micro blogging platform ‘Weibo’ are using Microsoft’s ‘XiaoIce’ chat bot. In essence, imagery software could be utilized on any scale from sale point search engines and manufacturing component sourcing to procurement operations. Software could determine the best C2C practices and search for results based on the renewability and sustainability of a product. This could revolutionize how companies design and create products.
Thanks to the Internet, sourcing is becoming a consumer-to-consumer conversation for the very first time. Artificial intelligence (AI) is already determining purchasing patterns for big retailers, allowing companies to maximize on full price sales. Online shopping will become a conversation where the end consumer describes a product of their desire and an AI-powered search engine matches and sources the best possible outcome. All professionals across the supply chain from manufacturers, designers, merchandisers, and buyers can utilize AI for increased efficiency and faster operations. In fact, AI will be able to predict what customers desire before they even know it themselves. AI has the ability to make predictions of particular implications for trends; this can be done to determine colors, materials, and sizes per specific country or city. When Al is combined with social media, the options are limitless, allowing a conversation to happen organically between everyone around the world. Human interaction software combined with C2C standards could create algorithms that will change how our society generates innovation forever.
In the next few years, we will see a new age of sourcing. This could be seen through raw and/or new sustainable materials, biodegradable packaging, and also consumer-to-consumer based sourcing. Today, fashion is suffering due to a lack of change adaptation and the demand for fast fashion. Both aspects work directly against supporting a healthy economy. Labor workers are underpaid, toxic materials destroy the environment, and in the end our society pays a heavy cost for over buying of cheap disposable goods. Business pioneers are recognizing that these business practices must change. Most consumers don’t understand the flaws of fast fashion, dirt-cheap pricing, and counterfeits. Buying fake goods damages the environment and supports terror groups, organized crime, drug smuggling, sex trafficking and child labor. These goods are sourced like any other product aside from the fact that they don’t pass proper inspection and no tax is collected, which translates to less money for schools, hospitals, parks and other social programs.
Sourcing has a great potential and consumer-to-consumer interaction will be one of the first steps to sharing more data, understanding quality, and shifting to locally made and locally sourced products.