The Undiscovered Business Potential of Production Leftovers within Global Fashion Supply Chains:
Creating a Digitally Enhanced Circular Economy
Reverse Resources, after winning the Global Change Award, has carried out extensive research among major fabric and garment factories in China and Bangladesh. We conclude that the volume of production leftovers is systematically underreported and thus underestimated by the industry. After the capacity of lean manufacturing methods (process optimisation) end, still >25% of resources (for a variety of reasons) are spilled out of original supply chains. Even though these materials get used somewhere, most materials get downcycled, incinerated or dumped. We describe the economic incentives for stakeholder (a “hidden subsidy” embedded in current pricing scheme) to continue along linear patterns, preventing more effective use of resources. We analyse the market situation, and potential for growth within the industry via improved material circulation, in the example of Bangladesh. We suggest a win-win business model of remanufacturing - integrating >20% of the leftovers (bigger fabric pieces) back into the same production. We describe an alternative pricing scheme which could give great economic incentive for suppliers to open up their data digitally. Better data from factories would facilitate virtual traceability of resources and digital interconnections throughout supply chains. This is crucial for building an effective circular economy as well as supporting many digital solutions of industry 4.0 globally (e.g. blockchain-based transparency).
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