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The Interline Conversations: Gonçalo Cruz, Co-Founder & CEO, PlatformE

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Key Takeaways:

  • The definition of sustainability should be extended to include both environmental / social and economic challenges – balancing responsibility to people and planet with a repeatable, responsive business model.
  • Fundamental issues at the core of fashion’s current business model are the direct root of a startling volume of waste and overproduction, with more than a third of all styles never actually reaching consumers. To stem this tide, fashion needs radical transformation.
  • Technology will be key to unlocking a new model of communication and collaboration between brands and their supply chain partners – one built on accurate data and pre-validated, production-ready components in place of intuition, interpretation, and iteration.
Do you believe “sustainability” is still a useful term for defining the complex road that fashion needs to travel? What does that word mean to you, and how does your definition manifest itself in your company’s approach to designing solutions for fashion’s most urgent challenge?

Yes, I believe that sustainability is still useful. It’s true that the industry has used the word a lot and in some cases not in the right approach. So, it’s true that it’s kind of a wasted expression, but I really believe that sustainability, it’s the right term, but we should look at the world not just from an environmental standpoint, but also sustaining the business. Businesses are supposed to profit to sustain themselves, right? It’s not just environmental sustainability. It should be both environmental and financial if you want capacity to sustain or sustainability. I do believe that the word is right and one goes with the other.

For us, business should be done in a smarter way and if we are capable to optimize processes and some broken models, we will definitely impact both the PNL – the financial part as well as the environmental impact. I believe that we should use the word impact more and more. Sustainability and impact should definitely be tied together. But I still believe that it’s a useful term and it does justice to the challenge.

While better materials and more efficient processes are important in the drive for sustainability, fashion’s biggest unaddressed problem is the waste that originates from overproduction. Can you give us an idea of the scale of that problem, where it originates, and what you see as the solution?

This is definitely the elephant in the room and for some reason it’s really “sexy” to reinvent materials, find and invent new fibres, again, alternative materials. And that’s what we could call incremental optimization, incremental innovation. But we need to disrupt what is broken and the scale of overproduction. It’s so evident that this is a priority in order to find disruptive approaches.

We believe that more than a third of fashion is waste – and we’ve seen many studies and we’ve worked with many brands and retailers that confirm this data. Either because it’s really not sold at all or sold with negative contribution from a financial point of view to the brand, the retailer or even the wholesaler. And we have several levels of overproduction. We have the excessive material use that does not go to the market. What we could call as scraps – quality materials that are not used in the supply chain, but they exist. So they were created, they were manufactured, they were dyed, they were again processed, but not used in the end for the final product that arrives to the market. This is level one. Level two is products that go to the market but are not sold at all – what we could call dead stock, or things that do not find buyers. And then we have the invisible overproduction issue, which is finding smart angles to offload inventory levels, but losing financially. And this depreciation of stock is drastic, not only financially, but again, it really damages the reputation of fashion, the reputation and excitement of brands. It’s really dramatic.

It’s very, very clear that all of this is way more than a third, probably even over 40%. The scale, it’s huge. And this is really the elephant – actually millions of elephants – in the room. We need to find disruptive solutions. It’s not just one thing, it’s changing many processes, which isn’t easy. If it was easy, it would be done by now.

And there are many things that we’re doing. We are gradually coining the term eco-design. One of the things that generates a lot of waste, is the lack of visibility and traceability of things that were produced, parts or sub-products that the supply chain has. And the team of merchandisers and designers, they don’t know or they don’t have access to that information. Over and over again, in their new seasons and their new design cycles, they will reinvent the entire collection, designing from scratch. And there are millions of items, materials, fabrics, parts, hardware that are amazing, beautiful, that no one knows – or if they know, they don’t have the right information in terms of availability, quantities, etc. And this generates a lot of waste.

This eco-design expression means designing with this sense of optimizing and using everything that you have already in your supporting supply chain. In a way, using this expression, “cooking with the things that you have in the fridge”, instead of continuously going to the supermarkets and letting your things essentially be wasted. This is one important part. The other is creating shortcuts and real time visibility on the entire process of product development. And, ideally, this ultra-agility of reacting to the market. One of the things that obviously made fast fashion successful was the capacity to inform in a very, very quick manner what the market was providing in terms of data and reacting on their chain incredibly rapidly. We believe that this bridge – the capacity to connect the supply chain to several stakeholders in brands and retailers – is absolutely fundamental. And some of the solutions that we are developing and implementing are precisely on that.

One of the largest contributors to the length of time it takes to bring a product to market is miscommunication and misalignment between brands and their supply chain partners, which leads to multiple, iterative rounds of sampling. This is the drive behind a lot of brands seeking new ways to collaborate more closely with their suppliers. What does it look like to actually unlock that sort of collaboration and co-creation? And what impact can it have on speed to market?

This is a great, great question. Recently I was in conversations with a very large retailer in the United States and they were telling us that more than 95% of the elapsed time is just communication time. Waiting for answers, waiting for reactions, waiting for decisions. So effectively, when we have a very long time to market less than 5% of that, it’s really valued added time where we are producing something in the supply chain, in the product development part, in the logistics, and so on. The vast majority of time, more than 90% is waiting for people to decide, to receive confirmations documents, or validations. It’s absolutely crucial to create visibility and agility and obviously this comes with technological tools so every party can collaborate and, ideally, decide as fast as they can. Obviously this will have a drastic impact in the speed to market.

We believe that a very important indicator is reducing things by an order of magnitude. So, if today the time to market from concept to store is 200 days, it should be 20 days. If it is one year, it should be more or less one month. So we should reduce things by one order of magnitude. This is feasible; this is not science fiction, it’s feasible. But again, those digital tools and hopefully things like PlatformE need to exist to support that transition. And again, being smarter and working with the “ingredients that we have in the fridge and in the kitchen” – being closer and closer to the supply chain to have more awareness of their processes, their catalogs, their operations. We can benefit from that.

We tend to look at transparency as a tool for accountability and disclosure, but there’s also a significant upside to end-to-end supply chain visibility when it comes to planning, orchestrating, and optimising the design to production process. How does RealTime support both of those aims at once?

Absolutely. If we don’t know exactly the capacity to trace and to be aware of the things that we have with our partners, it’s very hard to optimize all of that and to utilize those resources in a smart way. One of the missions of RealTime is to promote this real-time (as the word suggests) visibility and knowing exactly the catalogs of fabrics, materials, parts, etc, in real time and possible alternatives (different options, different colors, if those exist) with real time updates of data. This could be price in terms of cost, this could be lead time.

An example could be: you are designing a navy blue dress and you want a very specific blue and the designers will design that dress and they will ask for that specific blue and our tool will suggest the specific lead time and price for that navy blue. But at the same time it will suggest similar tones of blue that perhaps are already in house, therefore being eventually more efficient, less costly and less lengthy. So with a shorter lead time and the designers and eventually merchandisers will have the option to either go to their first request or opt for a faster and cheaper option that is not 100% the same. It might be 99%, 95%, 90% the same, but equally good for their intents and better from a financial standpoint …and eventually more impactful and smarter from a sustainability or environmental take.

Our tool wants to promote real time visibility of materials, lead times, predictive costs and it wants to promote a direct access for collaboration and co-creation. Again, to create shortcuts in terms of decision making, questions and answers being done very, very fast and having a multi-tenancy network where people can chat, can communicate, accelerating the process and the decision making elements.

We really believe that this acts on several levels. The agility of communication is key, but also having the right data with the right suggestions and orchestration tips and elements to disrupt and to impact the process positively.

For a lot of fashion businesses, compliance with regional regulations is the priority target, but long-term sustainability is about individual and collective action to rapidly improve fashion’s environmental and ethical credentials. What do you think the future looks like at that whole-industry level? And what does that mean for your roadmap and your customers?

It’s very clear in 2023 that the way that we’ve been managing fashion at an industry level is broken. We cannot afford to keep doing the same things over and over again. And we will see this on many levels. Firstly, customers and consumers are smarter, are more educated and have more and more access to information and they will demand better practices. Secondly, if this is financially harming, it’s not just being nice from an environmental/ecological point of view, it’s on making more margins, being more profitable. Margins in the fashion industry are historically very thin and there’s more than room to improve on that. And it’s very clear that the excessive production and stock is one of the most negative contributors to that.

We are seeing more and more countries, and in some cases entire regions like Europe, validating and making laws that will force some of these actions to be executed on a faster lane.

So we have at least three positive pressuring drivers: the market (consumers need to be more sustainable), financial, and law. And so we know that the industry will have to change. And it is. We’re happy to be ahead of the curve because we started dedicating our resources and energy and time several years ago precisely on this very important subject, optimizing the industry with digital tools. And it’s a priority in our roadmap to keep evolving our technological products. We already have some leading actors as customers.

Over the next couple of years we’ll see tremendous acceleration, not just in the fashion industry impact, but eventually in the growth of platforms like ours. This is bringing tailwinds and positivity to our roadmap and in the near-term future, more and more customers will definitely use smarter tools like PlatformE.

Original article can be seen here.