Traceability and Circular Design: A New Challenge for Vietnam’s Textile and Garment Enterprises

For many years, delivery capacity, product quality and labor costs have been among the factors most frequently prioritized when assessing the position of a textile and garment enterprise. However, these criteria are now being supplemented by a more fundamental requirement: enterprises must be able to demonstrate where products are made, what materials are used, how many resources are consumed and how the products can be handled after reaching the end of their life cycle.

This change has not occurred at a single point in time. It is the result of several simultaneous trends, including environmental policies in importing markets, fashion brands’ emissions-reduction commitments, growing consumer demands for transparency and pressure to reduce dependence on virgin materials. For Vietnam’s textile and garment industry, traceability is no longer merely a tool for quality inspection. It is gradually becoming part of competitiveness and the ability to retain orders.

The European Union’s strategy for sustainable and circular textiles, published in 2022, set out directions for increasing product durability, reparability, reusability and recyclability. The EU Ecodesign for Sustainable Products Regulation, issued in 2024, also expanded the scope of policy from energy efficiency to many other product groups. Specific requirements for each product group still depend on implementing legislation, but the main trend is already clear: product data will play a greater role in international trade.

From Supplier Records to Data on Each Product

Traceability in textiles and garments is often simply understood as knowing where a garment was made. In reality, the scope of information that needs to be managed can be much broader. A product may involve fiber sources, spinning mills, weaving or knitting facilities, dyeing units, garment factories, trim suppliers, finishing processes and distribution systems. Each stage generates a different set of data.

At the raw-material stage, an enterprise may need to prove the origin of cotton, the type of polymer used in synthetic fibers or the proportion of recycled materials. For the production process, data may include processing facilities, chemical-treatment stages, water and energy consumption, as well as information related to working conditions. For finished products, the required information may concern fiber composition, usage instructions, reparability and take-back options.

Not every market or customer requires the same set of data. Enterprises should therefore not build systems around collecting as much information as possible without first defining how it will be used. A more effective approach is to map the supply chain, identify risk points and classify data into three groups: information required for compliance, information needed by customers and information used for internal management.

The Difficult Points Often Lie Outside the Garment Factory

Garment factories are usually the most visible link in the supply chain, but they do not determine the entire capacity for traceability. Many problems arise from earlier stages, particularly the blending of materials, processing through multiple tiers of suppliers or the use of trims whose origins are not managed consistently.

For example, an enterprise may have a fairly clear understanding of sewing-line productivity while lacking consistent data on incoming fabric lots. If information on purchasing documents, fabric inspection records and production files is not linked, proving the origin of the finished product will be difficult. This situation becomes even more complicated when the same product code is made from multiple material lots or allocated to several facilities.

For this reason, traceability should not be assigned solely to the quality or compliance departments. It involves purchasing, production planning, warehousing, information technology, product development and sales. When data is created at the point where it arises, the cost of checking and supplementing it later will be lower than reconstructing records after an order has been completed.

Product Design Determines Circularity

Collecting used clothing is necessary, but it is not enough to establish a circular economy in textiles and garments. Whether a product can be reused or recycled depends significantly on design decisions made from the outset.

Fiber composition, the combination of different materials, dyes, coatings, trims and product structure all affect post-use processes. A product made from multiple materials that are difficult to separate may meet aesthetic or functional requirements in the short term, but it increases sorting and processing costs when it becomes waste. Conversely, simpler designs that use easily identifiable and detachable materials facilitate repair, reuse or recycling.

The European Environment Agency has repeatedly emphasized the role of design in reducing the environmental impact of textiles and garments. A notable point is that much of a product’s impact does not occur only during sewing. Service life, washing frequency, colorfastness, reparability and end-of-life treatment options all need to be considered during product development.

Recycled Materials Should Not Be Equated with Circular Products

Using recycled fibers can help reduce demand for some virgin materials, but it does not automatically turn a product into a circular product. Enterprises still need to clarify the source of recycled materials, the processing technology, the proportion used and whether the materials can be recycled again after the product is discarded.

In particular, mechanical recycling and chemical recycling need to be distinguished when describing products. The two methods have different technical characteristics, input requirements and limitations. If information about the source of materials or the recycled content is presented inaccurately, enterprises may face reputational risks and disputes with customers.

For Vietnamese enterprises, a practical starting point may be to standardize the materials catalog. Each type of fabric, fiber, thread, zipper, label and trim should have an identification code, composition information and clear usage rules. When this catalog is integrated into design and purchasing, enterprises will find it easier to assess the potential for repairing, disassembling or replacing materials.

Digital Product Passports Create Pressure on Data Capabilities

The concept of the Digital Product Passport is regarded as one of the important tools in the EU’s direction toward sustainable products. In essence, it is a set of digital data associated with a product, allowing relevant parties to access information about the product’s characteristics, materials, origin or processing options within the scope prescribed.

A Digital Product Passport does not mean that all business data must be made public. Enterprises still need to determine which information is intended for regulators, which is intended for customers and which is used only for internal control. The important point is that data must be structured, verifiable and maintained throughout the product’s life cycle.

This represents a significant change for enterprises that manage information through scattered spreadsheets, paper records or disconnected software. When material data is held in one system, production data in another and delivery information stored separately, creating a unified file for a product will take considerable time. This data gap can become a weakness in negotiations with international brands.

Technology Investment Must Go Hand in Hand with Process Standardization

Enterprises do not necessarily have to start with a complex system. The first priority is to standardize product codes, lot codes, units of measurement, material naming conventions and responsibility for updating data. Enterprises can then connect tools for warehouse management, production planning, quality control and supplier management.

Technologies such as QR codes, RFID, cloud computing platforms or blockchain can support traceability, but technology cannot replace accurate input data. If the initial information is incomplete, entered incorrectly or lacks a verification mechanism, placing the data on a modern platform will only make inaccuracies get stored more quickly.

For small and medium-sized enterprises in particular, a suitable approach may be to implement the system by product group or for a specific customer. This enables enterprises to measure costs, identify bottlenecks and improve processes before expanding. Agreeing on a minimum data set with customers can also help avoid a situation in which each partner requires a different format.

Impact on the Competitiveness of Vietnamese Enterprises

Traceability and circular design add management requirements, but they can also create benefits beyond compliance. Good data helps enterprises identify loss rates, detect abnormalities in material consumption, compare supplier performance and improve production planning.

When quality and origin information is well organized, enterprises have a basis for moving from competing solely on price to competing on reliability. This is important as brands seek to reduce supply-chain risks and find suppliers capable of meeting increasingly specific environmental requirements.

However, the cost of transformation is not distributed evenly. Larger enterprises are more capable of investing in data systems, testing laboratories, product development teams and employee training. Smaller enterprises may face greater difficulties when they must simultaneously meet certification and audit requirements, digitize records and change materials.

The greatest risk is the creation of a new layer of procedures without any genuine improvement in capabilities. If records are prepared only to pass an assessment while production processes and data sources remain unchanged, enterprises will find it difficult to maintain consistency when customers request deeper inspections. Conversely, if traceability is integrated into operations, the initial cost can become an investment in long-term management.

Three Priorities for the Preparation Stage

The first priority is to map the supply chain for each product group. Enterprises need to know where they purchase materials, which processes are carried out by third parties, what data is retained and where information is at risk of being disrupted. A supply chain cannot be improved if the enterprise does not have a complete view of it.

The second priority is to include data requirements in contracts and supplier-selection processes. Merely requesting documents at the end of a period is often insufficient. Suppliers need to know what information must be provided, how frequently it must be updated, how discrepancies will be handled and who is responsible when the data cannot be verified.

The third priority is to link design with long-term use objectives. The product development department should assess durability, reparability, material complexity and post-use treatment options from the sample-development stage. If these criteria are considered only after the product has been completed, the scope for change will be limited and the cost will usually be higher.

The direction taken by the EU and developed markets indicates that environmental requirements in textiles and garments will increasingly shift from general commitments to verifiable information. Vietnamese enterprises cannot control the pace of policy change in its entirety, but they can proactively standardize data, improve supplier management and design products that are better suited to longer life cycles.

At a time when competition for orders is increasingly linked to transparency and environmental responsibility, traceability is no longer a task that takes place behind production. It is becoming a core capability that determines how deeply an enterprise can participate in the international textile and garment supply chain.