New Business Models: Exploring the Idea of A More Sustainable Supply Chain

Whether fashion businesses are ready for it or not, it has been prophesied that a new world is emerging. These fundamental changes could potentially wake up the industry to the fact that the time has come to reject traditional business models, in favor of new and more ethical ones. Although the fashion supply chain is complex, the adoption of new business models could lead to a transition that allows the industry to explore the idea of an ethical supply chain. By doing so, the industry could, in theory, start to rebuild fashion businesses with a social and environmental mindset.  

Could There Be Such a Thing as a ‘New Business Model’? 

The demand for new business models has so far been driven by the circular economy, fair trade, reduced consumerism, and sharing economy. With an unexpected shove from the COVID-19 pandemic, we are seeing more new business models being generated through conversation and co-innovation. It is a direction that could potentially change the system and open doors to circular practices. 

The good news is that new technologies are making it easier to redesign business models that not only cater to the environmentally and political generation but also improve the long-term sustainability of the fashion supply chain.  Fredrik Timour, Head of Fashion Innovation at Swedish Fashion Council, told Suuchi that he believes that the digitalization of the fashion industry is the way forward.

“I believe the industry needs to adopt more resilient business models with recurring revenues. This, in turn, is a great way of lowering the volumes and becoming more sustainable and at the same time increasing revenue”, he explains. Also, Timour sees technology playing a vital role in new business models: “Technology’s part in new consumer services and business models include asset tracking to clothes directly connected to the internet. Also, simple RFID tags will be needed to be able to sort fabrics for recycling.” 

Also, looking at the role that technology plays in the development of new business models is Lawrence Lenihan. The co-founder of Resonance declared in a recent Entrepreneur article, “Fashion’s business model is broken”.  In the write-up, he argued that the main problem today is that the general business model used by fashion companies is based on technology mostly developed in the ’90s or earlier. “It stifles rather than enables innovation”, wrote the chairman of a technology-based, vertically integrated fashion holding company. Lenihan also points out that “systemic change will not happen if investors and businesses continue focusing on incremental innovation in the last mile.” 

Exploring Long-term Sustainability 

The initiation of sustainable practices throughout the supply chain is not going to be an easy feat. This is because from water and chemical use during fiber, yarn and textile production to CO2 emissions during the manufacturing, distribution, and consumption of clothing, each stage exerts environmental impacts. One of the ways of supporting sustainable practices in the fashion supply chain is through the deceleration of manufacturing. This will require fashion brands and retailers to look at other avenues for opportunities and growth. 

Continuing on the path of exploration, associate Professor Kirsi Niinimäki at Aalto University believes that slow fashion is the future. “We need a new system-wide understanding of how to transition towards this model, requiring creativity and collaboration between designers and manufacturers, various stakeholders, and end consumers,” said Niinimäki to The co-author of a new research paper, The environmental price of fast fashion,” published in Nature Reviews Earth and Environment concludes that to move forward, we need to move away from fast fashion and head towards slow fashion. By slowing down manufacturing volumes, we will be able to incorporate sustainable practices throughout the supply chain. “It is a systemic change that could improve the long-term sustainability of the fashion supply chain,” explained Niinimäki.

When it comes to challenges faced when trying to secure long term sustainability, Amsterdam-based expert Pim Kneepens, explained in ‘Transparent report’ by Zalando: “It is quite complicated to create a robust, cost-efficient and end-to-end traceability solution that requires minimal changes to the way factories operate.” The former Fashion for Good Innovation Manager continued: “Given that some brands are operating with very narrow margins, they might not have the flexibility to experiment with these solutions.” Other challenges include changing consumer behavior, which involves decreasing clothing purchases and increasing garment lifetimes.

In the end, there is no denying that change is kickstarting a pivotal moment in the fashion industry.  We are moving away from preserving a broken system by taking a more collaborative approach to developing sustainable business models. It is like the industry has finally seen the light, and has started to make progress like working with policymakers to modify legislation and investing in cleaner technologies. I think the future will be built on the fashion industry developing new business models based on prominent trends like sustainability, upcycling and forward-thinking consumers who expect brands to have ethical credentials. In doing so, an industry that has not changed much in the past 25 years will slowly be transformed from a system that no longer fits into a new normal where technology empowers creativity.

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Written by Muchaneta Kapfunde


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