Stefan Rennicke
Co-Founder / Managing Director Kaya&Kato GmbH
Sustainability & digitisation to shape future
Blockchain will enable companies and consumers to identify the origin and processing of fabrics in every production and sales step, thus gaining complete transparency and traceability from fibre to the finished garment. Stefan Rennicke, co-founder of Kaya & Kato, discusses with Subir Ghosh how the joint project between Kaya & Kato and IBM is aiming to leverage blockchain to create that kind of transparency.
How did the Kaya&Kato project on developing a blockchain network with IBM come about? What were the thought processes that went into it? Please tell us from the beginning.
We believe that the following two fundamental developments will shape the future: sustainability and digitisation. In 2017 Kaya&Kato, a young textile company manufacturing workwear, started introducing fully-certified products to the market. In the meantime, our aprons, chef's jackets, shirts, trousers and tunics were tested and certified by numerous certification bodies. We have been working intensively on digitisation since 2019. We maintain contacts with European universities; we work with tech start-ups in Tel Aviv and we held a workshop with IBM in the Garage in Böblingen.
The IBM Garages are a worldwide network of locations where new business approaches are designed and minimally viable products (MVPs) are developed. The goal of the workshop was to find out which blockchain solutions already exist in other industries and to access whether it is reasonable to apply such technology in the textiles supply chain.
During our first meeting with the (German) federal ministry for economic cooperation and development (BMZ) held at the end of 2019 with IBM on the topic of the use of blockchain technology in the textile supply chain and development cooperation, it quickly became clear that a joint project should be developed.
The resulting joint project would aim to create transparency from the raw material to the final product by means of providing a forgery-proof protocol for the material traceability. Moreover, the project would focus on determining whether and how blockchain technology can help improve working standards in the textiles industry. The MVP should be developed along our products, made from organic cotton originating from Uganda, but should also be transferrable to other production lines.
There are many who believe that blockchain is what will make supply chains over the next few years. Do you think it is an overstatement? Or is it an understatement? The technology has been around for a few years now. So, why is it that its use in supply chain transparency is still to take off fully?
The blockchain technology aims to redefine the most important business relationships by establishing trust, transparency and a newly discovered collaboration. We do not expect customers to turn towards sustainable, quality products, produced under fair conditions in the long run merely because of the transparent documentation of the textile supply chains. Immediate action must be taken in the textiles industry, as the industry is strongly interwoven internationally and the supply chains are very complex. Just like in the meat industry, there has been a complete detachment of the consumer from the production process. Hardly anyone is aware of the amount of effort and work that is invested in the production of textiles. The price pressure is extremely high-especially in our workwear industry. The blockchain can help make textile production chains more transparent and fair. Perhaps it will also develop into a helpful tool in complying with the future supply chain law.
There has been a lot of hype over blockchain, but beyond cryptocurrencies, the revolution has not happened as yet. How do you react to that (especially from the textiles/apparel point of view?
There is an increasing demand by consumers to understand the environmental impact the products they buy have on the environment. According to a global study conducted earlier this year by the IBM Institute for Business Value in collaboration with the National Retail Federation, 77 per cent of the interviewed consumers said that sustainability is important to them, and 57 per cent of the respondents said that they are willing to change their shopping habits to help reduce the negative impact on the environment.
In the clothing industry, these attitudes are more prevalent among and are more important to the younger population. A recent survey of European consumers by Morning Consult commissioned by IBM found that 75 per cent of respondents said they are concerned about the level of waste generated in the fashion industry. Furthermore, 64 per cent of respondents said that they are more likely to buy a garment if new technologies are able to meet the sustainability claims.
An effort is made in the fashion industry to address changing consumer attitudes while creating ways to be more transparent about the environmental impact caused by the materials they use. Blockchain is well suited to help garment manufacturers and their suppliers in working together to create a permanent, constant record of the origin of all materials used in production and build trust.
Could you tell us a bit more about how your end customers can identify links in the supply chain? How does it come across to an ordinary person (who has no clue how blockchain technology works)?
With the help of the blockchain solution, companies, consumers and partners will be able to identify the origin and the processing of the fabrics in every production and sales step, thus gaining complete transparency and traceability from fibres to the finished garment. The supply chain can be checked with an app by scanning a simple barcode attached to the finished garment. The aim is to create transparency from fibre-to-final product and to develop an almost forgery-proof protocol for the traceability of the processed materials. The data of a transaction, available to everyone involved, is recorded in blocks and stored in the form of an unchangeable chronological chain. Should an asset change ownership, this shall also be automatically visible within the blockchain.
How exactly did the collaboration with IBM work? What was the flowchart of the entire process like? How long did it take to develop? Did you follow any specific roadmap or did you improvise as you went along?
Within approximately the next 10 weeks, Kaya&Kato and IBM will develop a minimum viable product prototype that will cover the basic functionalities of the planned solution as a first step. A further objective of the project is to identify and ensure the developmental benefit of this blockchain solution and to develop the basis for apossible industry-wide solution. In line with the methodology IBM has developed for its blockchain solutions, they will be looking to redefine the most important business relationships in the ecosystem based on trust, transparency, and to create a more intensive form of cooperation with partners, customers and suppliers. This allows IBM Blockchain solutions to offer consistent, secure and controlled data transparency, creating new value that can also serve as documentation for industry regulators.
Initially, we shall be developing an MVP with IBM, and then we would like to give other companies from the textiles industry, including large ones, the opportunity to join our project.
What would be your piece of advice for other manufacturers who have either not started, or do not have a clue on how to go about implementing blockchain in supply chains?
The BMZ has long been calling for more transparency in global supply chains. The cooperation project between Kaya&Kato and IBM for the development of a blockchain-based solution enables the transparent documentation of the textiles supply chain. For companies and consumers, this guarantees transparency and traceability of their fibres all the way to the finished garment. With the help of the IBM blockchain solution, customers and partners can identify the origin and processing of the substances in every production and sales step.
The aim is to create transparency from fibre to the final product and to develop an almost forgery proof protocol for the traceability of ecological materials. In addition, we are also working on functionalities such as tracking the transport routes to enable CO 2 compensation, promoting the circular economy, blockchain access for employee representatives, storing minutes of meetings with management, or uploading certificates.
Kaya&Kato is one of the first companies to be certified with the "Green Button" by the BMZ. How does the new project fit into your scheme of things, and going forward on the Green Button trajectory? Also, what was BMZ's role in the project?
By claiming, "We change workwear", we take social and ecological responsibility in textile production in the area of workwear. Kaya&Kato organic cotton products are GOTS-certified and have been awarded the Green Button. Furthermore, the blended fabrics are also Oeko-Tex 100 and certified by the RCS (Recycled Claim Standard). We offer a transparent insight into the complex supply chain of the textiles industry, while production takes place exclusively in Europe or neighbouring countries. In order to manufacture high-quality products and guarantee fair working conditions, we maintain a personal relationship with our suppliers. Our certifications demonstrate this path, ensuring transparency and building trust with our customers. Furthermore, all certificates should be integrated into the blockchain and transmitted in the production chain in a forgery-proof manner. The federal development minister Gerd Müller and his team are committed to providing humane working and living conditions and to ensuring the protection and sustainable use of the worldwide resources. In the textiles sector, this is not an easy task, as the industry is internationally interlinked, and the supply chains are complex.
The BMZ has long been calling for more transparency in global supply chains and supports the cooperation project between Kaya&Kato and IBM to develop a blockchain-based solution for a transparent documentation of the textiles supply chain. In addition, the project shows another important development: the increased cooperation between business and development and the growing influence of digitisation in this area.
This article was first published in the December 2020 edition of the print magazine.
Published on: 02/02/2021
DISCLAIMER: All views and opinions expressed in this column are solely of the interviewee, and they do not reflect in any way the opinion of Fibre2Fashion.com.
