The complexity of fashion supply chain tiers is unknown to many outside of the industry but we cannot underestimate it as a single product may pass through dozens of hands before reaching the consumer.
The mission at TrusTrace is to empower companies with the data to know, prove and improve the impact of their value chains. Each day we are driven to further streamline and advance the mapping and tracing of fashion supply chain tiers. Whether that means mapping out the location of each supplier or going a step further to trace individual batches of products and materials, having visibility over your supply chain gives brands the ability to identify and act on environmental and social risks that may occur, such as the illegal use and disposal of chemicals and water, human rights abuses, and deforestation of ancient forests for farmland.
Through our journey so far, we have come to appreciate the nuances between commodities, their risks and respective supply chains, and this is something our platform can be configured for when it comes to traceability. To help get most on the same starting point, this article outlines the tiers that are commonly found in most fashion supply chains and identified the potential risks involved at each level.
Tier Zero
Tier Zero includes offices, distribution centres, and retail locations that are owned by a brand. They’re not involved in the production process but are worth mentioning in regard to impact reporting. Tier Zero is often where a brand will start when looking to reduce its carbon footprint – Scope 1 & 2. For example, they may run their distribution centre on renewable energy or have a no paper policy at their headquarters. Brands that do report on their carbon emissions will often report largely on their impact at Tier Zero because it is comparatively easier to calculate and implement changes than further down their supply chain.
Tier One
Tier One suppliers are also known as direct suppliers because they’re the factories and facilities that cut, sew, package, and prepare a finished garment to ship to a brand. Fashion brands usually have a direct relationship with their Tier One suppliers. In recent years, campaigning by groups like Fashion Revolution has led to an uptick in brands disclosing their Tier One suppliers — in 2021 the Fashion Transparency Index found that 47% of 250 brands surveyed were making their Tier One supplier list public. We estimate that the majority of brands have not traced their supply chains beyond this tier.
Risks
In this tier, the main risk that brands should be aware of is garment worker rights violations. The human impact of the fashion industry is immense. Brands that outsource clothing production to countries where there is no social safety net or minimum wage guarantees risk being complicit in human rights violations, including wage theft, physical and sexual abuse, unsafe working conditions, and union-busting. Brands should prioritize building a strong relationship with their Tier One suppliers to ensure that facilities abide by codes of conduct when it comes to garment worker rights and safety. This should include regular inspections and third-party audits of their Tier One suppliers.
Tier Two
Tier Two suppliers produce the fabrics used by those in Tier One to make our clothing. It’s in this tier that processes like printing, ginning, spinning, embroidery and other embellishments, tanning, and laundering are performed. The 2021 FTI found that only 27% of brands surveyed published information about their processing facilities. Commonly, Tier Two suppliers have a direct relationship with Tier One suppliers, but it’s less likely that they work closely with a brand. This means if a brand wants to understand its supply chain beyond its direct suppliers, it will need to work collaboratively with its Tier One facilities to request information from Tier Two and beyond.
Risks
Many of the processes described above are chemical, water, and carbon-intensive in practice. Because Tier Two facilities are unlikely to be owned by the brand itself, they fall into the Scope Three emissions category. It’s believed that 80% of the fashion industry’s carbon footprint occurs in Scope Three (Scope One and Two refer to brand-owned facilities). The use of toxic chemicals in this tier has significant knock-on effects on the environment and on people. Factories have been known to dispose of hazardous chemicals and water waste into the local environment, which pollutes rivers and soil in nearby communities. This, in turn, has an impact on the health of those who work in these facilities, and those who live close to the facility.
Tier Three
In this tier, raw materials are turned into fibers. For example, it’s where cotton lint is turned into yarn and where livestock are slaughtered for their hides. In this tier, fibers undergo spinning, dying, weaving, and other processes that prepare them to become materials in Tier 2. Most brands don’t have very much contact with or visibility over Tier 3 suppliers, let alone report on them.
Risks
There are a number of risks involved in this stage of the fashion supply chain. Much like Tier 2, high chemical and water use and improper disposal are concern areas in Tier 3. This tier can include a wide variety of facilities and factories due to its resource and labour-intensive nature. Subcontracting and informal work can be prevalent, so it is incredibly difficult for brands to investigate human rights, animal welfare, and environmental damage that may occur this deep into the supply chain.
Tier Four
Tier 4 refers to the raw material source, such as the farm that grew the cotton plant or raised the livestock. Fashion relies on agriculture for the production of cotton, wool, leather, the feedstocks for man-made cellulosic fibers, silk, furs, hemp, linen, and many more materials. Because the cultivation and harvesting of raw materials rely heavily on the natural environment, its impact can be seen in everything from soil health to the biodiversity of natural ecosystems, the health of waterways and air quality.
Risks
The risks involved with raw materials will be different depending on the material. Several factors must be considered, including the region that the material is sourced from and the processes it requires for cultivation. For example, conventional cotton involves high pesticide, insecticide, and irrigation use, and has a history of forced labor abuses in countries like China and Uzbekistan. Leather, on the other hand, has been linked to deforestation in the Amazon, where the rainforest has been destroyed to make way for farmland. Animal welfare abuses can occur in the farming of sheep, cattle, mink, and all other animals involved in fashion material production.
Regardless of the complexity of your supply chain, it’s crucial that businesses of all sizes are implementing traceability solutions to ensure that social and environmental risks are being avoided and remediated if and when they arise. Only through traceability can businesses truly understand their impact on people and the planet, and use that to inform their sustainability strategies.
About TrusTrace
With TrusTrace, you’ll have the visibility and proof you need to proactively manage supply chain risks and ensure compliance for current and future regulations. The platform’s built-in flexibility empowers you to gather the right data for today’s standards and seamlessly adapt to meet evolving regulatory demands, keeping your business one step ahead of compliance challenges. Contact Sales for a consultation and demo.
