From Chaos to Structure

To explain the data challenge, Walter used a striking analogy: city traffic. If data flows in different industries were compared to traffic systems, each industry would resemble a different city. The aerospace industry, for example, would be comparable to a city like Zurich: highly regulated, highly structured and tightly controlled. The automotive industry might resemble Tokyo: extremely large and complex, but still highly organised and rule-based. And the textile industry? “Something like Lagos or Karachi,” Walter said. “Extreme complexity, very little regulation, very high fragmentation and very limited infrastructure.”

This comparison illustrates the core problem. The fashion industry is not just complex – it is structurally fragmented, globally distributed and often still poorly digitised. Data is exchanged via emails, PDFs, WhatsApp messages and Excel sheets across continents and companies. Walter illustrated this with a typical real-life example: a freelance designer in Paris works for a Spanish brand, receives a fabric sample via WhatsApp from an agent in Hong Kong, production takes place in China and Vietnam, goods arrive in Rotterdam, are distributed across several European markets and sold through different retail and e-commerce channels. After presenting this scenario, someone in the audience told him: “You just described exactly how our company works.”

This fragmented system is now facing increasing regulatory pressure. European legislation such as the Ecodesign for Sustainable Products Regulation (ESPR), the Digital Product Passport (DPP), Corporate Sustainability Reporting (CSRD), forced labour regulations and deforestation rules will require companies to provide structured, reliable and traceable data across the entire value chain. “This will not go away,” Walter said. “It may come slower than expected, but it will come. Waiting is not a strategy.”

The challenge, however, is that the textile industry cannot transform overnight. Unlike aerospace or automotive, the sector is extremely fragmented. Even the largest global fashion companies have market shares of only two to three percent. This fragmentation will not disappear quickly, even under regulatory pressure. However, regulation will likely lead to gradual consolidation, because compliance costs are easier to manage for larger organisations than for very small companies.

One of the central questions Walter raised was simple: Where is the product data? In most fashion companies, the relevant data sits in the Bill of Materials (BOM). But in the textile industry, the BOM is not a fixed document – it evolves over time. There is a design BOM, a sourcing BOM and a production BOM, and the information changes along the way. Materials, suppliers, processes and specifications are adjusted continuously. At the same time, future Digital Product Passport requirements will require access to many of these data points. Whether companies need five, fifteen or twenty-five specific data fields is almost secondary – the real challenge is that the system infrastructure must exist.

Another structural problem is the enormous diversity of companies in the industry. Walter again used his traffic analogy: in the same “traffic system,” there are a few companies driving highly sophisticated “cars” with advanced PLM systems and digital tools. Then there are many companies on “scooters” using lighter, more flexible tools. And finally, there is a very large number of companies that are “pedestrians” – with very low levels of digitalisation and structured data. “We are a structured-data-free zone in many parts of the supply chain,” Walter said. This reality means that there will not be one single technological solution that fits everyone. The industry will need interoperable systems, common standards and shared infrastructure that allow different levels of digital maturity to connect.

If the industry wants to move from “Lagos traffic” to “Tokyo traffic,” several elements are necessary. First, common rules and standards – comparable to traffic laws and traffic signs. Second, a common language and shared data definitions so that companies can exchange information efficiently. There are already many initiatives working on different parts of the problem: material standards such as Textile Exchange, product identification standards such as GS1, and various data models and traceability initiatives. The key challenge is not to create one single system, but to ensure that different systems can communicate with each other. In addition, the industry needs digital infrastructure – so-called data spaces – where companies can exchange information securely and in a standardised way. Projects such as the European data space initiatives or sector-specific platforms are currently working on these foundations.

Walter emphasised that the biggest change required is not technological, but strategic. Many companies still see data as an administrative burden – something required for compliance and reporting. In reality, data should be treated as a strategic asset. “If you don’t see data as a strategic asset, you have a problem,” he said. Historically, many companies in the fashion industry have operated with a high level of opacity. Not sharing information was seen as a competitive advantage. But in a world of transparency, traceability and digital product passports, this logic no longer works.

Walter outlined a practical roadmap for companies:

• Top management must understand and support the transformation.
• Companies must understand their value chain – both upstream and downstream.
• They must define their data needs – not only for compliance, but also for efficiency and innovation.
• They must select digital tools and systems.
• They should start with pilot projects and scale from there.
• They must train and incentivise their organisation.
• They must automate processes – which requires structured data first.

He also warned against jumping too quickly to artificial intelligence without proper data structures. “Using AI without structured data is like attaching a jet engine to a horse carriage,” he said. “It scares the horses and burns the carriage.”

At the end of his talk, Walter pointed out a fundamental difference between fashion and many other industries. In most industries, function determines form: products are developed to fulfil a specific function, and supply chains are built accordingly. In fashion, however, the logic is often reversed. “If this season pink cashmere knit tops are in fashion, companies build a supply chain for that,” he explained. “If next season it’s black synthetic stretch garments, the entire supply chain changes again.” This constant reinvention of products and supply chains makes standardisation and data management more complex than in many other industries – and helps explain why the sector has struggled with digitalisation for so long.

The transformation of the textile and fashion industry will not happen overnight. But the direction is clear: more regulation, more transparency, more data and more digital infrastructure. The industry is moving – slowly but inevitably – from chaos towards structure.