The fashion business has long had an overproduction problem, but the coronavirus exacerbated the issue as store closures led to mountains of unsold goods that are destined for deep discounts, liquidation or landfills.
Chain of Demand wants to help fashion get out of its overstock rut by leveraging predictive analytics. The company’s artificial intelligence-powered platform gives retailers insights at the stock-keeping-unit level, allowing them to reduce excess inventory by focusing on what will actually sell through, simultaneously improving sustainability and profitability.
“We believe that with better inventory planning, brands and retailers will be able to buy more accurately, and therefore reduce markdowns and deadstock,” said AJ Mak, CEO and founder of Chain of Demand. “This would have a great environmental impact because it would help stop the production of what would ultimately be unsold goods.”
Aside from the environmental impact tied to production and waste, cutting back on excess inventory also reduces the footprint for logistics, including packaging and transportation.
With the unique challenges of the pandemic for fashion retail, Chain of Demand recently debuted a dedicated COVID-19 Retail Tracker. This tool charts stock movement, retail sales and cancelled orders, while also predicting when major markets will reach recovery. Chain of Demand also aims to establish projections for possible second waves of the contagion, which is experiencing a resurgence in parts of the world, helping retailers plan for more potential changes in consumption.
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“Our free COVID-19 Retail Tracker was developed with one thought in mind: to help brands and retailers make better decisions in such uncertain times,” said Mak. “We thought it’d be necessary to provide retailers with more data-driven insights to help them better plan for the upcoming quarters.”
Chain of Demand’s data science team leveraged its previous experience following the SARS epidemic for its COVID-19 tracker. However, the firm still needed to adapt its earlier epidemic tracking methods to account for the differences with this new virus. The team’s background in virus tracking and retail analytics also helped it overcome the challenge of deciding which sources to pull from and what information to display, given the wide range of public data available about COVID-19.
By making the tracker free, Chain of Demand is looking to put its projections into the hands of more decision makers.
But data is only half of the answer to achieving demand-driven procurement models. The other half is having suppliers that can quickly respond. “Our industry really needs to collaborate more closely with its supply chain by the sharing of sales and demand data,” said Mak. “It’s only when data is shared across the value chain that any predictions or recommendations can fulfill its objective.”
Looking ahead, the firm has its sights on broader sustainability key performance indicators.
“We are working with sustainability experts and consultancies to come up with the best way to track the environmental impact of every product manufactured and shipped,” Mak said. “Unfortunately, there is not a widely accepted metric or index that we could use, and it’s also one of the reasons why this task is so difficult.”
What’s the most important issue the fashion industry has yet to address?
“In our opinion, the most important issue the fashion industry has yet to address is the willingness to implement data-driven decision models to all levels of operations. This would include the setup of digital transformation or innovation teams, who would be the crucial bridge between innovation and business objectives.”
Sourcing Journal’s Sustaining Voices celebrates the efforts the apparel industry is making toward securing a more environmentally responsible future through creative innovations, scalable solutions and forward-thinking initiatives that are spinning intent into action.
See more of our Sustaining Voices honorees and their stories, here.