Has Fashion Fixed Its Italian Supply Chain Problems?

Over the last three years, the Italian fashion industry has been dogged by a series of supply-chain scandals. Dramatic moments included early-morning police raids on suppliers to some of luxury’s biggest names and court-appointed administrators at Dior, Armani, Valentino and others.

Police found factories supplying luxury’s biggest fashion houses employing undocumented labourers working 15 hours a day while living in degraded conditions, with wages of just a few euros an hour and machines with safety guards removed to speed production. The situation boiled over in October last year when Tod’s chairman Diego Della Valle lashed out publicly at the Italian prosecutor leading the cases against the sector, saying companies manufacturing in Italy were receiving unfair scrutiny.

The headlines have been less dramatic in recent months but investigations continue.

In July, prosecutors sought supply-chain and governance records from nine brands including Chanel, Moncler and Brunello Cucinelli after finding illegal workers and unsafe machinery at subcontractors. None of them have been placed under investigation.

The stakes go beyond compliance. Italy’s luxury industry is built on a highly fragmented manufacturing base, with tens of thousands of small and micro-sized companies supplying the major brands. That network has contributed to Italian fashion’s reputation for craftsmanship and underpins the premium prices luxury brands exact from customers. But it also makes the supply chain harder to monitor.

How have brands addressed the scandals?

The abuses were thrust into the spotlight at the start of 2024, when a Milan court placed premium Italian label Alviero Martini under judicial administration after labour police discovered problems at the brand’s suppliers. Prosecutors alleged the company had failed to take adequate steps to monitor labour conditions in its supply chain. Armani faced the same sanctions in April of that year and Dior two months later.

The brands were required to work with an external supervisor to bolster supply-chain oversight. In all three cases, the companies acted quickly enough for the court to lift judicial oversight before the end of their year-long court-appointed terms. Cases at other brands including Valentino and Loro Piana followed a similar pattern, with luxury labels responding with assurances they had reinforced their supply-chain protocols.

Industry insiders say there has been a notable shift towards stricter systems of oversight, with brands conducting more audits and consolidating suppliers to reduce labour risks. However, these changes have also added more pressure on manufacturers.

“The ones really taking the costs for all this are suppliers. Nobody pays for time spent on audits,” said Caterina Occhio, a responsible supply-chain expert who works with the UN.

Critics say the biggest challenge remains unaddressed. They say illicit supply chains powered by labour abuse are a feature, not a bug in a luxury system that has historically prioritised margins and speed over worker welfare. Prosecutors in Milan allege brands turned a blind eye to exploitation in order to maximise profits.

“There’s pressure to create structural derisking strategies. … That doesn’t mean [brands] are changing their purchasing practices,” Occhio said.

How has the government addressed the scandals?

In addition to work they’ve done in-house, brands have also turned to government for support, arguing that long and complex supply chains are extremely difficult to control, especially when incidents often occur in factories that have been subcontracted without authorisation.

Industry trade associations have been working with government bodies for years to develop mechanisms to simplify and streamline compliance, to make it easier for both brands and suppliers to act responsibly. But results have been slow to materialise and sometimes controversial.

The Italian government has yet to deliver a coordinated national response to supply-chain abuses, which have also emerged in other industries including construction, agriculture and logistics. That has left fashion companies facing a patchwork of audits, contractual requirements and other controls.

At the national level, industry groups pushed for a common certification framework for fashion supply chains, including requirements around documentation, contracts, labour-law compliance and controls. Provisions for this were added to the government’s small and medium-sized business bill and approved by the Senate in 2025. But they were later removed by the Chamber of Deputies, after a swell of criticism that the changes would exonerate the big brands from future liability for what happens in their supply chains.

The so-called Milan Protocol, a regional initiative signed by local authorities, prosecutors, police, unions and industry groups has emerged as the most advanced effort to build a framework for monitoring fashion supply chains.

It combines contractual requirements across the supply chain — covering workers’ rights, health and safety and social-security contributions — with a voluntary digital platform to give companies and authorities greater visibility into their suppliers. A beta version of the platform exists, but industry groups and software developers are still working on the final system.

Labour advocates have been critical of the voluntary initiative, however, noting it mirrors similar efforts in other industries that have had limited success.

“We are putting the tools in place [to improve the supply chain], but only time will tell if they are the right tools,” said Danila Passantino, head of legal affairs for Confindustria Moda, the fashion sector’s arm of Italy’s largest employers’ lobby. The goal, she said, is to move from a largely emergency-driven response to a preventive system that can stop problems before they become scandals, without further burdening companies.

A major part of that effort is to standardise the way companies monitor their suppliers. Confindustria Moda wants common standards for audits and due diligence so manufacturers do not have to undergo different, costly and sometimes overlapping checks for every brand they supply. The association also wants support for smaller companies to help cover the cost of audits and certification.

What comes next?

Concerns have grown about the rising cost of audits as companies face pressure to devote more resources to monitoring suppliers.

Gruppo Florence, an integrated group of Italian manufacturers working for luxury brands, has argued that compliance management can be simplified by drawing on scale. A small manufacturer may not have the resources to employ people dedicated to monitoring its supply chain, while a larger group can spread those costs across several businesses. This could lead to more consolidation among Italy’s manufacturers.

Therein lies the difficult balancing act Italy is still navigating three years after judicial investigations emerged. The fashion industry hasn’t settled on how to make supply-chain oversight both rigorous enough to prevent worker exploitation and practical enough to preserve the supply base on which Italian manufacturing depends.

There seems to be little appetite to wrestle with the most uncomfortable question of all: how much the industry’s underlying business model is contributing to the problem.