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Brands requirements and the evolution of leather making
Federico Brugnoli | 29 February 2016

I decided to start this new adventure as a blogger with a topic that is growing more and more in importance in the leather world: which are the factors that are influencing the choices of brands in the selection of their leather suppliers? Are these static, are they evolving? If so, are they evolving rapidly?

Brands requirements on leather purchasing

Different kinds of brands are active leather purchasers in the international market. Whether operating in the mid, high-end or luxury segment of the market and across multiple industries (footwear, apparel, upholstery to accessories and automotive), they have always been following the same principle: buying large portions of leather with the best possible quality / price ratio. This in my opinion has been the main driver, for years in the past. Now things are changing. And they are changing very rapidly. Leather price isn’t the ultimate factor that influences the choice of brands in the selection of their suppliers.

It is undeniable that leather-purchasing habits have undergone significant changes throughout time. Leather as a material has always been selected by its customers for its intrinsic properties of appearance and of technical performance. Leather is a long lasting material, with almost infinite design options, allowing creativity and with technical properties that are suitable for many different purposes: from sport and leisure, to outdoor applications, to fashion and luxury accessories to upholstery and car interiors. The common factor in all these applications is that leather is perceived by the consumer as a “high end” material, with a significant intrinsic values. The consumer, in other words, selects leather for its look, its smell, its long lasting properties and its charm.

Brands are perfectly aware of that, and most of them still propose large portions of their worldwide production with leather based products.
Buyers have always expected leather to be of good quality, long lasting and at a bargaining price. Now, different factors in the global market are leading to a rapid evolution of the customer expectations toward leather and toward tanneries. 

Why? 

The answer is simple: such a high end material, with the fascinating perception from the consumers cannot be unsustainable. Brands and their customers have started asking more to leather. There are three dimensions of sustainability, as it is commonly understood in the scientific community. Economic, Social and Environmental. Brands requirements are going in precise directions in each one of these. 


Challenges of remaining price competitive without compensating quality and efficiency 

The Economic factors remained unchanged over the years: leather must combine good quality and affordable prices, in all the different market segments. In this case the new challenges for tanneries in the global market are represented by an increased international competition, high specialisation of production in different areas of the world, somehow increasing pressure on prices and on industrial margins, with a concomitant need to increase efficiency and industrial organisation within the walls of the tanneries.

Leather supply chain management to be enhanced

The Social dimension of sustainability is declined in the leather market under two main aspects: supply chain management and protection of consumer’s health. The pressure for a better and more controlled management of the supply chains started earlier in the textile and clothing industry, with a significant boost after the well-known “Rana Plaza” event. More than 1.100 people working in the garment industry in Bangladesh died in April 2013. These people were working in factories producing also for famous international brands, which suffered serious reputational and (in some cases) direct economic consequences. Corrective actions implemented by most of these brands, gradually taken up by most of their competitors, included tighter controls on the working conditions of their suppliers, defining contractual requirements on aspects such as for example health and safety in the workplace, labour practices, avoidance of discrimination and periodically auditing them. This trend is in place, requirements are becoming stricter, auditing procedures are implemented more and more often. Working conditions in production are in other words becoming a competitive factor with a growing importance in global leather supply chains. Commercial relationships between tanneries and brands can stop, if such requirements are not met. If we moreover consider “Consumer Health and Safety”, we have witnessed in the recent past a proliferation of requirements from brands. The principle is that leather must be a safe product and therefore it must not create any risk for human health. To this aim, brands have developed detailed lists of substances on which specific requirements have been defined. Some substances are accepted only if below certain limits, others are not accepted at all. The technical term for this set of requirements is RSL (Restricted Substance List). RSLs in some cases contain stricter limits if compared with the international legislation. Sometimes there are moreover relevant differences in the requirements of different brands.

The verification process of conformance with these RSLs implies a significant amount of tests and chemical analysis on leathers, with costs that are rising year after year. There is hope in the leather market for a harmonisation of customer’s requirements, in order to optimize the testing and verification process. Several discussion tables are open in the international market and are expected to lead to significant improvements.

Leather making
Photo credit: ​National Beef
 
The emergence of various environmental assessment disciplines

The third dimension of sustainability is linked with Environmental protection. Also in this case we are witnessing a rapid evolution of Brands requirements. In the past, only few actors in the market were actually asking for pro-active behaviors of their suppliers towards environmental sustainability of their production. These were in most cases related to certification processes and auditing schemes according to different international standards (mainly ISO 14001) and to sector specific sectoral initiatives, for example the one implemented by the Leather Working Group.

The evolution of environmental sciences and the corresponding emergence of different environmental assessment disciplines have accompanied a parallel evolution of customer requirements. In particular, Life Cycle Assessment (LCA) methodologies and techniques are becoming more and more common and available at affordable prices. LCA studies aim at proving clear information on the environmental impact of the products throughout their entire life cycle: from the raw material stage through all its manufacturing phases (in some cases even considering some possible end of life scenarios). LCA is becoming an important tool for the analysis of the environmental impact of specific products and supply chain configurations. The intelligent and correct use of this information will allow in the short future to be able to produce Eco-Design leather products, taking into consideration raw material inputs, supply chain and logistics, process efficiency, energy production mix. Moreover, some brands are in the process of understanding how to eliminate and phase out from the production processes of the different components of their supply chain Hazardous chemicals. The SRLs mentioned before are now evolving MRSL (Manufacturing Restricted Substances List).  These include the substances that are required not only to be absent (or to be present below certain limits) in the product, but that need not to be used (or used within other limits) in the leather manufacturing process.

These three aspects of sustainability are therefore contributing to the evolution of brands requirements in the global leather market. Tanneries worldwide should in my opinion consider this fact very seriously and exploit the huge possibilities for their growth and their short and mid-term evolution.

Leather making
Photo credit: just-style.com

We will go more in detail in the next post.

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