Why Brand–Supplier Relationships Are Failing

Why don't we go ahead and introduce ourselves, and we'll start with you.

Thank you, my name is Christophe Girardier. I am the happy co-founder of a company which name is Glimpact. Glimpact, like global impact, the company with expertise in sustainability. And the specificity of our mission is that we have modernized a new scientific framework of the European Union which defines the, the environmental footprint of product or company in a different way, taking into account not only the stake of climate change but the 16 impact categories of the human activity in the planet. And this framework, we have modelized this because it is on those, on this scientific framework that the European Union adopt different law and legislation. And I will explain, uh, with this conference how this will change the, the global, uh, industry of, uh, fashion. Because Europe, uh, Union is an important part of the market. And what will happen and will become mandatory for all players want to sell, uh, fashion product in the European Union will have impact on other country and especially in United States. So it could be a good way to change and to reinvent the relationship between the brand and their supplier.

Good morning. I'm Miranda Morrison. I work at Steve Madden currently. And I split my time between designing shoes, which is something I've done for 40 years, and working on sustainable product development. So it's a lovely role for me because I get to do things I love half the time, and the other half the time I'm essentially learning— learning and trying to bring positive impact to an industry I love, which I know over time has done a tremendous amount of environmental damage. So that is my sort of— that was my goal when I went back to Steve in September, was that the last however many years of my career would be spent in a positive way for the industry that has done so much for me.

And my name is Alexander Snyder. I am a clinical assistant professor with Arizona State University, which is now ASU FIDM. I've been with them for 5 years, been in the industry a little over 20. My major focus has always been in technical design and technology. And I love coming to conferences like this because I like to see where technology, sustainability, circularity are all trying to meet in that attempt. And I think that that was part of the conversation that we were having earlier. We had an email chain kind of going between all of us, which was starting with where we thought and how we thought a collaboration between brand and supplier could be broken, or is it broken?

I think we all basically came down on the side that it wasn't broken. I think under strain would be a reasonable statement. I mean, the macro— atmospherics have been very challenging for the supply chain. We've, you know, I mean, globalization of supply chain had been sort of humming along and with all the harm it does, but also all the good it brings quite nicely until this tariff situation just threw our world into chaos. But that said, I think that in chaos people reach for familiar hands to help them, and it's not my sense that we are breaking up with our suppliers. I think if anything, we're doubling down to try and help solve these, these unwanted problems together.

And from your perspective, because I find your, um, your point of view very unique in what your company is doing. Where do you see that fit between a brand and supplier collaboration, and how do you see those working together?

Oh, so first of all, as you said, I think the relationship is not broken because those players, brand and supplier, have to to work together. But it's true that the research— this relationship changed a lot. From my point of view, it changed with the effect of two major factors. The first one is the development, very important, of what we call in Europe the ultra-fast fashion. We change radically the relationship, the negotiation with the price issue at the heart of the relationship, which is not a good thing, in fact, you know, with not a lot of value. The second factor is the technology. We see that, you know, that more than 80% of the supply chain of the fashion industry is not in America, is not in Europe, it's external. And those suppliers on which all the industry is based, from India, China, Pakistan, or whatever, those people, some of them have a management of the technologies, other not, okay? And this is the two major factor which change the relationships. But I think that there is another one which will change more, also, which is the stake of the effect of the environmental crisis. I just want to remind everybody here that only the fashion industry is approximately 10% in the contribution of the global environmental crisis. Which is important. Okay? So it's obvious for me, even it's not the case on the discussion in United States, but I think that the stake of the ecological transition of the fashion industry is key. And I think it's good news. Most of the players think it's a constraint. I think it could be an opportunity. To reinvent these resources you consider as broken because sustainability is a complex subject. And I can come back on this during the discussion, but the sources of impact of the fashion industry is not necessarily where you imagine, okay? And if you are a brand and if you claim to reduce the environmental footprint of your collection, you can't do alone that. If I take my shirt, you know, my shirt, which is a brand that you recognize, the sources of impact of my shirt is not the final industrial process of this shirt. The 90% of the impact of this shirt starts at a special part of the supply chain, which is first the condition of production of the cotton, because it's a cotton shirt, and some industrial processes, in particular dyeing process. So all this is 90% of the impact. So you imagine that if I am the brand of this shirt, I need to work with the farmer who create the cotton. Because for myself, only this place, the conditions, the agricultural practice of cotton is at minimum 40% of the impact. So in the relationship, all this ecosystem have to work together. And I think this, the effect of this could be replace this very bad discussion only on pricing, you will replace it by value creation, innovation in sustainability. Sustainability is not a constraint, it could be an innovation opportunity.

And I think going back to the points that you both had made when we were talking about our, um, our own points of views about a brand-supplier collaboration, or is it broken, my area, I saw that it's not broken, it's strained. Because I think that a lot of brands right now, especially with tariffs, especially with a lot of new issues globally that are going on, the brands have more asks. And it's coming at the suppliers in order to make that up. And where— when we started to expand into a globalized market, it was supposed to be mutually beneficial. And now I think the scale is tipping where it's more beneficial to the brand and less to the supplier. And I think that that's where it's strained and it's down to things not even when we're pushing them for prices, we're pushing it to go to market quicker, we're pushing it for better prices. Even with technology. I mean, every company with these suppliers are asking for different technologies that they have to implement in order to work with them. There are a lot of asks for these suppliers. So it's figuring out where the mutual aspect can come together, where we can work together to be profitable, not financially in its soleness, but in business. So a couple of questions, and I think this is a good time to start pulling these up. Is it true that vendors don't want full transparency as they believe brands will use that as a tool to drive the, quote, undesirable?

To drive the undesirable? I'm sorry, that's a question I'm having a hard time—

Oh, yes.

Open to more force in a way that's negative for you as a supplier. People don't want that, right? They kind of like that, "Here's another one, Joel. I give myself this buffer because when things go wrong, or I need that to protect myself." All of a sudden, if that buffer is seen and tried to be removed, there's a negative effect, or perceived negative effect, of that.

Okay, okay. Fender-san, what— hmm, well, it's a tough question. I mean, we all know that transparency is going to be more and more demanded of us, and, you know, as the world moves, albeit slowly, towards digital product passports. But I'm— yes, give us— I'm sorry, yes, please.

Yeah. [Speaker:CH] I'm not normally known for being quiet, but so coming back to the bill of labor point. So we have a price associated to producing the garment from a labor perspective. As a vendor, if I give full transparency to that to a brand, and a brand disputes that, or we realize that actually we can produce that at a couple of seconds lower than that particular vendor is, they're pushing constantly. So with that visibility comes the ability to push. If it's cloudy, it's difficult to push against, right? But if it's clear, you have something that you're able to push against. Hence why vendors, I think, are hiding in some of this muddy water.

Yeah.

Because it means you're unable to push. So with transparency becomes the ability to push. And that's, I think, a them and us in the industry that we're still trying to work through. Do you think?

Yeah, no, I mean, I agree there's always been a certain amount of fudging on the vendor end. And, but I mean, the sort of transparency that I'm driving towards asking of people is about, you know, sources of materials, material contents, and that kind of stuff, environmental impacts. I don't know that I am looking for them to be completely transparent about what they— you know, what their costs are. I have come— I mean, I'm relating this actually to a project that I'm currently working on with— through the Footwear Collective, where we're trying to help as a group. We're trying to do a pilot project in Vietnam to reduce EVA waste, because all the people in the Footwear Collective generate EVA waste, and a lot of it's in Vietnam. And it's kind of interesting because who owns the waste is kind of something that almost everyone's afraid to ask because we're trying to add value, but we don't know if we're adding it for them or for ourselves because to even ask the question You know, has that waste been factored into the cost of the product already so it doesn't really matter anymore? You know, these kind of things. And they're culturally sensitive too. So you have to tread very carefully. Look, I think that a lot of brands are in what I would call bad boyfriend relationships with their vendors. And we are very demanding and we— I don't always show up for them in the best way possible. But even within that, people— the human relationships of fashion, I think, are so critical. And I always try to put on my vendor hat when I'm asking for anything. You know, it really— worries me sometimes when we say, oh, we're going to need them to get certified for this, this, this, and this, and it's all going to be at a cost to them. And already profit margins are very suppressed, so it makes me anxious when we say we're going to need an LCA for that, we're going to need them to get certified GRS, or, you know, all these things. And it's just like, and how is this getting paid for? You know, so I try in my small way to be sensitive to that and to maybe not lift every rug and not probe too hard on things. I think it's hard to be a vendor in the current situation. It's also hard to be buying and selling the goods. So I think we just— that's why for me the human relations are so important. Because you've got to be sensitive to where people are coming at things. I'm sure you're right. I'm sure they would hate for us to know every last dot and little— but anyway, that wasn't a very good answer.

But no, but just to piggyback off of that, I think a lot of it goes back to what we were saying earlier, which was it's not broken, it's strained. And I think you touched upon it where it's mitigating all of these things that as the company we're expecting for these manufacturers to do. But who owns the cost? Because if they want to play, they need to pay. But we need them as much as they need us. And I think that the transparency will come, A, through good sourcing strategy, ethical and responsible sourcing strategies, making sure that you build a relationship with them because I think as you build trust in that relationship, if you're constantly doing business, it might not be as loud as somebody telling you absolutely everything, but you start to see the puzzle come together. And I think that that's what assists in seeing a little bit more about that manufacturer and what you can and can't do. Because I know in previous lives, a lot of the time the asks were always within knowing that we had a relationship. Like, could we help with this one time because we'll do this? And it was very mutual, but that was built over time and trust. Did you want to—

Well, yes, I understand your question, but I think it's— for me, it's not an issue, it will be an obligation. Brand is a— we are in a in an evolution where brands must be responsible and brands have to have a requirement for transparency of their supply chain, just for a question of risk. You know, I have one of our biggest customers who have just— he make everything to control his supply chain and he have an awful experience where there was a press, a media who identified one supplier among 2,000 where there is something, there is a problem, you know? And it was an enormous big problem for the brand, you know? So I agree with you. I imagine that some suppliers don't want transparency, but if I come back to Europe, Europe adopted last year regulation which is very important, which name is the ESPR, Eco-Conception Sustainable Product Regulation. It's entered into force last July. This regulation will have two effects for all brands who want to sell in Europe. First, the European Commission industry per industry will define eco-conception requirements. Let me give you an example. For example, no apparel which is done with at minimum 30% of recycled raw material. It could be an example. First point. The second point, which is related to your question, the ESPR make mandatory the concept of digital product passports that you mentioned. What is a digital product passport? It's a requirement of the European Commission, to have for each apparel to be a low-odd in your European Union market. To have this pattern on which you have a lot of traceability information, including the environmental footprint of the apparel, but calculated in a rigorous way using the scientific methodology framework of European Union, which is a PEF method. So through the digital product passport, the brand have to be transparent, and to be transparent, she has to require the same thing to their supplier. And I think, you know, I, I will not say the name. Yesterday I have a supplier long far away here who work with big group like Walmart, Tesco. And these supplier ask for transparency because it's the only way he have to make a distinction and valorize his effort to the brand. So for me, through the effect of this regulation in Europe, as you know, Europe is the first economy in the world. Brand will have to be obliged to ask to their supplier this transparency. So we start this new area which will be good in the relationship because it's a question of responsibility of the brand to know where, what is their supply chain, and especially for sustainability.

If I read these out of order, I apologize. but one of the questions, how can digital tools help brands and suppliers achieve measurable environmental and social impact moving toward truly circular and regenerative practices?

Well, I think Christoph's tool is trying to do exactly that from what I've understood, because he's created a tool that can help brands study closely the impact across many different factors, not only the typical carbon footprint. So undoubtedly such tools can help. Getting them implemented, paying for them, and all that is a whole nother matter. While everybody's panicking and worrying about the bottom line. But I certainly imagine that that is the way that digitization is going to be used in our industry. I have no doubt of it.

Yes.

Thank you.

Thank you so much. The most important thing is to have a method to define where is the sources of impact. So the method is now done by the European Union, 10 years of work. I was in the group which advised the European Commission on that. It's a wonderful project, but now it's done. It's a very important asset, scientific asset. Now it's necessary to make accessible this method to the brands. It is what we have tried to do. And what is important is not only to measure, but it's to identify the key explanatory factor of your— of the impact of your product or collection, and how to identify the best leverage to reduce the environmental footprint according to your constraints. And I want to tell you just with a few minutes that when we see The real explanatory factors of the environmental footprint of the fashion industry, we discover very new things. As I mentioned today, for people who think that the packaging is important, no, it's not important in the fashion industry. Packaging is, let's say, 5% of the impact of apparel. There is another thing that everybody thinks, My apparel come from China is bad. Oh, my apparel was done in New York, is good. This is not true, okay? Because the component of transport of the apparel from the place where they are created and the place where they are sold is less than 5%. So through this approach, systemic approach, you discover that the key explanatory factor is condition of production of the raw material and certain industrial process including dyeing, making, or weaving. And only on that you can identify what we call the hotspot. And I mentioned this example that I am glad to share with you very quickly, what we have done with Lacoste brand. Lacoste want discovered that their organic cotton is not good because organic is not necessarily better than conventional. So we explained to them that to define if the organic is good or not, you have to go in the farm to see what is the agriculture practice. We have done that and Lacoste have changed all their sourcing of cotton on the, on the, on the world to find the organic cotton which is really less impact than conventional one. So it's a good story and they created new supply chain of cotton, which is a good example of good practice.

Well, I think this is the end of our time.

Trying to break this up.

It is the end of our time. But that was a great way to end. Yeah, just really quick. Just one last thing. Really, really quick. What is one thing that you would say is your top probably thought when it comes to a brand-supplier relationship? Just very quick.

I would say create value rather to just reduce price and pressure.

I would say think of it as co-creation. It's the only way to be in this world that's worth being. Yeah, in my opinion.

And I second that with communication.

Yeah.

Well, thank you both so much.