Conducting conflict mineral audits confirmed my past findings on the issue of traceability throughout a commodity supply chain. That is, end buyers' and non-governmental organizations' (NGOs) knowledge of how the cotton supply chain operates and what type of information (e.g. name of suppliers) is highly guarded by supply chain actors is scant. Unfortunately, it seems that most cotton end buyers only have relationships with, and knowledge of, the supply chain as far back as the mill.
Commodity supply chains are extremely complex; take cotton for example. It is mixed during processing at multiple stages by various actors who work within a network of relationships to exchange non-descript products on a spot market. Tracing a fiber back through this maze would be challenging even with the best data and data tracking system available. To compound the problem the industry operates with an intentional level of opaqueness as details of business transactions (e.g. prices, supplier names) are considered proprietary.
Some suppliers take the protection of this information so seriously that even their employees don't have access to it. Setting up a system to trace cotton from producer to origin whereby suppliers report all required information to confirm cotton's origin will take time. It is also worth considering having the auditee report all necessary information to an independent third party auditor who then reports the conclusion (i.e. absence of banned cotton) but not report all detail of business transactions (e.g. supplier names).
The cotton industry faces an additional challenge over the conflict minerals program. In conflict minerals there are very few smelters, the processors who first mix and transform the ore that contains the minerals and thus remove a distinct, verifiable link with its origin. In the cotton supply chain spinners, of which there are hundreds of thousands, would be similar to the smelters of conflict minerals.
In order to trace something out of a supply chain, one must trace virtually all of the material to ensure the quantities of origin claims matches the volumes actually produced (e.g. conduct a mass balance). Therefore, the only credible way to trace a source of cotton out of a supply chain is by routinely auditing all cotton spinners of which there are thousands. This would best be done through one comprehensive program. This is not realistically manageable.
I feel the cotton industry should help NGOs and apparel companies understand the complexities of the cotton supply chain so more effective and mutually beneficial alternatives might be explored.
Is there a way to overcome the challenges of tracking cotton from product back to origin? If so, should the industry embrace this challenge and create a system that could begin to trace lint through the chain?