Anton E. Schumann (Source: Gherzi)
Today, the textile industry is facing many challenges ranging from changing supply chains and consumer behavior, to new, sustainability-driven legislation, and a shortage of raw material and work force. Blockchain technology can help address these. On February 6, 2023, Dr. Michael Gebert, Chairman of the European Blockchain Association e.V., Munich/Germany, and Anton Schumann, CEO and Partner of Gherzi Germany GmbH, Chemnitz/Germany, signed a Memorandum of Cooperation. Going forward, both organizations will work together to bring innovative technologies and management concepts to the textile industry. Here, Anton Schumann talks about the challenges for businesses and the transformational potential of blockchain for the industry.
Gherzi is an organization focusing on consultation and engineering services for the textile industry. What are the biggest challenges the industry is facing today?
The textile industry is one of the oldest industries and has gone through several transformations in the past centuries. Today, we have entered yet another transformation phase, in which the industry is challenged to adapt and make fundamental changes to existing supply-chains and processes. Currently the industry suffers from a lack of transparency in the supply chain, inefficient management of inventory across different stages of the supply chain, and an increased risk of natural disasters and other unforeseen events which can lead to loss of raw materials, cash flow, and reputation. That said, our number one challenge is sustainability. The designated goals and top priorities are to become carbon-neutral, switch to green energy, and use sustainable materials and garments. Closely linked to these goals are management challenges like developing access to new markets and attracting the right talent.
How could blockchain technologies help address these challenges?
Basically, blockchain technologies can help transform our industry in 2 major ways. Firstly, with ensuring quality standards through trustworthy certification. The textile industry is a very global business, with many players involved in producing one single piece of clothing. Often many of these players are competitors. In order to provide trust-worthy certification for the whole supply-chain, we need to able to verify data without exposing the data to other parties. Comparable to the mobility industry, which in order to create a seamless experience for the end user also needs to overcome the coopetition challenge, i.e. to ensure the cooperation of all parties, it needs to integrate mobility data while at the same time keeping it protected. The mobility industry has already shown that this is something where blockchain can demonstrate its advantages.
Secondly, also related to the global nature of our business, blockchain can help us meet new demands regarding specification and test procedures for global supply chains. The German Supply Chain Act is especially strict. With the same principle as explained before, blockchain technology can help us create digital product passes and transparent supply chains while still protecting the data of the parties involved. This will enable the industry to save time and money in preparing to meet the standards of the EU Green Deal and the goals of the EU Ecodesign Directives which requires companies to reduce, recycle and, repair.
All in all, blockchain can help the industry become more transparent, efficient, and sustainable.
Speaking of digital product passes, how will digitalization and web3 affect the textile industry?
Digitalization definitely plays a very important role. First of all, it opens up a unique opportunity for production companies. A digital environment enables them to overcome the supplier dilemma as it allows them to bypass the retail B2B chain and sell directly to the consumer – globally.
Regarding web3, I guess at this stage no one can fully grasp the impact it might have on global business as a whole. However, from what we are seeing so far, the textile industry has a front seat in the web3 consumer industry. Adidas, YSL, Prada, and many others are already successfully exploring the market for digital fashion. Again, blockchain can be a means to protect copyrights of designers and digital producers.
What are the next steps in the cooperation with the European Blockchain Association (EBA)?
What we like about the European Blockchain Association is its hands-on approach and its goal to create real results. Accordingly, we agreed to explore and leverage the potential applications of blockchain technology throughout the textile value chain. With the EBA’s extensive experience and expertise in blockchain technology and Gherzi’s broad customer base in the textile sector we will work on launching pilot projects to test and demonstrate the possibilities of blockchain technology for the textile industry.