by This is no groundbreaking news that our world is in danger. The IPCC says we have 12 years before it’s too late, others say 18 months, and some critics believe doomsday is imminent. But one thing is clear: change is needed, and while we are already greener, we need to do more, if only to cushion the blow.
This change can only be achieved if everyone works together, although industry and politics must be the main advocates for change. Especially the fashion industry. Our high position in environmental damage is nothing new. In terms of greenhouse gas emissions, we managed to rank sixth, and when more factors such as water consumption, CO2 emissions and waste production are taken into account, the result casts an even worse light on us.
This negative connotation has a bitter taste, but looking at fast fashion and ultra-fast fashion, it’s not a surprise. But we don’t want to embarrass ourselves too much, there are already amazing improvements in the works. Especially the latest developments in textile technology, transparency, circular economies, communities and the growing aftermarket – to name a few – challenge our inadequacies.
However, these are not the only changes towards a more sustainable industry. Because let’s face it. Even if your products are made from the most sustainable and sustainable cotton and produced in the most sustainable and ethical way, having just 10% too much of your products is still wasteful and unsustainable. There are further advances that could revitalize the eco-friendly industry, and most of us seem to forget about them. In this case, we want to highlight in particular digital innovations that encourage sustainable transformation supporting a sustainable transformation. With the use of Smart Merchandise Management, some weaknesses of the fashion industry can be improved and transformed.
Unlock your hidden sustainability
When Ben Vermin, founder of Chainbalance, was working for the international sportswear giant, he was shocked to see the number of unsold products vegetating in warehouses. Mountains of unsold shoes, shirts, pants and more lie on the shelves. Waste of materials and waste of money. Although sustainability wasn’t an issue at the time, Ben already knew a change was necessary. Not just to turn those lost sales into profit and clear the never-empty warehouses – but to save our planet.
The huge amount of stock at the end of the season is the result of 2 major mistakes: mass production and wholesale allocation.
Many companies calculate their production for the next season based on financial goals, which translate into the volume of purchases per SKU, as well as the stock left in the central warehouse. Not only are they buying large quantities that are not based on actual sales figures, but additionally no one seems to delve into the complexity of ordering the right quantities by size, consequently ignoring the sizing curves.
Leftover stocks in other warehouses, stores or retail stores are mostly not taken into account when it comes to production volumes. For example, if DC is empty but other warehouses have 20% left, 100% is often recycled to fill the empty shelves. Not only is this a waste of investment, but it also leads to even more excess inventory.
Moreover, we allocate products in bulk to the market, leading to even more overstock and loss of sales for outlets or locations that need these products. Consumer behavior is dynamic, but due to the large range in terms of style, color and size, we cannot manually allocate products to the market by static systems based on consumption.
What are the options for overstocking?
Selling to second suppliers such as TK Maxx, discounting sales prices, sending products to outlets, or even destroying and incinerating, cannot be the solution to the problem. Options exist to prevent overstocking and overproduction from occurring before you have to come up with solutions to address these issues.
Smart Merchandise Management at the very beginning, POS – a way to support sustainable development
We all want to know how much we need to produce to increase profits and, of course, how best to prevent excess inventory. This is the goal, but not the first approach. Before you can make reliable production forecasts, you need to understand the sold-out behavior for each outlet. The journey begins with the consumer’s behavior, directly at the point of sale – both in the case of wholesale, retail, e-commerce and outlets. Data is needed to understand product behavior. For data analysis, you need trained solutions that are able to deal with bad and especially small data streams. By implementing solutions such as Smart Supply® by Chainbalance, SKUs per point of sale are analyzed daily and about 35% of overstock is prevented. This increases availability in warehouses and also provides a more accurate picture of consumption and demand for production volumes.
Replenishment is just one of the many instruments used to prevent overstocking. Even more important is the initial allocation – spawn of all evil, resulting in overstock, out of stock, shifts in stores and loss of sales. Based on product performance up to the volume curve, Chainbalance can predict the optimal initial allocation, resulting in fewer out-of-stocks and shifts to stores, which saves CO2 emissions and ultimately results in less inventory.
These functions are used to better understand the behavior of the product. By providing the algorithm with more data and configuring small adjustments by users, the solution can make reliable forecasts of production volumes and prevent unnecessary duplication of slow-moving products and single sizes. Smart Supply® users will receive a demand forecast after 12 months, based on analysis and decisions for each POS and each SKU. Of course, not without the ability to set predefined parameters such as life cycles, growth and new POS.
