A data-driven approach to addressing fashion waste

Fast Company

5 hours ago

Recent images of fire ripping through the world's largest resale clothing market in Accra, Ghana, provided shocking evidence of overproduction in the global fashion industry. Clothing waste is ending up in our oceans and landfills, including one in Chile that is large enough to be visible from space. And if the environmental price is high, so is the cost to brands—excess inventory that represents $140 billion in lost sales and increased reputational risk.
Pressure to address this is increasing, and regulations are tightening. By 2030, apparel and textile producers in California must join a 'producer responsibility organization' that is charged with creating and developing plans for the collection, repair, and recycling of their goods. Meanwhile, European clothing and footwear brands must now report on their excess stock and, from 2026, can no longer dispose of unsold inventory.
But while companies have compelling sustainability and business reasons to address the problem, where do they start?
Understanding the challenges is key to solving the problem. Today's supply chains are long, global, and complex, particularly in the fashion industry. From the sourcing of raw materials to their conversion into a fabric or polymer, their assembly in a garment factory, and their transportation to retailers, the clothes we wear pass dozens of touchpoints before reaching the fashion store checkout counter.
Other factors lie behind fashion industry waste. These include the drive for economies of scale, the risk of missing sales because of stock-outs, and the relentless consumer demand for new styles. This leads fashion companies to overproduce. In 2023, for example, the industry produced between 2.5 billion and 5 billion items of excess stock.
Even if companies want to step up and take remedial action, the complexity of sustainability challenges and production variables means they face tough tradeoffs through which addressing a negative impact in one part of the supply chain may end up having a negative impact elsewhere.
What's clear is that acting after the fact is not a solution. In fashion, the sheer scale of overproduction and waste means we cannot recycle our way out of this particular sustainability challenge. Instead, waste needs to be addressed before it enters the supply chain by curbing overproduction through smarter inventory planning. This is where the fashion industry can turn to a powerful tool: technology.
AI AND ML TOOLS ENABLE MORE PRECISE PLANNING
First, planning solutions enable companies to understand the problem. By applying artificial intelligence (AI) and machine learning (ML) to comprehensive, timely, and high-quality data, companies can capture sustainability information and supply-demand data that is based on real activity in the supply chain—not assumptions. They can also see where sustainability and production tradeoffs are occurring.
This gives them the visibility needed to make planning decisions across departments internally and with suppliers and trading partners externally, while aligning those decisions with their sustainability goals.
Scenario planning can then be applied to different demand patterns and inventory management to model how different strategies might influence production plans, as well as carbon emissions and waste. This enables companies to manage and track their progress towards both sustainability and business objectives.
Key to this holistic approach is having a single platform that brings together sustainability and supply chain data, providing end-to-end visibility on the company's activities and those of its supply partners. This enables collaborative planning and the ability to execute on insights from data and analytics, all in one place.
By integrating data on demand, supply, inventory, and logistics on such a platform, companies can avoid overproduction and overstocking—and the waste that goes with that—while reducing costs, increasing capital resource efficiency, and lowering their carbon footprint. Brands can also respond faster with more relevant solutions to the disruptions that will inevitably come their way.
DATA-DRIVEN INSIGHTS INCREASE RESILIENCY
In the world of fashion, knowledge is power. Armed with new data-driven insights, companies gain more market agility. Moving swiftly and precisely, they can react to everything from sudden changes in the weather to fashion micro-trends and shifts in popular culture—all based on specific, segmented, and highly localized information.
Critically, all this data feeds back into the supply chain in the form of production orders that more accurately reflect demand signals. This means that the right amount of product can be directed to the right place at the right time. Better decisions can then be made around logistics, whether that's load optimization or the selection of routes and modes of transport that generate the lowest emissions levels.
With better data, companies can also do more to manage a growing logistical and cost headache: returns. Customers can be offered more convenient, self-service drop-off locations, which speed up the returns process and enable returned goods to be resold in the same season, while there is still demand. This reduces the need for markdowns and minimizes waste.
Meanwhile, improved supply chain visibility enables companies to build resilience in a time of increasing frequency and severity of weather volatility, geopolitical uncertainty, trade tariffs, and other supply disruptions.
Data and analytics solutions make it possible to break down traditional silos between sustainability data and data on supply chain operations, informing decisions that are better for the company and for the environment.
This comes at a critical moment. We are at a point where securing the health of the planet and its people means we have to act with more urgency and on a greater scale than we have in the past. For the fashion industry, pressure is mounting to align commercial strategies with the needs of a fragile global ecosystem.
Once equipped with a single, integrated real-time platform for planning and execution, and that includes all trading partners, brands can acquire the agility needed to predict and respond to demand at a time when fashion trends are moving faster than ever. They can build the resilience needed to withstand today's growing range of supply chain shocks. They can ensure that sustainability decision-making goes hand in hand with inventory management and production planning. By harnessing technology, companies can continue to thrive while also respecting planetary boundaries.