Traceability Becomes a New Competitive Advantage for the Textile and Garment Industry

For many years, traceability in the textile and garment industry was often viewed as a requirement for quality inspections or for proving the origin of goods. This approach is changing. As major markets increase their requirements for environmental data, raw materials, production conditions and recyclability, the information accompanying a garment can become a factor that directly affects access to orders.

For Vietnamese businesses, this shift is taking place as supply chains become increasingly fragmented. A shirt may use yarn from one country, be woven and dyed in another, cut and sewn in Vietnam, and then distributed across multiple markets. If data is interrupted at any stage, businesses will find it difficult to prove that the product meets requirements relating to materials, emissions, chemicals or social responsibility.

Therefore, traceability is no longer merely a matter of keeping records to deal with an inspection. It is gradually becoming a management system that helps businesses control inputs, reduce risks and maintain relationships with international brands.

From Origin Records to Product Life Cycle Data

The concept of traceability in textiles and garments covers more than identifying where a product was sewn. Data may include the type of yarn, composition percentages, material sources, suppliers, spinning, weaving, dyeing, finishing, cutting, sewing and distribution processes. For more demanding requirements, businesses must also prepare information related to energy, water and chemical consumption, emissions, and the product’s repairability or recyclability.

The difficulty lies in the fact that this data does not belong to a single business. A garment factory can only accurately confirm its own processes, while information about yarn and fabric must be provided by companies further upstream in the supply chain. If each business uses a different recording method, consolidating the data will be time-consuming and prone to discrepancies.

The European Union has created a new policy framework for this issue through the Ecodesign for Sustainable Products Regulation, commonly known as the ESPR. The regulation was introduced with the aim of expanding requirements for durability, repairability, resource efficiency and product information. One important tool mentioned in the policy framework is the Digital Product Passport.

A Digital Product Passport is not necessarily a separate document accompanying each product. In essence, it is a collection of electronic data that can be accessed through an identifier, QR code or similar method. Depending on the product group and specific regulations, the data may serve regulators, businesses in the supply chain, consumers and end-of-life processors.

Why Is Data Becoming a Commercial Requirement?

International buyers increasingly need more information to evaluate suppliers. They are concerned not only with price, quality, delivery time and production capacity, but also need to consolidate data for sustainability reports, supply chain risk assessments and compliance with regulations in importing markets.

This creates an important change in the relationship between garment businesses and their customers. Previously, a factory could complete an order based on the product’s technical specifications. Now, the factory must also prove that the information behind the product has been recorded consistently and can be verified. The ability to provide data can therefore affect whether a business is invited to participate in an order.

Supply Chain Links Most Prone to Breakdowns

The greatest challenge in traceability lies in raw materials. The textile and garment industry uses many types of fibers and materials with different characteristics, from natural fibers, man-made fibers and recycled fibers to blended fabrics. Each type of material has its own requirements for certification, methods of calculating composition percentages and evidence of origin.

When recycled fibers are used, businesses need to distinguish between information about the source of waste, the recycling process and the finished output. A general statement that a product “uses recycled materials” is not enough to prove the proportion, production method or consistency of the material. If the data is not supported by documentation, the business may face risks when a customer requests an inspection.

Dyeing and finishing also require attention. These processes may involve the use of water, energy and chemicals. Data from these stages is often held by weaving or dyeing factories, while garment businesses may not directly control them. Without a mechanism for sharing data at an early stage, garment factories will find it difficult to complete records for the entire product.

Another weakness is the way suppliers are managed. Many businesses still store information in spreadsheets, emails or paper records. These tools may be suitable for small-scale operations, but they become difficult to control as the number of product codes, suppliers and customer requirements increases. Differences in material names, units of measurement, update times or document versions can reduce the reliability of records.

What Do Businesses Need to Prepare?

Start by Mapping Data, Not by Buying Software

Digital transformation for traceability is often misunderstood as the implementation of a technology platform. In practice, the first step should be to determine what data the business has, where the data is created, who is responsible for it and which parts are still missing.

The approach can begin with a product group or a specific supply chain. The data map needs to answer basic questions: Where do the materials come from? Which documents prove their origin? When is the information updated? Can the data be reconciled with invoices and production orders? Who has the authority to edit or approve the information?

Working within a defined scope helps businesses avoid widespread investment. After testing, businesses can identify the processes that cause the most errors, the types of data that are most difficult to collect and the suppliers that need the most support.

Standardize Recording Methods Across Departments

Traceability only has value when data between departments can be connected. The material code used by the purchasing department needs to match the code used in the warehouse, production planning and quality records. Similarly, fabric lot information must be linkable to cutting orders, sewing orders and finished-product lots.

In addition, it is necessary to clearly define which data is mandatory, which data is only needed when requested by customers and which evidence is acceptable. A simple process implemented consistently may be more useful than a system with many functions but poor updating discipline.

Work with Suppliers Early

A garment factory cannot complete traceability on its own if suppliers of yarn, fabric and accessories cannot provide corresponding information. Therefore, data requirements need to be included in the supplier selection and evaluation process, rather than appearing only when a customer sends a questionnaire.

Suppliers can be classified according to their importance and risk level. For materials that have a major impact on environmental or origin claims, verification should be stricter. For lower-risk accessories, businesses can apply a more concise data set. This tiered approach helps focus verification resources on the points most likely to have the greatest impact.

Impacts on Costs and Business Models

Establishing a traceability system will certainly create additional initial costs. It requires businesses to allocate resources for training, process standardization, supplier verification, record digitization and, in some cases, upgrades to production management systems. For small and medium-sized businesses, this can be a significant barrier if customers have not clearly communicated their requirements or established a cost-sharing mechanism.

However, costs should not be viewed solely from a compliance perspective. Good data can help businesses identify inventory discrepancies, reduce material mix-ups, shorten the time needed to find records and resolve complaints more quickly. When production data is connected, businesses also have a better basis for evaluating the performance of each process.

At the commercial level, traceability can help businesses shift from competing purely on price to competing on reliability. A factory with clear material records, stable processes and the ability to respond quickly to data requests will be better positioned when working with brands that need to control supply chain risks.

Nevertheless, traceability should not be viewed as a tool that automatically generates higher prices. Commercial value also depends on product quality, delivery capacity, customer relationships and the ability to meet other requirements. Data only becomes an advantage when it is accurate, verifiable and integrated into production decisions.

The Boundary Between Transparency and Overstated Claims

Data requirements also create pressure on environmental communications. In environmental communications, it is necessary to distinguish between information that has been substantiated and goals that are still being pursued. A product containing recycled materials does not mean that the entire product has a low environmental impact. Similarly, using a material considered more sustainable cannot automatically prove that the product’s entire life cycle has been optimized.

A cautious communication approach is to clearly state the scope, methodology and limitations of a claim. If the data only covers production at the factory, the business should not present it as though the entire supply chain has been assessed. If the material percentage is calculated using a specific method, that method needs to be documented so customers can correctly understand the information.

This is also why businesses need coordination among production, purchasing, quality, legal and marketing departments. A claim made in the market without supporting records can create greater risks than the benefits of short-term communication.

Prospects for Vietnamese Textile and Garment Businesses

Vietnam has the advantage of being an important garment production hub in the international supply chain, while also having an export-oriented business system familiar with brand audits and standards. However, the level of traceability readiness varies among businesses, particularly among those that rely heavily on external suppliers or use manual management processes.

In the coming period, the gap between businesses may not be determined solely by factory size. Businesses that know how to standardize data, maintain consistent records and work transparently with suppliers will be better able to adapt to new requirements. Conversely, businesses that only begin collecting data when customers make urgent requests will face higher costs and a greater likelihood of errors.

Preparation should also not wait until specific regulations take effect for each product group. Legal requirements may be introduced according to a roadmap, but major customers often establish their own supply chain standards and require suppliers to comply before mandatory deadlines. Early preparation gives businesses time to test, correct errors and negotiate data responsibilities with partners.

For the textile and garment industry, traceability is ultimately not a standalone technology project. It is a combination of material management, production control, supplier relationships and transparency in commercial communications. Businesses that view data as part of product quality will have a stronger foundation for adapting to a market that increasingly demands evidence of how goods are made.