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(c) Nadine Glad
18.07.2023

Promoting transparent supply chains and a more circular economy with digital product passports

Any prospective buyer interested in knowing more about the products they have set their eyes on will have to cope with limited information on print or online manuals or engage in time-consuming research. This may change soon, as the European Commission introduced a standardised digital product passport for the upcoming legislation. A project consortium has been formed with partners from industry and academia to set ground for the developments. The idea is for the proposed passports, supported by EU regulations, to make all product information available along the entire value chain and easily accessible e.g. by QR code.

Any prospective buyer interested in knowing more about the products they have set their eyes on will have to cope with limited information on print or online manuals or engage in time-consuming research. This may change soon, as the European Commission introduced a standardised digital product passport for the upcoming legislation. A project consortium has been formed with partners from industry and academia to set ground for the developments. The idea is for the proposed passports, supported by EU regulations, to make all product information available along the entire value chain and easily accessible e.g. by QR code.

ID cards and passports are usually the first things packed when one goes on a journey. They are internationally recognized and accepted documents with all the necessary information about the holder: Commonplace items for people that will soon become just as common for electronic devices, textiles, or batteries. But mobile phones, tablet computers, and their kin usually do not travel with a passport pouch, so their digital product passports with all their “personal details” will soon be accessible at every link in the value chain via a QR code or RFID chip.

Consumers looking to buy a new piece of clothing, a piece of electronics, or even furniture or toys should have more means to understand important information about their products, including their energy efficiency, the labor conditions during manufacturing, or their reparability, in order to make informed and sustainable purchasing choices.

Product passports also hold great potential for other actors, e.g. for repairs or recycling. Current electronic products, often highly miniaturized, make it hard to understand with materials, not least toxic substances are contained and how they could be separated from another. Use-specific certificates can regulate that this type of information is available to the people who need to know it.

No final decision has yet been made about the range of information that will be contained in the product passports. For the CIRPASS project, Eduard Wagner and his team at Fraunhofer ZM is currently surveying which types of information are already covered by current legal requirements and which additional information could be contained on a digital product passport. Their aim is to provide an information architecture that determines which types of information have added value for which actors in the value chain and at what cost this information could be provided. A reparability scale that shows how easily a product is to repair has been required in France since 2021 and might be a good inclusion in the digital, pan-European product passport. “Information about energy efficiency is already required, but this information still has to be prepared on a case-by-case basis, and there are no universal European disclosure requirements for other types of circularity related information. Meaningful standardization here is one of the top goals of the product passport. Imagine we could compare the durability of all t-shirts in the EU between each other,” says sustainability expert Eduard Wagner.

For the first product passports to be ready by 2026, many actors still need to be brought on board and a consensus be found for which information is most relevant. “Our project has identified 23 groups of stakeholders that we are including in our survey of requirements, in all three sectors”, Wagner explains. “We have suppliers of materials, manufacturers of electronics, and representatives of repair and recycling associations with us.” The results of these consultations will go to the European Commission to act as pointers for the political process en route to new legal requirements for the product passport. Small to medium-sized enterprises are given special attention and support in this, as providing the required information can mean a considerable effort on their part.

Source:

Fraunhofer Institute for Reliability and Microintegration IZM

Photo: Pixabay
19.07.2022

The future of fashion: Revolution between fast and slow fashion

The fashion industry is massively influenced by the change in social values. Which trends can be observed and in which direction is the fashion future developing - an excerpt from the Retail Report 20231 by Theresa Schleicher.

The fashion industry is massively influenced by the change in social values. Which trends can be observed and in which direction is the fashion future developing - an excerpt from the Retail Report 20231 by Theresa Schleicher.

The fashion industry has been slowed down by the global health pandemic and further affected by the measures taken in the wake of the Ukraine war: Fragile supply chains, increased transportation and energy costs, and rising prices are having an impact on the globalized fashion industry. Those who were moving the fastest are being hit the hardest. Fast fashion based on the principle of "faster and faster, cheaper and cheaper, more and more" - which has been in the fast lane for years - is now experiencing an unprecedented crash. Even without these momentous events, the fashion system would have reached its limits. What could have developed evolutionarily is now being revolutionized. Now and in the future, it will be particularly difficult for brands and retail companies that do not have a sharp profile or that have lost many customers in the attempt to offer mass-produced goods at prices that are still lower than those of their competitors.

New value paradigm in society - also for fashion
While fashion retailers and fashion brands are focusing on expanding online and have been putting their foot on the gas pedal since the corona pandemic at the latest, a parallel change in values is taking place in society. Many behaviors that have been practiced, tested and lived for months will continue to shape our consumer behavior and lifestyles in the future. The uncertainty in society as well as a shrinking economy and rising consumer prices as a result of the Ukraine war will further contribute to this shift in values.

The old paradigm was "primarily shaped by pragmatic factors such as price, quantity, safety and convenience, so consumer behavior was predominantly based on relatively simple cost-benefit calculations." The new value paradigm, on the other hand, is more strongly influenced by "soft factors". For example, the quality of a product is defined more holistically. In addition to price, "ecological, [...] ethical and social aspects are also taken into account. It is about positive or negative experiences that one has had with producers and about the visions that they pursue with their companies". This new value paradigm is forcing the large chain stores in particular to rethink. They have to develop their business models further in the direction of sustainability, transparency and responsibility - and show attitude. The influence of the neo-ecology megatrend combined with the push towards the sense economy is reshuffling the cards in the fashion industry.

The most important driver for the change in consumer behavior is climate protection, which is also becoming personally more important to more and more people because they are feeling the effects of climate change themselves in their everyday lives. The transition to a sustainable, bio-based and circular economy is accompanied by fundamental changes in the technical, economic and social environment.

Circular fashion as an opportunity for fast fashion
The development of the fashion industry - especially the fast fashion industry - towards a more circular economy is not a short-term trend, but one of the most long-term and at the same time forward-looking trends in retailing of all.

Even before the pandemic, a growing proportion of consumers placed value on sustainably produced clothing instead of constantly shopping the latest trends. A reset is needed, but the fashion industry faces a difficult question: How can it respond to the demand for new trends without neglecting its responsibility for the environment?

The solution for reducing emissions and conserving raw materials and resources seems obvious: produce less. On average, 2,700 liters of water are needed to produce a T-shirt - that much drinking water would last a person for two and a half years. In Europe, each person buys an average of 26 kilograms of textiles per year - and disposes eleven kilograms. Of this, almost 90 percent is incinerated or ends up in landfills. Overproduction, precarious working conditions during production and the use of non-sustainable materials are the major problems of the fast fashion industry. It is time to slow down fast fashion.

Fashion recycling by Design & Recycling as a Service
A first step towards keeping fashion and textiles in the cycle for longer is to recycle materials properly. In the future, recycling must be considered as early as the design stage - not only for sustainably produced fashion, but also for fast fashion. The H&M Group, for example, developed the Circulator for this purpose: The digital evaluation tool guides the designer through materials, components and design strategies that are best suited for the product depending on its purpose, and evaluates them in terms of their environmental impact, durability and recyclability.

However, more and more young companies are specializing in offering recycling for textiles as a service. They work directly with fashion retailers or fashion brands to enable the best possible recycling, re-circulation or even upcycling. Until now, it has not been worthwhile for large textile companies to invest in their own recycling systems. But Recycling as a Service is a market of the future, led by innovative start-ups such as Resortecs that are tackling previous hurdles in our recycling system. In the future, more and more new service providers will pop up around returns and recycling and help fashion retailers to align their material cycles more sustainably.

Secondhand conquers the fast fashion market
Another way to extend the life of clothing is to pass it on to new users. We are witnessing the triumph of vintage, retro and more - chic secondhand stores and chains like Resales and Humana are popping up everywhere. The renaming of secondhand to pre-owned or pre-loved also illustrates the increased appreciation of worn clothing. The trend toward secondhand also pays off economically for companies: The number of platforms whose business model revolves around the resale of clothing is increasing, and secondhand fashion is arriving in the middle of society. The luxury segment and especially vintage fashion are stable in price because the availability of these unique pieces is limited. Fast fashion, on the other hand, is available in sufficient quantities and is particularly interesting for price-sensitive customers, as secondhand is considered one of the most sustainable forms of consumption - meaning that fashion can be shopped with a clear conscience - and is usually even offered at a lower price than new goods. The second-hand market will continue to professionalize and become more socially acceptable. As a result, the fast fashion industry will also be forced to produce higher quality clothing in order to become or remain part of the circular system.

Slow fashion gains momentum thanks to technology
The development and orientation of fast fashion towards circular processes is also changing sustainable fashion. In the future, fast fashion and slow fashion can learn from each other to fully exploit their potential: fast fashion will become more sustainable, while slow fashion will focus on faster availability and delivery and make the customer experience as pleasant as possible. Fast and slow fashion are no longer compelling opposites - because the sustainable fashion movement can also benefit from technological innovations that are being established above all by the fashion platforms, and lift slow fashion to a new level.

At the same time, Sustainable Luxury is a new form of luxury consumption - especially in the field of designer fashion, sustainability is becoming the all-important criterion. Sustainability as a means of distinction for true luxury and sustainability as a basic prerequisite for a functioning fashion industry are increasingly converging. This is where the transition between a slowdown of fast fashion and an acceleration of slow fashion takes place.

Trend Sustainable Luxury
Luxury is defined less and less by the object and its possession and is increasingly becoming an expression of one's own lifestyle and values. Consumers' understanding of premium and luxury has changed - not least driven by the neo-ecology megatrend. In the future, it will no longer be just about owning something as expensive and ostentatious as possible. What began as a rebellion against careless consumption of luxury brands that promise high-end products but accept unfair and environmentally damaging manufacturing conditions in the process has increasingly become accepted as a value attitude. Luxury products have no less a claim than to improve the world.

Sustainable and ethical products and services made from innovative materials that have the power to solve problems and make the world a better place. At the same time, this highly ethically and morally charged form of sustainability is turning into a means of distinction: For the materials are so new, the manufacturing processes still so experimental, that the products are unique and often only available in very small quantities or on order. And this exclusive sustainability naturally comes at a price. After all, a company that pursues a mission is not concerned with simply cutting costs - certainly not at the expense of others or the environment. Instead of leather and fur, luxury fashion is now made from oranges, pineapples, hemp, cacti: there are more and more new, innovative and sustainable materials from which unique garments and accessories can be made.

Predictive, Pre-Order & Made-to-Order
Artificial intelligence and Big Data analysis can help predict fashion demand. Fast fashion leaders like Shein are characterized by agile production which is supported by AI algorithms for trend prediction fed with data from TikTok and other social media services. This could sustainably reduce overproduction and unsaleable goods in the future. As critical as Shein's practices are, the automation of processes also offers immense opportunities for a more sustainable fashion industry, as production only starts when goods are in demand.

AI support in the design process can be used to produce more sustainable fashion - and make it available more quickly. In a future of an avatar economy and in the world of virtual influencers, it may even be possible to dispense with part of the production process: Fashion will remain virtual - and thus more resource-efficient. Digital fashion will become increasingly important as the metaverse is built.

5 Key Takeaways on the Future of Fashion

  1. The current crisis in the fashion industry is an opportunity to move more in the direction of circular fashion. Above all, the new value paradigm in society, understanding quality more holistically and consuming more mindfully, is providing a push towards fairer, more ecological and more social fashion. Fast fashion and sustainability are not mutually exclusive.
  2. There are already first approaches to keep fast fashion in the cycle longer or to return it to the cycle. One important development is to consider recycling or reuse as early as the design and manufacturing process - known as recycling by design. In addition, there is a growing number of start-ups specializing in the optimized recycling of textiles and cooperating with major fashion players.
  3. Above all, the booming online trade in used fashion, often communicated as the pre-loved or pre-owned category, is making secondhand respectable for the mainstream. Such fashion, with a story and an aura of uniqueness, is also a cost-effective but more sustainable alternative to fast fashion.
  4. But slow fashion is also changing, especially due to the dominance of new technologies. Slow fashion can also benefit from processes that are currently manifesting themselves in the online fashion market, such as fast delivery or pre-order services. Slow fashion thus becomes more convenient, better and faster available. It will be easier for sustainably oriented fashion enthusiasts to consume according to their values and attitudes.
  5. The trend toward sustainable luxury continues: Sustainability as a means of distinction for a new form of luxury enables alternative manufacturing processes and innovative materials in the luxury fashion market. These are being showcased by an avant-garde and, if they prove successful, adapted by fast fashion.

1 https://onlineshop.zukunftsinstitut.de/shop/retail-report-2023/

Source:

Retail Report 2023 | Theresa Schleicher, Janine Seitz | June 2022

Photo: Pixabay
12.04.2022

Disrupted supply chains: Only nearshoring and digital technologies will help in the long term

  • McKinsey survey: Globally, more than 90 percent of supply chain managers are investing in the resilience of their supply chains during the Corona crisis.
  • But more often than not, they are simply increasing inventories instead of focusing on long-term effective measures such as regionalization of suppliers.
  • Only the healthcare industry has consistently relied on nearshoring and regionalization of suppliers so far.

Supply chain managers worldwide are under pressure: More than 90 percent invested during the Corona crisis to make their supply chains more resilient to external disruptions. More often than planned, however, supply chain managers resorted to the ad hoc measure of simply increasing inventories. And less often than planned, they also relied on long-term effects by regionalizing their supply base.

  • McKinsey survey: Globally, more than 90 percent of supply chain managers are investing in the resilience of their supply chains during the Corona crisis.
  • But more often than not, they are simply increasing inventories instead of focusing on long-term effective measures such as regionalization of suppliers.
  • Only the healthcare industry has consistently relied on nearshoring and regionalization of suppliers so far.

Supply chain managers worldwide are under pressure: More than 90 percent invested during the Corona crisis to make their supply chains more resilient to external disruptions. More often than planned, however, supply chain managers resorted to the ad hoc measure of simply increasing inventories. And less often than planned, they also relied on long-term effects by regionalizing their supply base. These are the key findings of a comparative study for which management consultants McKinsey & Company surveyed more than 70 supply chain managers from leading companies worldwide - for the first time in 2020 and again this year. Further results: Digital technologies are used much more frequently today than at the beginning of the pandemic, for example real-time monitoring or analytics based on artificial intelligence (AI).

The survey also quantifies the striking shortage of IT specialists in the area of supply management: in 2021, only one percent of the companies surveyed had enough IT specialists. "In the wake of the digitalization push, the need for IT skills is becoming even more of a bottleneck than it already has been," reports Vera Trautwein, McKinsey expert for supply chain management and co-author of the study. "As a result, the scope for action is also decreasing dramatically." In 2020, ten percent of the supply chain managers surveyed still had access to sufficient experts with the relevant IT know-how in their departments. How did the supply chain managers act during the crisis? Almost all respondents (92 percent) have invested in the resilience of their supply chains, and 80 percent have also invested in digital supply chain technologies. But while 40 percent of the 2020 respondents in McKinsey's first "Supply Chain Pulse" had still planned nearshoring and expanding their supplier base, only 15 percent ultimately put this into action. Instead, significantly more managers than expected - 42 percent versus 27 percent - expanded their inventories.

The 2020/21 comparative study also shows that supply chain managers have acted very differently in the crisis, depending on the industry. Healthcare can be considered a pioneer in the regionalization of the supply chain: 60 percent of the respondents in the industry have actually concentrated procurement, production and sales in a region such as Europe or North America, which they have also announced. In 2020, 33 percent of companies in the automotive, aerospace and defense industries had also announced this. However, according to their own figures, only 22 percent actually did so. This was despite the fact that more than three quarters of supply chain managers had given this measure priority. The chemicals and raw materials sectors made the fewest changes to their supply chains.

After the crisis is before the crisis
Over the years, supply chains have evolved into a high-frequency sensitive organism. Consistently globalized, optimized to fluctuations in consumer demand and with as little inventory as possible to cut costs. "This strategy has left companies vulnerable," notes McKinsey partner Knut Alicke. "And during the crisis, measures were taken that were more effective in the short term." As a result, supply chains are not yet resilient enough to prevent future disruptions. "For companies, nearshoring of suppliers remains a key factor in increasing their crisis resilience in the medium to long term." In addition, however, he said, the expansion and use of digital technologies are the key factors for resilient supply chains.

The pressure to act is great: Massive supply chain disruptions occur on average every 3.7 years and disrupt supply chains for at least one month. This was the conclusion of another McKinsey study on supply chains entitled "Risk, resilience, and rebalancing in global value chains" back in 2020.

Source:

McKinsey & Company [Düsseldorf, Germany]

Foto: Lalit Kumar, Unsplash
29.03.2022

The man-made fibers industry at the turning point of time

"You don't tear down a house before the new one is ready for occupancy."

Textination talked to the Managing Director of the Industrievereinigung Chemiefaser e.V., Dr. Wilhelm Rauch, about his assessment of the turning point that the man-made fibers industry is currently facing. What are the risks and threats, and what needs to change in order to remain a competitive player on the global market.

"You don't tear down a house before the new one is ready for occupancy."

Textination talked to the Managing Director of the Industrievereinigung Chemiefaser e.V., Dr. Wilhelm Rauch, about his assessment of the turning point that the man-made fibers industry is currently facing. What are the risks and threats, and what needs to change in order to remain a competitive player on the global market.

US President Joe Biden has called his Russian counterpart Vladimir Putin a war criminal in connection with the invasion of Ukraine. The United Nations' highest court, the International Court of Justice in The Hague, has ordered Russia to immediately end its war against Ukraine. How do you personally assess Russia's behavior?
Dr. Rauch:
With family roots in the Rhineland, Central and East Germany, I grew up at a time when, as a result of the division of Europe, families were separated and people were ruthlessly shot in the middle of Germany who wanted to cross the inner-German demarcation line towards the West. Since 1989, the fall of the Iron Curtain has led us into a period that lasted more than 30 years and allowed us, at least in Europe, to experience an era of peaceful coexistence between the great power blocs, intensive trade relations and prosperous states.

It is more than shocking to see today how Russia is trying to turn back the wheel of history in Europe with a brutality that the youngest generation growing up in Europe has fortunately not had to experience so far, and it brings back the worst memories of the Cold War, which everyone hoped would never return. If today in Ukraine even facilities for the peaceful use of nuclear energy are fired upon, a dimension has been reached that one does not want to extrapolate any further. In addition to the unspeakable human suffering caused, which we can only begin to alleviate by accepting Ukrainian refugees, in the long term all trust in political promises is being gambled away, which, however, is essential both for peaceful coexistence and for economic cooperation. We are facing a reordering of the world in which supply relationships and dependencies with or on autocratic states must be evaluated much more sensitively for each individual case.

The economic consequences of the Russia-Ukraine conflict are becoming increasingly clear. The Association of German Chambers of Commerce and Industry (DIHK) is correcting its forecast for 2022, but does not yet see a recession. What are your expectations for the industry in the current fiscal year?
Dr. Rauch:
The man-made fibers industry has been severely affected by the SARS-CoV-2 pandemic in the last two years. Planned investments were first postponed and then finally abandoned. By the end of 2022, three man-made fibers producers will close their doors in Germany compared to 2019. The industry started the current year on a very hopeful note, although previous issues such as REACH and, above all, energy costs were already increasing in severity before the Russia-Ukraine war. The economic consequences of the war will have a negative impact both directly in the form of increased energy prices and indirectly through changes in international competitive conditions.

What do the war in Ukraine and the economic sanctions against Russia entail for the upstream supply chains of the manmade fiber industry?
Dr. Rauch:
The immediate upstream supply chains will not be affected much by this war at first. However, we must expect supply chains in other industries to be disrupted. If, for example, certain raw materials or products are no longer available, this can have a noticeable impact, starting with logistics (mobility) and extending to components in production technology facilities. An example of this is the availability of cable harnesses, which were previously produced in Ukraine and are indispensable in many electronic components for man-made fibers production.

What is the relevance of Ukraine and Russia as sales markets for IVC member companies?
Dr. Rauch:
If we take the last year before the outbreak of the SARS-CoV-2 pandemic as the reference year, exports to Ukraine and the Russian Federation account for around 1.6% of total exports of man-made fibers from Germany. On average, a loss of sales to these countries can be tolerated, although it should not be forgotten that in individual cases - depending on a company's product portfolio - the impact can be quite significant. Looking beyond the horizon, it is not only the direct exports of man-made fibers to the war region that are of significance, but also deliveries of products in which man-made fibers are processed. Here, there are now interrupted supply relationships that result in order losses for the man-made fibers industry.

Certain industries are particularly affected by the consequences - what does this mean for the man-made fibers sector as a supplier industry?
Dr. Rauch:
Wherever production is cut back along the downstream value chain in which man-made fibers were used, the effects will be noticeable with a temporal delay. This applies, for example, to deliveries to the automotive sector, where the production of new vehicles comes to a standstill due to a lack of components originating from Ukraine.

How are exploding energy prices and the gas embargo affecting man-made fibers producers in the DACH region?
Dr. Rauch:
Even before the Russia-Ukraine war, European energy costs were already at a level that hit our members hard. For example, European gas costs currently rose by ten times from approx. 12 EUR/MWh to approx. 120 EUR/MWh as a result of the war, while in the USA they "only" rose by two and a half times from approx. 8 EUR/MWh to approx. 18 EUR/MWh. The situation is similar for electricity prices in Germany in particular, which have also risen by a factor of 10 from an already high level. Further price increases in Europe cannot be ruled out, but are more likely. Against this background, moderate adjustments in man-made fibers prices are only a drop in the bucket. A market development with virtually exploding energy costs cannot be reliably depicted by any company, nor can it be priced in such a way as to cover costs.

As the industry association of the man-made fibers industry, what do you think of "Freeze for Peace" or a stop to all Russian gas and raw material imports?
Dr. Rauch:
In Germany in particular, we have deliberately made ourselves dependent on Russian gas, contrary to all international warnings, by defining it as necessary for the bridge technology of electricity generation that we will need after the shutdown of coal- and nuclear-based power plants, before the availability of a sufficient amount of so-called "green" energy is assured. Gas is also needed for heating purposes and as a raw material, so it takes on the function of an all-rounder.

A boycott-related import stop would not only have serious negative consequences for the man-made fibers sector, but for the entire German industry and the majority of private households. As I mentioned at the beginning, it is the order of the day to help alleviate human suffering by taking in Ukrainian refugees. But this is not the end of the crisis. It must be assumed that the war situation will not be resolved in the near future. However, in order to cope with a protracted crisis situation, our economic strength must be maintained in order to be able to cope with the challenges ahead. An import freeze would be counterproductive in this respect. Since, due to the latest developments, gas deliveries are now to be paid for in rubles, there is rather a risk that Russia, for its part, will stop gas deliveries. In their effect, the two scenarios do not differ. The only thing that is certain is the fact that the availability of Russian gas to Europe is no longer guaranteed. Ultimately, the Russian demand to switch payments to rubles, which is not only aimed at revaluing the ruble, makes it clear that Russia is not dependent on Europe as a buyer of its gas. This would mean that a "freeze for peace" would lead to nothing. In the Far East, there is already a potential buyer of Russian gas to obtain it cheaply and safely, and which is also a major competitor of the European chemical fiber industry: China.

Are agreements with the United Arab Emirates and Qatar a good substitute solution for gas and oil supplies from Russia?
Dr. Rauch:
It is not a question of evaluating a measure in the sense of good or bad, but of whether it appears suitable in this particular situation to reduce unilateral dependencies on an aggressor before sustainable solutions are available in sufficient quantity. In this respect, there should initially be no ideological barriers in the measures to be examined for feasibility. The agreements concluded with the United Arab Emirates and Qatar after certainly careful political scrutiny are individual decisions and represent only one piece in the mosaic among many.

Does the saying "First we had bad luck, then we were not lucky at all" apply to the current economic performance of the industry - or: how do you assess the influence of the Corona pandemic and the war situation in this respect?
Dr. Rauch:
Both the SARS-CoV-2 pandemic and the Russia-Ukraine war are events with a global character. While the first event affected all countries equally sooner or later, the impact of the Russia-Ukraine war must be assessed in a more differentiated manner. The consequences of the war primarily affect companies in Europe, and there in particular those countries which - as mentioned above - have placed themselves in unilateral dependencies like Germany. This does not apply to the man-made fibers industry in particular. Although there are many fellow sufferers in other industries, this does not improve the situation, of course.

What does the industry expect from the political leaders in Berlin and Brussels in the future?
Dr. Rauch:
The wish list can be fixed to a few core elements:
In the long term, we need a supply of energy and raw materials that is not based on the dependence of a few autocratic states. On the way there, against the backdrop of the Russia-Ukraine war, previous exit scenarios from coal and nuclear energy must be reconsidered without prejudice with regard to their timeline. Or to put it more concisely: You don't tear down a house before the new one is ready for occupancy.

But energies from renewable raw materials must also be offered at prices that allow global competitiveness. According to a study by DECHEMA and FutureCamp, the chemical industry has calculated a price of 4 ct/kWh (including all taxes and fees). We are miles away from this today.

The revision of REACH must not lead to further bureaucracy and requirements that tie up capacity in companies. What we need in Europe is not dotting the i on Maslow's hierarchy of needs, but to ensure that we do not slide down the levels step by step and that the i dot floats in the air without an "i".

European economic policy must focus on the international competitiveness of European industry. It is not sufficient to consider and regulate the European Union only from the point of view of the internal market. The planned carbon border mechanism is such an example. It is intended to impose customs duties on imports that carry a high CO2 burden. This may protect the domestic market, but it does nothing at all to help export-oriented European industry such as the man-made fibers sector on the international world market, because European production costs remain too high by global standards despite the carbon border taxes.

The European Commission must increasingly recognize the European industry and with it the man-made fibers industry as problem solvers. Man-made fibers are indispensable as products for the energy turnaround (rotor blades for wind turbines), lightweight construction in mobility (lightweight car bodies in composite systems), sustainable road construction (geotextiles to reinforce the road surface and increase its service life), reduction of steel-reinforced concrete and thus cement, sand and gravel (reinforcement with high-tensile man-made fibers) and medical products (medical masks, bandaging materials, stents).

In Europe, we again need more market economy and no small-scale regulations that are adapted again and again and proliferate into an impenetrable thicket.

With all the wishes to politicians mentioned above, let me finally mention the following with regard to the current situation: In 1961, after the Berlin Wall was built, Russian and American tanks faced each other at Checkpoint Charlie at a distance of less than 50 meters, ready to fire.

A year later, in October 1962, nuclear-equipped American and Russian naval units met head-on in the Cuban Missile Crisis. Both John F. Kennedy and Nikita S. Khrushchev - bitter rivals in the contest of political systems - were sensible enough at the time not to let the situation escalate.

At present, I wish our national, European and transatlantic politicians’ unconditional determination in the defense of our free democratic values, but I also appeal to all politicians worldwide to take to heart one of Albert Einstein's fundamental perceptions: "I don't know what weapons will be used in the Third World War. But I can tell you what they'll use in the Fourth - rocks!"

Source:

Textination

The Interview was conducted by Ines Chucholowius, CEO Textination GmbH

Photo: Pixabay
15.06.2021

Cabinet passes Draft on German Supply Chain Act

Passed on March 3, 2021, it will become effective as of Jan. 1, 2023 - the Supply Chain Act for companies with more than 3,000 employees. The draft law on corporate due diligence in supply chains - The Supply Chain Act - decided by the German Cabinet is expected to be finalized by the German Bundestag before the summer break.

With the fire at a textile factory in Pakistan in 2013, which claimed more than 250 victims, the topic of supply chain management and sustainable procurement received a great deal of publicity and was placed on the political agenda at various levels: companies can relocate their production abroad - but not their responsibility.

Passed on March 3, 2021, it will become effective as of Jan. 1, 2023 - the Supply Chain Act for companies with more than 3,000 employees. The draft law on corporate due diligence in supply chains - The Supply Chain Act - decided by the German Cabinet is expected to be finalized by the German Bundestag before the summer break.

With the fire at a textile factory in Pakistan in 2013, which claimed more than 250 victims, the topic of supply chain management and sustainable procurement received a great deal of publicity and was placed on the political agenda at various levels: companies can relocate their production abroad - but not their responsibility.

In recent years, a number of measures have been taken worldwide to improve the situation in global value chains. In particular, this involves compliance with human rights, social issues and environmental protection. However, the results are sobering: According to the BMZ (Federal Ministry for Economic Cooperation and Development), 25 million people are currently in forced labor, and 75 million boys and girls worldwide are affected by exploitative child labor.

But where does responsibility begin, and where does it end? The recently passed draft law on corporate due diligence in supply chains is a compromise decision by the ministries involved for development, labor and economy.

Experts from the accredited certification organization GUT Certification Company for Management Systems in Berlin have compiled key statements and estimations:

Which human rights do the due diligence obligations relate to?

  • Integrity of life and health
  • Freedom from slavery and forced labor
  • Protection of children and freedom from child labor
  • Freedom of association and the right of collective bargaining
  • Protection against torture
  • Fair working conditions (occupational health and safety, breaks)
  • Environmental obligations to protect human health

Circle of affected companies located in Germany and deadlines:

  • From 2023: Companies with more than 3,000 employees (over 600 companies in Germany)
  • From 2024: Companies with more than 1,000 employees (2,900 companies)

Obligations in the value chain
In addition to the affected companies' own business operations, responsibility initially extends only to their direct suppliers and service providers. Within the framework of risk management, adverse effects on human rights and environmental due diligence obligations are to be identified and documented in corresponding risk reports.

As long as there are no concrete indications of human rights violations, the monitoring of indirect suppliers is not the responsibility of the companies involved.

The documents are to be checked by the Federal Office for Economic Affairs and Export Control (BAFA). In the event of violations of the law, companies will initially face sanctions in the form of fines, however, in the event of serious violations, they may also be excluded from the granting of public contracts.

Overall, the "Act on Corporate Due Diligence in Supply Chains" does not provide for a duty to succeed or a guarantee liability, but primarily requires the companies involved to take measures within the framework of an "obligation of efforts".

The law does not provide for civil liability for any human rights violations in the supply chain. However, in the event of violations of human and labor rights, foreign employees are to be given the opportunity to be represented by trade unions and before German courts.

What does a company need to do in its own business unit and with its direct supplier?
Companies must implement the following measures:

  • Pass declaration of principles on respect for human rights
  • Risk analysis: establish and implement procedures to identify adverse human rights impacts
  • Risk management (incl. corrective measures) to prevent potentially negative impacts on human rights
  • Set up complaints mechanism
  • Report transparently and publicly
  • In the event of a violation, corrective measures must be taken immediately in the company's own business area, and it is imperative that these measures lead to the termination of the violation. In addition, further preventive measures must be initiated
  • If the violation with the direct supplier cannot be terminated in the foreseeable future, a concrete plan for minimization and avoidance must be created. Appropriate measures must be taken for this purpose, starting with supplier development within a defined time frame and ending with the discontinuation of the business relationship.

What does a company have to do with the indirect supplier?
Here, the due diligence obligations only apply on an occasion-related basis. If the company becomes aware of a possible violation by an indirect supplier, it must immediately:

  • Carry out a risk analysis
  • Implement a concept for minimization and prevention
  • Establish appropriate preventive measures regarding the causer of the violation

Is that a breakthrough? Barely.
With the aim of improving the human rights situation along the supply chain of German companies and thus implementing the UN Guiding Principles on Business and Human Rights, the German government passed the National Action Plan on Business and Human Rights (NAP) back in 2016. This urged companies to review their business activities and relationships with regard to human rights risks and implement necessary measures - on a voluntary basis.

However, the German government's report was sobering. For example, the monitoring of the implementation status of the NAP's requirements carried out from 2018 to 2020 revealed, that less than 20% of the German companies surveyed have voluntarily fulfilled their human rights due diligence obligations to date.

Now, ethical obligations are becoming part of the compliance, at least for the big companies in Germany. The majority of the "giants" involved are already familiar with the obligation under the EU Conflict Minerals Regulation and/or the EU CSR Directive: Corporate responsibility in the supply chain is a mandatory part of non-financial reporting. However, the materiality view here is defined by size of loss and not the topicality of the problem in the supply chain.

What does the new law change? With the law passed, everything remains the same for now: Digging in deeper and developing one’s own supply chain is still not mandatory.

Status Quo
From experience in validating sustainability reports, GUTcert auditors see that many German companies of various sizes are already addressing sustainability concerns in the supply chain based on their own corporate sustainability and ethical obligations:
 
The introduction of a code of conduct for business partners is already part of everyday life in many companies. When contracts are listed for the first time and renewed, the direct suppliers and service providers must adopt certain obligations and carry them forward into their own value chain.

Documentation of the risk analysis and its results as required by law is also no longer a novelty. At the latest in the context of conventional economic concerns, it is no longer possible to imagine supply chains without risks. The pandemic had brought this topic even more into focus in the light of interrupted supply chains in many places. Many companies have already expanded the purely economic risks to include sustainability-related issues, i.e. environmental and social concerns, human rights clauses and anti-corruption rules.

What is often missing, however, is an effective monitoring of the respective performance of the business partners. Self-reporting is the common tool in demonstrating sustainability in the supply chain. On-site controls are linked with high costs and often with the lack of knowledge about the possible means of a sustainability management. Some risks therefore often remain "blind spots".

What to do?
A matrix of one's own corporate sustainability risks of the value chain related to countries, industries and products is a first step in the right direction. With or without the law: The important thing is to take a serious look at your own supply chain and set the boundaries, so that existing risks of violation can actually be addressed - step by step. This way, any company can work out the key risks and opportunities with manageable effort. Help is provided by some internationally recognized sources that can serve as a basis for risk evaluation.
 
Targets and measures should be derived from the main risks and opportunities. These can range from the company's own controls and association work in its own industry to cooperation with international organizations, platforms and certifications. There are many options if one is looking for them.

Source:

GUT Certification Company for Management Systems

(c) Hochschule Niederrhein
06.04.2021

120 Years of Textile Training in Mönchengladbach

The Faculty of Textile and Clothing Technology at the Hochschule Niederrhein is celebrating a double anniversary this year. Firstly, the Hochschule Niederrhein will be 50 years old. Secondly, the Prussian Higher School for the Textile Industry was founded 120 years ago. This later became the Textile Engineering School, which was then integrated into the Faculty of Textile and Clothing Technology at the Hochschule Niederrhein in 1971. 

This year's Master Congress on April 23, 2021 embraces this double anniversary. The Congress is entitled: NOW AND THEN - MG CREATES CAREERS.

The Faculty of Textile and Clothing Technology at the Hochschule Niederrhein is celebrating a double anniversary this year. Firstly, the Hochschule Niederrhein will be 50 years old. Secondly, the Prussian Higher School for the Textile Industry was founded 120 years ago. This later became the Textile Engineering School, which was then integrated into the Faculty of Textile and Clothing Technology at the Hochschule Niederrhein in 1971. 

This year's Master Congress on April 23, 2021 embraces this double anniversary. The Congress is entitled: NOW AND THEN - MG CREATES CAREERS.

“Textile education in Mönchengladbach has a significant historical legacy of which we are very proud," comments Professor Dr Lutz Vossebein, Dean of the Faculty of Textile and Clothing Technology. With over 2,000 students and more than 30 professors, the Faculty is now one of the largest educational institutions in the field of textiles and clothing – even on a European scale.

“The Master Congress is aimed at students and partners of the Faculty as well as of the Research Institute for Textiles and Clothing from the fields of business, research and teaching as well as politics. As always, current topics will be presented at a high level by the aspiring engineers," says Prof. Dr. Maike Rabe, who initiated the Master Congress five years ago. This year's keynote speaker is Dr Uwe Mazura, Managing Director of the Confederation of the German Textile and Fashion Industry in Berlin. One of his topics will be corporate due diligence or, in short, the Supply Chain Law. “This is what the future and seasoned professionals in the industry have to get to grips with," explains the planning team with Oliver Heß, Dr Esther Rohleder and Iris Siebgens.

On April 15, 1901, the green light was given for textile education and training in Mönchengladbach. On this day the Higher Vocational School located on the Mönchengladbach / Rheydt city border welcomed its first students. This event was preceded by the growth of the textile industry in the 19th century, which was driven by the development of industrial spinning, weaving and finishing machines, and which led to an increase in the demand for skilled workers and managers, particularly in Mönchengladbach and the surrounding area.

The Mönchengladbach school was special as it united several departments under one roof. In addition to textile production, from 1912 there was a clothing department, which was expanded with time. Classes subsequently taught students about women's outerwear, lingerie, workwear and sportswear. The "Prussian Higher School for the Textile Industry", at that time unique in Germany, combined a wide range of subjects in the field of textile and clothing technology.
 
Due to the large number of students in the clothing departments, in 1932 the school was renamed "Higher Clothing Vocational School”. It was the first educational institution in Germany to be authorised to train clothing engineers. This upgraded the school to an engineering school, adding subjects such as costing, business organisation, performance and work planning.

The Faculty of Textile and Clothing Technology, which came into being when the Hochschule Niederrhein was founded in 1971, united the expertise of the former Textile Engineering School in Mönchengladbach – but also of the schools in Cologne, Bielefeld, Aachen, Wuppertal and naturally Krefeld. Krefeld, also a textile location with a long tradition in the region, was compensated for the departure of textile training to Mönchengladbach by the fact that the administration of the new University of Applied Sciences came to Krefeld.

One of the pioneers for the foundation of the University was Prof. Dr. Rolf Klinke. Fifty years ago, he was Chairman of the Planning Committee and then, as Vice-President of the young University of Applied Sciences and at the same time the first Dean of the Faculty of Textile and Clothing Technology, he was a central figure in the founding years. On the occasion of the Digital Master Congress 2021 he will be a guest of honour and will hold a talk about this time. The Master Congress is free of charge and will be held on Friday, April 23, 2021 from 9 a.m. to 4.15 p.m. For the full program and registration form visit: www.hs-niederrhein.de/ftb/#c129082

Cost-effective Ways to minimize Risks in the Supply Chain Photo: Pixabay
28.07.2020

Fraunhofer ITWM: Cost-effective Ways to minimize Risks in the Supply Chain

  • Algorithms for optimized supply chains

The coronavirus pandemic has hit the economy hard. What lessons can be learned from this experience? And what’s the best way for companies to protect themselves against this kind of crisis in the future? The answer will certainly involve a combination of different approaches – but new mathematical methods developed by the Fraunhofer Institute for Industrial Mathematics ITWM look likely to be a very promising piece of the puzzle. These methods aim to calculate how the risks posed by supply shortages can be reduced significantly at very little extra cost.

  • Algorithms for optimized supply chains

The coronavirus pandemic has hit the economy hard. What lessons can be learned from this experience? And what’s the best way for companies to protect themselves against this kind of crisis in the future? The answer will certainly involve a combination of different approaches – but new mathematical methods developed by the Fraunhofer Institute for Industrial Mathematics ITWM look likely to be a very promising piece of the puzzle. These methods aim to calculate how the risks posed by supply shortages can be reduced significantly at very little extra cost.

 Nobody ever expected hospitals to be struggling to get hold of the face masks and other personal protective equipment they need. The supply chain had always run smoothly in the past, yet the coronavirus crisis has now caused shortages of these products on multiple occasions. Previously, these supply chains had worked well – but the necessary restrictions on the global flow of goods led them to collapse.In many cases, for example, Chinese suppliers were unable to make deliveries even while factories in Germany were still working as normal, a situation that had a knock-on effect on goods production in Germany. And viruses are not the only potential risk: international suppliers can be paralyzed by all kinds of unforeseen factors, from natural disasters such as tsunamis, earthquakes, storms and floods to strikes or other unexpected political developments. If a company chooses to rely on just one supplier for its production needs in order to reduce costs, this can have devastating consequences that may even bring production to a complete standstill. It can take a very long time indeed for other suppliers to ramp up their production and start delivering the required products.
 
Analyzing and safeguarding supply chains
This is where methods developed by Fraunhofer ITWM come into play. “The algorithms analyze how diversified the supply chains are in different areas of the company and thus how great the risk is of running into critical supply problems in an emergency, in other words in the event of regional or global disruption,” says Dr. Heiner Ackermann, deputy head in the Department of Optimization at Fraunhofer ITWM in Kaiserslautern. “The question is how you can minimize the risk of supply shortfalls without incurring significant additional costs.” The dilemma is similar to that of buying a house: Is it best to opt for the lowest possible interest rates, even though there is a risk that follow-up financing will offer much worse rates? Or is it best to play safe and pay slightly higher interest rates from the start if that means having the reassurance of reasonably priced financing for the entire term?
 
Companies also have to get the right balance between risk and costs. If a company chooses to rely solely on the cheapest supplier, they are taking a major risk. But if they procure a raw material from multiple suppliers at the same time, that risk drops significantly. “And in this case the difference in cost is much lower than the difference in risk,” says Ackermann. In other words, the risks fall dramatically even when a company increases its costs by just a few percent – so it is possible to eliminate much of the risk by accepting just a slight rise in costs. Companies can use the algorithm to discover what would work best in their particular situation. “This method lets companies optimize their supply chains based on multiple criteria, helping them to find the optimal balance between costs and risks,” says Ackermann. “The underlying algorithms work equally well whether you are dealing with supply shortages caused by an earthquake or a virus. So, unlike existing software solutions, we don’t try to make assumptions as to the likelihood of any particular scenario.” With this new method, a company starts by entering various parameters – for example areas in which they think disruption could be likely and how long that disruption might last. The algorithms then calculate various cost/risk trade-offs for this exact raw material, including the possible allocations of suppliers that would correspond to each point on the scale. They even take into account options such as storing critical products in order to cushion any temporary supply shortfalls.
 
Substituting raw materials during supply shortages      
Another option the algorithms take into account is whether a raw material could potentially be replaced by different materials in the event of a supply bottleneck. If so, this can be taken into consideration from the start. Essentially, the method calculates the costs and risks of different courses that a company can follow in regard to their suppliers. Procter & Gamble is already using a software-based variant of this methodology which has been specially tailored to its needs.

Source:

Fraunhofer Institute for Industrial Mathematics ITWM

Supply chains in Asia are in motion © Tokamuwi/ pixelio.de
08.03.2016

SUPPLY CHAINS IN ASIA ARE IN MOTION

  • Vietnam is largest beneficiary
  • Relocation closer to sales markets

Hong Kong (gtai) - For global consumer product manufacturers, Asia has developed an important role as a procurement region. Large parts of production have been displaced in recent decades into the region and here traditionally mainly to China. The rising costs in China however lead to a strategy adjustment. Thus the production moved on to cheaper locations and a shift back closer to the end customer began. Free trade arrangements support this trend.

  • Vietnam is largest beneficiary
  • Relocation closer to sales markets

Hong Kong (gtai) - For global consumer product manufacturers, Asia has developed an important role as a procurement region. Large parts of production have been displaced in recent decades into the region and here traditionally mainly to China. The rising costs in China however lead to a strategy adjustment. Thus the production moved on to cheaper locations and a shift back closer to the end customer began. Free trade arrangements support this trend.

Labor costs in China will not move down again. Even when the economic growth increasingly weakens, China's coastal regions are already often too expensive for wage-intensive productions. The world's largest location of the manufacturing sector will anyway leave its dependence of exports and will generate more growth through domestic consumption. The remaining companies are therefore increasingly focused on Chinese customers. Has the textile industry heard the signals already several years ago and shifted away, now the electronics companies have started to search.

But – the relocation of production is not so easy, the experts agreed upon at the discussion panel Shifting Supply Chains in Asia on the Asian Financial Forum (AFF) in Hong Kong. Because no country, except India, offers such a workforce. But neither the infrastructure and the investment climate can match, nor the country has any interest in low-production stages. Furthermore China has set up a supply industry without any comparison.

Relocation trends slow down

Even Bangladesh, established for a long time as a cheap location for clothes, is losing its attractiveness - experts say. Besides fundamentally difficult production conditions especially scandals like collapsing factories are responsible. No western clothing manufacturer likes to be associated with that repute today. While Indonesia was generally judged for being rather little investment friendly, the Philippines would provide a better reputation than years ago. So in addition to numerous Japanese producers also German companies have moved from southern China to the special areas of the Philippines.

Due to wage cost increases by an average of 15% per year, China with it’s the low-wage area has catapulted itself in a large extent out of the market. In times of rising productivity this was compensated for a while but at last the model came to its limits. The empire of the middle will therefore make the leap to a consumptionbased growth based on production of high-tech and on the provision of services. It is still
unclear whether this leap across the "middleincome trap" will succeed. Many emerging countries are caught in this trap, and the growth is flagging.

German buyers order less in China

Accordingly German retailers are increasingly reducing their imports from China and buy more and more in other countries. This is the result of a member survey of the Foreign Trade Association of German Retailers (AVE), at which for the most part textile and shoe retailers participated. 80% of the respondents have already reduced their import volume from China in 2015, 90% of the companies said they are
planning to source from other supply regions. The merchants are seeing a shift to countries like Myanmar (78%), Bangladesh (67%) and Vietnam (56%).

Vietnam, which already benefited in recent years from the relocation, was still recommended on the AFF as a top location. The country with the highest economic growth in Southeast Asia in 2015 would have risen in the 1st half of 2015 to the fourth-largest exporter of textiles, the Vietnam National Textile and Garment Group (Vinatex) analyzed. For shoes it is already the third largest supplier worldwide. Based on mega investments from Samsung, now the electronics industry came out of the starting blocks and should attract more activities. Experts cite especially the mixture of young, growing populations with low labor costs as an important locational advantage.

Vietnam benefits from Free Trade Agreements (FTA)

A thrust Vietnam's attractiveness currently receives through free trade agreements which are in a final stage. So a free trade agreement with the European Union was signed in December 2015 which was followed early February 2016 by the Trans Pacific Partnership (TPP). The latter agreement, which includes next to ten other Pacific neighbors the United States, should bring a large benefit for Vietnam. For the Vietnamese consumer goods manufacturers the US is the most important market, the large retailers in the United States can move their procurements very fast.

As an underdeveloped member Vietnam is likely to get larger portions of the value chain in the textile and electronics area at the ratification (and even before). The country is still missing a developed supplier structure. This is just happening to be built in the textile sector, there are investments in capacity for yarns, fabrics and dyeing going on. For Samsung, the largest foreign investor, all components are still coming
from China. And only when a large proportion of the added value comes from TPP member states, the low duty will become applicable.

While the purchasing power is not quite so big in Europe, costs play an important role also there. But next to it the control of the supply chain and the flexibility has developed a greater role, rapid changes of trends and collections are determined by customers and the Internet. Therefore also here a shift back, closer to the markets, has begun. Romania and Bulgaria have established themselves in the middle of
Europe as a "low-wage locations". But even there the population is characterized by aging. Accordingly labor forces will become scare and wages will rise. Ukraine is traded as a new location.

Africa still with small potential

Little potential the experts from the Supply Chain Panels evidence the location of sub-Saharan Africa. This was tested by some buyers or producers, but the results would not be convincing. The views however diverge. Some Chinese companies are already partly on site and American manufacturers are monitoring the further development. So, for example, the VF Corporation, the largest denim retailer in the world, is buying in Africa. Only Ethiopia would have potential - according to a representative. But the infrastructure, investment climate and working morale could not be comparable.

So - basically serious alternatives to the established locations are lacking. Therefore, due to the scarcity of labor, costs and thus the final prices will rise. Even in Vietnam the minimum wage increased by 15% in 2015. But when it will be hardly possible to turn at the purchase screw, the companies need to position themselves better in marketing and sales, so a large clothing buyer. Therefore social media must be used in order to come closer to the customer and, for example, to develop individualization as a selling point.

The buying hotspots for clothes for the upcoming years (survey early 2015)
Country Named among the Top-3
Bangladesh 48%
Vietnam 33%
India 30%
Myanmar 30%
Turkey 30%
PR China 23%
Ethiopia 13%
Indonesia 10%
Egypt 5%
Sri Lanka 5%
Tunesia 5%

Source: McKinsey survey of chief purchasing managers