Sourcing at Magic: Traceability and Logistics Technology Takes Center Stage

Kate Nishimura
·6 min read

The adoption of retail technology has accelerated in recent years, with fashion firms turning to various tools for 3D design and workflow management as a means of driving efficiency. But at Sourcing at Magic this week, service providers focused on supply chain transparency stole the show.

As the industry works to develop more sustainable supply chains and drive social compliance, “The immediate need is traceability,” the event’s vice president, Andreu David, told Sourcing Journal. Recent legislation like the Uyghur Forced Labor Prevention Act (UFLPA), along with anti-greenwashing measures in Europe like the Corporate Sustainability Reporting Directive (CSRD), are forcing brands and retailers to develop a more sophisticated understanding of their value chains than ever before.

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That’s not something most companies can do on their own, according to Inspectorio head of creative products Antonio Leon de la Barra Rocha. “There is a gap that exists between the operational realities of manufacturers, and the reporting requirements of brands and retailers,” he said. The software provider serves all of those parties, digitizing production, sustainability and compliance monitoring processes and centralizing them on a single platform.

But the methods companies have been relying on for years, like Excel files, email and project lifecycle management (PLM) tools, have proven both insubstantial for the degree of monitoring required and cumbersome when dealing with multiple customers, Leon de la Barra Rocha said. “We’ve created a network platform where suppliers and factories have their own accounts, allowing them to manage production monitoring and traceability, and collaborate with multiple different clients,” he added. ““They need to know whether what’s being produced is of high quality, if it’s being produced on time, and if they’re adhering to the environmental and social standards that they set in place.”

Inspectorio has seen a surge in interest amid the implementation of new regulations. “Overall, executive attention has changed,” the creative products lead said. “It’s now laser-pointed on traceability.” In the U.S., the UFLPA has enterprises scrambling for solutions out of fear that their shipments from China could be detained. But “siloed efforts” to create the right documentation for CBP are a “band-aid” on a much bigger issue with supply chain visibility. The platform allows companies to integrate existing data from purchase orders with chain of custody, supply chain due diligence, and risk assessment reporting.

It is also deepening its ability to help companies spot potential issues in the supply chain before they materialize, with the implementation of generative AI. The company’s corrective and preventative actions (CAPA) recommendation tool delivers guidance to brands by synthesizing their historical data and pinpointing known problems, allowing them to devote more resources to high-risk areas. This reduces the need for time-consuming manual investigations into product quality and compliance, Leon de la Barra Rocha said.

The traceability technology sector has blossomed even since a year ago, Pivot88 North American director of business development Jono Blackmore said. “I think there’s a lot of innovation in the space,” he added. “It’s been the biggest topic of conversation, and it’s not going anywhere. Brands are really investing in this today.”

The digital platform, which was launched in 2014, was originally intended for industrial clients. But since then, apparel and footwear brands have flocked to Pivot88, now making up about 85 percent of its customer base. “That became our fastest growing vertical in the company.”

Detentions at the border are the biggest source of anxiety for brands, he believes, and the only way to mitigate that risk is through exhaustive documentation. “Getting the documentation for every single purchase order mapped, and being alerted to risks in real time is what our solution is doing.” Quality and compliance processes, lab test data and raw material traceability are integrated into a 360-Degree Dashboard.

AI sifts through hundreds or thousands of documents, beginning with purchase orders and other sustainability and compliance reporting from Tier 1 suppliers, scanning for keywords that could represent risks, including a product’s region of origin, entities blacklisted by CBP, and other suppliers that companies have determined they’d like to avoid. Assessment takes place as soon as a purchase order is issued, so “brands have time to address any potential risks” before the goods are even produced.

Blackmore believes that fast-moving sustainability legislation across the globe is also prompting governments to develop new standards for data reporting. “That’s something that we’ve hired experts to help us get in front of, and we’re learning how we can help support brands to capture all that data.”

Meanwhile, Flexport-funded Silq, a modern inspections company and freight forwarder, has capitalized on the industry-wide interest in supply chain diversification, founder and CEO Ram Radhakrishnan told Sourcing Journal. “We help manage production quality, compliance and on-time ship-out,” consolidating company and logistics data to create the most efficient shipment plan, he said.

“The main attraction here [at the sourcing show] is that a lot of brands, more now than ever, are starting to think about a dual sourcing strategy” that includes sourcing locales outside of China. “For a long time brands had this ‘don’t fix what’s not broken’ mentality,” he said. But even the most tried and tested sourcing model can break.

“A migration is happening,” the executive said. “If you don’t have enough knowledge of these markets, it’s pretty anxiety inducing.” Silq acts as a “support system” for fashion brands, taking on factory evaluations, inspections and product quality assessments with boots on the ground in seven countries including China, India, Vietnam, Indonesia, Pakistan, Bangladesh and Sri Lanka.

At the show, Silq debuted an AI-based tool called Migrate With Silq that allows brands to develop a sourcing and logistics plan for a product within minutes, using just a few key words. After plugging in terms like “women’s dress,” and “cotton,” along with a country specification for sourcing and number of units desired, Silq generates a Harmonized Tariff Schedule (HTS) codes and provides a full breakdown of landed cost, including production, transport and duties.

Supply chain migration is a trend that Radhakrishnan believes is only poised to accelerate in the coming years as brands try to mitigate risk, but most aren’t independently equipped with the time, resources or budget to develop a new sourcing network or logistics plan. “It’s a cutthroat, thin-margin business,” he said. But the pandemic and all of its reverberations have forced a shift. “They are taking the supply side of the business more seriously.”

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