Kurt Wedgwood
North America Blockchain Leader for Retail, Consumer Products, Travel & Transport IBM
With new data comes new insights
From design to raw material to fabrication and ultimately to delivery - the fashion industry is gradually moving towards a scenario which will require the entire system to work together as one entity. In an interview with Subir Ghosh, Kurt Wedgwood, IBM North America's Blockchain Leader for Retail, Consumer Products, Travel & Transport, discusses how blockchain can solve this problem by tying together the ecosystem and enabling a one-on-one interaction.
Many people believe that blockchain will eventually make or break supply chains. Do you think it is an overstatement which will change the game altogether or do you think it is an understatement in the sense that probably there is more that blockchain can do considering whatever little is being talked about?
Technology is an enabler. It can also be an innovator. And if I look at what we have just gone through-did covid-19 break or make supply chains? It becomes a bit rhetorical in your head. Some were broken in areas that was unexpected. So, blockchain is a technology which is really shining a flashlight on opportunities for improvement, better collaborations and outcomes. Whether it is going to make or break-the companies which try to go alone will be left out. But when they join together and are very transparent with their information, they will continue to evolve and be stronger. There is no definitive answer to make or break. It cannot be as bifurcated as that.
This pattern that you see is spread across geographies or is it confined more to the West where the markets are?
We are in an inter-connected global economy. It is not one market. Folks try to make opportunities for textiles in Africa or Latin America. So, it is getting back to that farmer level, but they are part of what is ultimately delivered to the end-customer-they are involved. That's where blockchain is connecting that farm to the consumer. It could be wool of a sheep in New Zealand and you can have a farmer tending to that. There is now traceability and transparency for the mills to take this individual farmer's wool and prepare it in a unique way to (be delivered to) you that can be traceable and identified. It's not just a demand driven market. Now, it is suppliers meeting the demand.
Do you think, will this drive compliance with laws and regulations across the chain and across geographies?
It is going to go further-beyond driving compliance, driving innovation and setting a new bar to create differentiation. It is up to individual countries to adopt new standards. So, as we are ready to start shining the light on the right metrics and having traceability all the way through, that's the next level. Companies are ready to do that. That is where it gets exciting. And fashion gets to lead.
There has been a lot of hype about blockchain and people have known about it for a few years now. But then, beyond cryptocurrencies and beyond fintech as such, the revolution so far has not kind of happened. How do you react to that? Do you think these are still the early days?
Are we still in early days? Well, we have had waves of technologies to compare ourselves to. One could be use of RFID. We know there was a cost threshold as well as putting the implementation systems around it. Another would be the internet-right from adoption to the years it has taken. What I really appreciate about this question is the expectation that a capability can be released today and really be pervasive tomorrow. We as a world have moved to those expectations. For example, the vaccine for covid-19-how did we so rapidly move into what is already in stage-III trials with 95 per cent effectiveness in short months? It's amazing what the world's expectations have become. That said, I appreciate the question because of couple of things: one is if we think about the supply chain like a food supply chain, it takes a mover and a use case to move the market. What Walmart originally identified was that for Walmart to do it alone was not going to be enough-it needed to be systemic. So Walmart reached out to IBM to establish the IBM Food Trust-it is amazing when we look back at the additional companies which said that it was a great use case and launched right on the heels. Implementation is the most sincere form of flattery. We appreciate what other companies have done or started. So that adds up to IBM being disruptive, and bringing a solution that turned to market so quickly. There are leaders and laggards and followers, and that's what we need to recognise. There is an adoption curve as shortened as it is, but I have seen leaders take off and now we are looking for what's in it for you in a supply chain to drive the incentive to continue to adopt and grow. So, you really need to look at how you are doing things and be open to doing things differently.
You talked about the adoption curve. My experience has been that the fashion industry has been notoriously laggard in technology adoption. Even now during the pandemic we can see only certain names (luxury brands which have suddenly realized that we should have probably invested much more time to online channels rather than brick and mortar stores). This is 2020. This is something they should have done 10-15 years back. Our industry has been very slow in technology adoption. So how do you react to it given the fact that you are dealing with this industry for sometime now?
When I look at fashion and also at what the technology world has moved to makes me think of the power of one-for that one unique piece, one unique customer and one unique moment. That means it's going to require the entire system working together from design to raw material to fabrication and ultimately to delivery. We have moved to where the data can really be about that one-on-one interaction. The benefit now for companies that are participating in this ever emerging economy is to take advantage of having that one-to-one connectedness. Blockchain is that scene which will help you in expediting, being efficient, being transparent, authentic goods, reduction of counterfeit, highlighting where the counterfeit is, etc. I am looking at it from that perspective-meet my need at that moment, at that time and take me somewhere new that the fashion industry is so good at.
I have gone through the blockchain section on the IBM website. It is a huge ocean. Could you tell us inbrief what IBM is doing in blockchain as far as the textile/fashion industry is concerned?
We look at what the opportunities in the market are. One of the early problems was counterfeit. This is where we have continued to emerge- putting the item level on to blockchain. And that's where we are again talking about the unit of one-that one piece that's going to go to. And also, discuss about what we are doing with post-consumer (recycling). As an example: H&M is now accepting used clothing. We guide them into trusted recycling or perfumes that need to be taken off the market because all the samples may need to be destroyed. But how do you prove that the samples have been destroyed? There are a number of areas in fashion that we are looking at: counterfeits, post-consumer recycling, faster settlement. That's where we need to look at the farmer and say from the textiles side: are we paying quickly to the farmers? Are they getting a connection now to the consumer? The connection with the consumer is one area we are working on-giving away transparency to the individual consumer.
Who is your ideal client - a brand / textile manufacturer or a retailer? Who is it that approaches you first?
It's not just one. Whenever one emerges, the first thing they want to solve or recognise is that we are better together. So, the first thing is: who else participates? That's who you want to bring to the table. Now ideally, yes, it is a market leader whosees and has that innovative edge. That's what is going to drive the new way. So, ideally it is a market maker who is an innovative, works in a partnership environment, and brings friends to the table. But, we also cultivate and grow startups.
You also mentioned about leaders. From your experience what is that you have seen because there will always be first movers and fast movers in terms of technology adoption. Is there any pattern that you have noticed that brands and manufacturersboth have been proactive into blockchain adoption or is it you see the logistic wing of companies more interested in this?. Do you see patterns?
The biggest pattern: what are the problems we are trying to solve. Two: what opportunity are we trying to create. So, don't push blockchain and say: here is the hammer. Rather, think about what you are trying to do. There are companies who did not have online presence or the current technologies to sail through the troubles that the disrupted supply chains have cost in this moment. I think everybody has become more salient as to the opportunities and problems. What blockchain is bringing is a new way to address it in an ecosystem format where we are teamed with the transporter, where we are teamed with where we may be storing inventory for wholesaling, all the way back to the brands and back to the fields and that demandsensing in being able to move that entire part very fast-is one of the big opportunities. If there is a trend, it is sensing and putting it up, reading that signal and have that fast supply chain meet the consumer need. So, if there a trend-now more than ever-people know what their problems and opportunities are and are willing and hoping to do things in a new way.
There is one particular thing which always crops up particularly in our country-the cost. So, how much is it going to cost to an average cog in the supply chain? How expensive is it going to be? Is it some kind of cost which is shared or distributed? How does that work financially?
One of the things is: what's the value in solving this problem-we circle around that. It is not just a company or an association (quite often associations come up saying the group needs this). We put the participants through empathy mappings-what is the incentive of alignment, what's in it for them? That helps you in how you monetise that network. Is it going to be an association which funds it, is it a founder's model where there are a few select founders that are investing, or is it a subscription model? Part of what is so great about blockchain is that it allows you to be innovative with your business model.
At the backend, you have to think about the role the participants play and in some situations about people who are just giving information. So, these are information contributors; why would they pay? You really need to vet what each participant is going to get and that's where I say: map your monetisation model relative to your benefits received and also to the cost. If you donot have the balance it is going to be a flat tyre that will not take off.
Could you tell us if IBM is working on something new right now with respect to blockchain in fashion industry?
We are working on couple of things. One would be the focus on the consumer-the millennial in particular-one who has a deep understanding of how that jeans was taken all the way from the original raw material in a sustainable manner. That is one piece we are working on right now. We are also working on apparel all the way from the field to consumer with traceability along each stop. That's telling the consumer story. Underneath that is the benefit for B2B because we have now digitised some of the operations. They always needed to be, but they didn't have the project to do that. Blockchain unlocked that digital capability.
Anything that you would like to add?
Blockchain is the foundation. So blockchain has the capability of tying together the ecosystem and with that is coming new transactions and new data which you haven't had before in your domain before. And with new data comes new insights and new pattern recognition. I think there's that logical move and that says: don't just start blockchain to solve but also be open to what other questions that could be answered. So, there is a very unique tie to the other capabilities like IoT, AI, etc which are so salient, important for blockchain's evolution.
Published on: 25/01/2021
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.
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