Blockchain’s Future in Fashion

From their supply chains to their manufacturer lists, it used to be that companies never disclosed what goes onbehind closed doors. But in the wake of ethical issues and consumers’ wallet activism, the tides of the fashion industry, which undeniably has an image issue, are rapidly shifting.

Thankfully, the red alerts haven’t gone completely unnoticed. Popular brands like Patagonia and Everlane are leading the path towards full supply chain transparency. These are all important steps on a micro level, but significant change on a mass scale requires more than individual action — it needs a fundamental shift in the way things are done in the industry.

The silver lining, however, is we now have new innovations like blockchain technology, which can help address institutional problems on a global scale. As the blockchain continues to advance along with other technologies like Artificial Intelligence (AI) and machine learning, the fashion industry is set for a dramatic pivot.

What is blockchain, and how is it relevant to fashion?
Blockchain technology might sound intimidating, but it is simply a decentralised accounting tool that can process and log data at rapid speed and secure immutability. It has since disrupted many industries — from healthcare and agriculture, to education and entertainment. By removing the chance for human error and fraud risk, it can give the supply, production, and distribution chains a much-needed upgrade and help lessen the wasting of resources.

Thus, supply chain management gets the biggest slice of the blockchain pie. It is one of the most promising application for fashion brands, who can use it to bolster the tedious task of inventory management. But while the concept of tracking technology isn’t exactly cutting-edge, what this means is that there will always be an indisputable copy of the order, stored in the ledger. It cannot be changed, destroyed, or altered in any way because of the blockchain. Therefore, blockchain is also the ideal technology to provide consumer facing insight into the fashion supply chains and to (re)gain the trust of consumers by allowing them to see where their purchases exactly come from. For instance, the following example of a blockchaincompany assisting labels with their unique smart labelling system clearly demonstrates this.

The technology also stands to address longstanding issues of counterfeitproducts and brands, which rob the industry millions of dollars. Blockchain technologycanhelp owners and retailers easily verify product authenticity. Itworks by creating a digital trace of physical items and binding them with areal-life transaction. Similarly, blockchain can also help with intellectualproperty rights protection through smart contracts.

The long road ahead
Undoubtedly, blockchain holds plenty of promise.  Heinz Zeller of Hugo Boss spoke about the subject and his company’s role in it at the 34th IAF World Fashion Convention in Maastricht last October. Together with other companies, they are attempting to harness the blockchain to enable transparency, achieve better buyer-supplier collaboration, and turn the future of sourcing on its head.

However, blockchain has a long way to go in terms of mainstream adoption. Fortune reports that regulatory agencies have yet to catch up to the evolving system, while many are unable to reach a common ground on blockchain’s place in the future of the international commercial ecosystem. This is crucial if blockchain has any hope of getting the wheels turning on a mass scale andbecoming the next new global standard.

Article exclusive for IAF by Jennifer Birch