As we’ve seen, artificial intelligence (AI) is already transforming the fashion industry in a significant number of ways, and it’s likely that this transformation will only continue to accelerate in the years to come and as technology continues to improve. In this portion of the course, we’ll look at how AI can be used to impact two crucial areas for the fashion business: supply chains and sustainability.

Fashion Supply Chains

Fashion supply chains work similarly to chains in other industries. They comprise a network of businesses, vendors, and sometimes individual workers or artisans involved in the process of sourcing material, manufacturing items for sale, delivering, storing, and eventually selling those items. In the fashion world, these chains can be incredibly complex, particularly as certain types of materials used in the construction of apparel and accessories can be quite specialized or rare. These chains include everyone from the farmers that grow cotton or linen to textile makers, distributors, sellers, other logistics providers, and of course designers themselves. As with other supply chains, key to the healthy functioning of the fashion industry is proper communication and timing or coordination between each component of the supply chain.

AI’s Impact on Supply Chains

Although often overlooked in favor of flashier applications like the creation of a new flavor of Coca-Cola or even a romantic companion, one of the most significant use cases of AI up to this point has been in the world of supply chains. This makes sense: supply chains create and process vast amounts of data, including ledgers of materials and products in various stages of manufacturing, records of shipments, payments, storage logs, and so on. AI is especially well-equipped to handle large amounts of data.

Beyond simply keeping track of this huge volume of information, AI can analyze and make recommendations or adjust procedures based on these findings. If a chain is experiencing a bottleneck that slows down the manufacturing process because of the speed at which a particular component can be sourced, for example, AI systems are able to detect this and find ways to work toward improving the slowdown.

But the benefits of AI on supply chains in general extend far beyond this type of data management and optimization of workflow. AI systems trained on huge numbers of photographs of materials and finished products can quickly identify any incoming materials or products that have deficiencies, flagging them to be removed from the manufacturing process or from the retail shelf, for instance. These tools can also offer preventative maintenance recommendations for all stages of the supply chain to ensure that systems do not break down, as well as risk management assessments.

AI and Fashion Supply Chains

The above applications of AI are true for many supply chains across different industries, including fashion. One application that is particularly relevant to the fashion space is in the management of historical inventory and sales levels. AI can keep track of these figures over time, helping designers and retailers to better predict future sales. As of late 2022, an industry-wide report found that about 85% of retailers experienced lost sales as a result of stockout—in other words, when their anticipated inventory levels have not matched with actual inventory needs and customers have been unable to buy products because they are not in stock. For luxury goods retailers, the figure is even worse at 92%.

Fashion is a seasonal industry that is heavily impacted by aesthetic trends. These factors make it especially primed for AI intervention when it comes to managing inventory. Companies use AI tools to gather information about how many items are likely to sell and when, enabling them to make more informed decisions about everything from which products to stock to how to store those items to which other participants in a supply chain may be best to seek out as partners.

Environmental Impact and Sustainability

It may come as a surprise that the global fashion industry accounts for about 10% of all man-made carbon emissions. This is more than the emissions of international flights and shipping combined. 85% of textiles go to the dump each year, according to a report by the United Nations Economic Commission for Europe. Beyond that, there are environmental impacts caused by the demand for agricultural products used in clothing manufacture, by the energy used in factories and other manufacturing settings, by the process of washing clothing, and more. Further, because almost two-thirds of all materials used by the fashion industry are made from plastic, the creation of many items of clothing can lead to harmful chemicals being released into the natural environment. Lastly, about 93 billion cubic meters of water is used by fashion companies each year.

AI’s role in reshaping the fashion world’s supply chains can have a beneficial impact on the industry’s environmental footprint as well. The European Commission is implementing a Product Environmental Footprint program to mandate that companies calculate and disclose the environmental impact of their products as they relate to supply chains. Other regulations exist in different parts of the world. AI can assist with supply chain traceability so that they can achieve sustainability at the product level—which requires that a company know every detail about the product and all materials that went into making it. This more detailed approach employs significantly more data, which again is where AI comes into play. AI works to expand the visibility of supply chains, helping to mitigate interruptions and other issues which can contribute to excess waste.

Traceability within the fashion industry’s supply chains will also help companies to avoid doing business with firms and countries that have lax pollution and waste standards, choosing instead those that are best able to limit environmental impact. Such visibility will likely be most welcome in the fashion space, where supply chains have been notoriously opaque for generations. Greater visibility will also likely have side benefits ancillary to those related to the environment: it will probably reduce the transit time of goods sent across borders and stuck in import detention, reduce the likelihood of tariff penalties, minimize criminal violations associated with transporting and distributing goods, and so on.

AI is not a panacea for all things related to environmental impact in the fashion industry. Companies must still make decisions to limit the negative effects of their work on the environment. And some argue that AI itself is having a significant detrimental impact on the natural world in its own ways. But this powerful tool can nonetheless help to address a host of issues that have plagued fashion for many decades.

Cheat Sheet

• Fashion supply chains, like those in other industry, comprise the network of businesses, vendors, individuals, logistics teams, and others that make it possible to source materials, manufacture fashion products, transport, store, and sell goods.
• AI can manage the vast amounts of data produced by and governing supply chains, making recommendations about how to remedy inefficiencies and reduce costs.
• AI can also monitor products as they are produced, pulling any defective items before they continue through the supply chain to be sold.
• Retailers can use AI to analyze and predict sales patterns. Roughly 85% of retailers lose sales each year as a result of stockout, or the unanticipated selling out of certain goods.
• In helping to make the supply chain more efficient, AI may also be able to reduce the waste and other environmental impacts of the fashion space.
• Fashion accounts for about 10% of all human-made carbon emissions each year, and roughly 85% of textiles end up in the dump.
• AI can provide improved traceability in the supply chain, helping companies to avoid doing business with heavily-polluting firms or countries with lax regulations in this area.