Eliminating the Guesswork in Inventory Management with Real-Time Data

Written by Tom Vieweger, Supply Chain Expert & Daniela Orlandi, Sustainability Expert at Nedap Retail

May 5 2023

Did you know how many fashion products are produced every year? Recent studies say that more than 150 billion garments are manufactured worldwide yearly. According to the Ellen MacArthur Foundation, the last 15 years have seen a doubling in production. At the same time, there has been a 40% drop in the time clothing is actually worn. Still, the desire to fill one's closet with new styles is unbroken for most people. It's not just consumers' wardrobes that are overflowing. The warehouses of industry and trade are also full of surplus new goods and returns. 

At the same time, more and more consumers want to know where garments and accessories come from and under what conditions they were produced. As a result, consumer awareness and communication are improving, standardizing bodies aim to bring clarity and guidance, brands have begun experimenting with new materials, and suppliers are improving their production practices. 

Reducing the "guesstimation inventory" 

There is no scientific definition of "guess inventory," but specifically in the fashion industry, this is referred to the number of goods produced based on expected demand and the merchandise retailers keep on hand based on the hope they'll sell it, commonly known as safety stock. In this model, the production and supply chain departments estimate how much each item is needed for their next sale. Unfortunately, this often leads to over-production and waste since retailers want to avoid the risk of stock-outs and disappointing the consumer.  

Even with industry-leading planning tools and processes, guess inventory within the apparel supply chain is challenging to eliminate. The cost of storing aged inventory and discounting is high. But retailers can improve visibility into their supply chains to enhance their planning capabilities and meet legal requirements. For example, real-time inventory data could better predict demand and reduce excess stock. In addition, real-time inventory data can help retailers learn more about their business and consumer needs and wants. With these crucial insights, they can question if they need that additional safety stock to achieve their overall sales targets.  

Creating real-time insights and eliminating the silos 

Fashion supply chains are still complex and often siloed. They include e.g., processors, mills, factories, 3PLs, distribution centers, warehouses, marketplaces, and retail stores. Improving your ability to manage your inventory in real-time is a must if you're going to keep up with the demands of today's consumer market. Having better insights about inventory status and location enables eliminating the "guess inventory" and producing and supplying only what you need.  

More specifically, real-time stock visibility data from stores shared with supply chain partners enable better insights into what is selling in stores. This allows for better decision-making about production and supply—only producing and supplying what you need. Ultimately, this should help to prevent the destruction of unsold clothing. 

Digital IDs and product platforms 

The European Union3 wants to fight waste and overproduction. Therefore, by 2030, all textiles sold in the EU should be recyclable and manufactured in compliance with environmental rules and social rights. In this context, European Union, and other global authorities, are preparing to introduce a so-called digital product passport (DPP). The DPP will give every product a unique identity. It is a tool to digitally register, process and share information about where an item was made, how it was manufactured, and where it went through its entire supply chain before reaching the store. 

Already these days, the fashion industry generates masses of data. Still, it is often siloed, outdated, or hard to interpret to gain better insights into the business. Hence, the DPP initiative needs to include adopting data platforms to record each unique product's complete life cycle. As a global standard, EPCIS has proven to be suitable for storing and sharing traceability data along the entire supply chain. EPCIS represents a global standard for better traceability, transparency, and interoperability. By featuring Web APIs, the latest EPCIS 2.0 standard leverages the power of the internet and the easy, quick, and scalable transmission and data integration among supply chain partners.  

Sell more with less stock 

Sustainable fashion has been discussed intensively for years. While finding ways to produce fashion with a less harmful impact on the environment is certainly a step in the right direction, reducing the amount of clothing made in general is still the best option for the environment. It's important to produce and supply only what you need. 

Real-time stock visibility data shared with supply chain partners is essential for successful inventory management. As regulators and consumers begin to demand traceable fashion, having access to better, real-time stock data from stores, supply chain partners can make more informed decisions about their inventory and better anticipate future demand. This helps them to optimize their inventory levels and reduce the risk of overstocking or understocking. 


Tom Vieweger
RFID business expert
Tom Vieweger