A thorough explanation of the challenges and solutions for apparel inventory management! We also introduce how to utilize "used clothing purchase"!

In the apparel industry, inventory management is difficult due to the unique business structure of a wide variety of products and short cycles, and this is a major concern for management. In particular, issues such as unsold items, inventory loss, and dependency on individual employees are common to many companies.

In this article, we will summarize the issues with inventory management that are unique to the apparel industry, and provide a wide range of explanations, from efficient management methods and improvements through system implementation, to inventory disposal methods that utilize "used clothing purchases," which have been gaining attention in recent years. By the end of reading, you will have some hints for the optimal inventory management that suits your company.

The importance and current status of inventory management in the apparel industry

In the apparel industry, product turnover is high and the products that sell change with each season, so the skill of inventory management is directly linked to business management. In particular, in a business model that handles a wide variety of products, inventory surpluses and shortages immediately affect profits, so an appropriate management system is essential. Here, we will take a detailed look at the basic issues surrounding inventory management that are unique to the apparel industry and the background to them.

Inventory issues faced by a multi-product, short-cycle business model

In the apparel industry, high-mix low-volume production is the norm, and it is heavily influenced by seasons and trends. This means that product turnover is extremely fast, and inventory risk is always a problem.

In particular, the following problems are likely to occur:

・If you miss the trend, you will end up with a lot of unsold items.

・Products that can only be sold at certain stores are overstocked at headquarters and other stores

・If you misjudge the sale timing, your gross profit margin will drop significantly

All of these challenges are difficult to avoid without accurate forecasting and real-time understanding of inventory.

Why proper inventory management affects profits

Inventory is an asset, but at the same time, excess inventory is a cost, and insufficient inventory can lead to lost opportunities. Maintaining an appropriate amount of inventory is not just about operational efficiency, but is also directly linked to improved profit margins.

Proper management is important for the following reasons:

Eliminate wasteful storage space and labor costs

・Prevents sales opportunity losses due to missed sales or out-of-stock items

・Reduce the number of sales and discounts to maintain profit margins

In other words, inventory management is a strategic function that plays a key role in both cost control and sales maximization.

The difficulties of inventory management vary depending on the business type

Although the apparel industry is generally referred to, the challenges of inventory management vary depending on the business type, such as SPA (manufacturing retailer), select shop, outlet, and e-commerce specialty store.

Each business requires an inventory strategy that is suited to its type, and inventory optimization cannot be achieved with a one-size-fits-all method.

Common problems with apparel inventory management and their causes

Inventory management in the apparel industry poses many challenges due to the variety of products and the difficulty of forecasting. Common issues seen especially among small to large companies are inventory loss, the dependency of work on individuals, and inadequate inventory coordination between channels. Here, we will explain three typical problems that frequently occur in the field and the root causes of each.

Causes of inventory loss due to unsold items

Most inventory losses occur due to overbuying or poor sales forecasts. In the fashion industry in particular, trends change quickly and are difficult to predict, making it easy for supply and demand to become misaligned.

The main reasons for unsold stock are:

・Excess inventory due to misreading trends

・Increased purchases of unpopular products

- Uniform delivery without regard for differences in demand between stores

・Lower gross profits and lower inventory turnover due to discount sales

To prevent this, data-driven decisions based on sales performance are required.

Risk of inventory information becoming personalized and business slowing down

When inventory management relies on a specific person, the information becomes personalized and the process becomes a black box. In this state, there is a high risk that operations will be delayed when the person in charge is absent or that handovers will be incorrect.

The risks of personalization include:

・Lower accuracy due to inventory decisions being based on experience

- Analogue management using Excel or handwritten ledgers

- Customary practices that avoid system implementation

Standardizing operations and establishing an information sharing system is the first step in reducing the risk of relying on individuals.

Problems with inventory coordination between brick-and-mortar stores and EC sites

As omni-channelization advances, inadequate inventory coordination between brick-and-mortar stores and e-commerce sites has become a serious issue. Fragmented inventory leads to lost sales opportunities and excess inventory.

The main issues are:

・Store inventory is not reflected on the EC site, resulting in missed sales opportunities

・Return processing is manual and cumbersome

・Real-time sharing of inventory information between warehouses, headquarters, and each store is not possible

To resolve these issues, a centralized management system is essential.

Specific measures to streamline inventory management

In order to optimize apparel inventory, it is essential to operate based on data and rules, rather than relying on personal intuition or experience. Here, we will introduce specific measures that will lead to improved on-site operations, and explain how to improve the efficiency of inventory management from the perspectives of visualization, rule-making, and data utilization.

Utilizing inventory visibility and data analytics

Making inventory visible is the starting point of inventory management. Unvisible inventory can prevent accurate decisions and lead to excess inventory or shortages. First of all, it is important to develop a system that allows you to grasp the inventory status in real time.

Key points for inventory visualization

- Centralized management of all inventory in stores, warehouses, and online stores

- Check inventory trends for each product using graphs, etc.

・Analysis of turnover rate by linking with sales data

Furthermore, by conducting analysis based on past sales records and inventory fluctuation data, more accurate purchasing and replenishment decisions can be made.

Separate management rules for standard products and trendy products

The key to reducing unnecessary inventory is to manage inventory differently for each product type, rather than managing it uniformly. In particular, the way inventory is held and the timing of ordering differ greatly between standard products and trendy products.

Product type management

By clarifying management rules in this way, inventory turnover can be improved and inventory loss can be prevented.

Optimize replenishment decisions using POS data and sales performance

POS data contains detailed records of sales speed and selling trends for each product. By utilizing this data, you can make replenishment decisions based on evidence rather than on intuition.

Specific measures for utilizing POS

- Setting auto-replenishment rules based on sales ranking

-Analysis of sales trends by region and store

- Create and use weekly inventory trend reports

This makes it possible to adjust inventory levels to optimal levels in line with actual store sales, preventing both stockouts and surplus inventory.

Specific benefits of introducing an inventory management system

Introducing an inventory management system is extremely effective in breaking away from personal management and achieving efficient and accurate inventory management. Here, we will specifically introduce the benefits that companies that have actually introduced the system have gained from both operational and management aspects.

Reducing inventory loss and maximizing sales opportunities

Introducing an inventory management system allows you to visualize your inventory status in real time, making it easier to maintain the right amount of stock and significantly reducing inventory loss.

You can also expect the following benefits:

・Reduce missed sales by preventing stockouts

- Stock movement between stores has become smoother, concentrating products in stores with high demand

・Avoid discounts and improve profit margins by managing product freshness

As a result, you can maximize sales opportunities and improve inventory efficiency at the same time.

Significant reduction in labor costs and work hours

Inventory management is often done manually or through Excel, which consumes a lot of human resources. Inventory management systems automate routine tasks such as data entry, searching, and tallying, significantly reducing work time.

Specific examples of efficiency improvements

・Inventory work time halved

・Automate product replenishment and ordering tasks

- Stock data from multiple stores can be checked in one place

This will reduce the workload of staff and create an environment where they can concentrate on the tasks they should be focusing on, such as customer service and creating sales areas.

Use inventory data to make business decisions

The data stored in the inventory management system is a valuable source of information that can be used for decision-making at the management level. It is possible to create more strategic sales plans based on past trend analysis and future forecasts.

Benefits from a management perspective

- Easy profitability analysis by store and product

・Optimize capital efficiency by understanding inventory turnover and lead times

・Improve the accuracy of production and procurement plans based on demand forecasts

This allows management to use inventory as a weapon rather than a risk.

If you have excess inventory, consider using "used clothing buying" services.

No matter how much effort you put into inventory management, it is difficult to sell 100% of your inventory, and a certain amount of excess inventory is unavoidable. In such cases, a new method of disposing of inventory called "used clothing purchase" is gaining attention. Here, we will explain in detail how to utilize used clothing purchase from the perspectives of environmental consideration, cost reduction, and brand maintenance.

Why it's attracting attention as an environmentally friendly way to dispose of inventory

In recent years, awareness of sustainability has increased, and companies are being asked to operate in a way that reduces the burden on the environment. Buying used clothing is attracting attention as an environmentally friendly initiative because it allows companies to dispose of their inventory by reusing it rather than discarding it.

Why it's attracting attention

・CO2 emissions can be reduced compared to waste disposal

・Demand is increasing with the growth of the reuse market

・Contributes to corporate branding as part of ESG management

In this way, it is also seen as a way to demonstrate a company's commitment to a sustainable society.

Reducing disposal costs while maintaining brand value

If unsold inventory is simply discarded, there is a risk of loss of brand value in addition to disposal costs and environmental impact. On the other hand, by utilizing a used clothing purchase service, these issues can be resolved in one fell swoop.

Benefits of buying used clothes

・Reducing disposal costs while generating cash

・Disposal is possible through sales channels that do not affect market prices

Minimize damage to your brand image

In other words, this is a disposal method that has a positive effect on both business and image strategy.

Key points for selecting a used clothing purchasing service for B2B

The number of companies that buy used clothing for businesses is increasing, but when selecting a company, it is important to place emphasis on reliability and transparency of transactions. It is a good idea to check the following points.

Key points for selecting a service

・Does it support bulk purchases for corporations?

- Is there transparency regarding product handling and export destinations?

・Is it possible to conclude a non-disclosure agreement (NDA) etc.?

・Is the process from collection, assessment, and payment clear?

By choosing a contractor that meets these conditions, you can create a system for disposing of excess inventory safely and effectively.

We provide a wide range of services, from collecting and purchasing used clothing to recycling.

We offer flexible services to handle the backlog and remaining inventory of apparel manufacturers. We provide optimal services based on the know-how we have cultivated in the used clothing industry.

Introducing our corporate services

OLD FLIP promotes the effective use of used clothing and sustainable initiatives through partnerships with companies. We provide a service for corporations that purchases the remaining stock of apparel manufacturers and second-hand clothing stores in bulk and redistributes the items in a valuable form.

Our strength is not just to dispose of inventory, but to contribute to society as part of our SDGs activities. Through the reuse of old clothes, we aim to build a partnership that contributes to environmental friendliness and the creation of a sustainable fashion culture.

We also actively undertake joint projects and launch new businesses with partner companies, seeking to create new value by leveraging each other's technologies and know-how.

We are always looking forward to hearing from companies that support this initiative to breathe new life into old clothes. Please feel free to contact us using the email form here for business partnerships or consultations.

A remake service that breathes new life into old clothes by dyeing them black

The fabric is still strong, but the color is fading. Your favorite clothes have changed color. Do you have old clothes like that?

Even for items that are difficult to purchase, we offer a service that transforms them into valuable items through "black dye remake."

In collaboration with Kyoto Montsuki Co., Ltd., a long-established company in Kyoto, these items are dyed a deep black to create attractive, one-of-a-kind items. For a more sustainable society, we offer the option of re-dyeing your favorite clothes through black dyeing so that you can treasure them forever.

Dirty old clothes can be reused with cleaning services

Even if your clothes are in poor condition and difficult to use, we can restore them to a reusable state through our unique cleaning service.

Even clothing with strong stains, odors, or mold can be restored to a usable condition through specialized processing using highly skilled techniques.

We can also wash stuffed toys, kimonos, and dresses. You can also leave high-end clothing and leather items such as fur, which are said to be difficult to clean, to us. We will not waste your precious clothing, but will pass it on to the next stage in a sustainable way.

Proposal for setting up used clothing collection boxes for items that are difficult to purchase

Even if the items are difficult to collect, they can be collected in used clothing collection boxes that have been set up as a way to contribute to the local community. Even damaged or heavily soiled clothing can be reused as a resource, so this is gaining attention as an option to avoid throwing away clothing.

We can also set up the machines in homes, facilities, and stores, and can also be used for local collection activities. We are also receiving more inquiries from organizations that wish to participate in SDGs and eco-activities, which will also contribute to society through collection.

We are particularly focusing on collecting used clothing from Uniqlo and GU, which are difficult to put a price on.

summary

Inventory management in the apparel industry is extremely difficult due to the nature of the business model, and is plagued by issues such as unsold items, inventory loss, and the dependency on individual tasks. In this article, we have provided detailed explanations of specific measures to improve these issues, such as inventory visualization and data analysis, the creation of management rules for each product type, the use of POS data, and the introduction of a system to improve efficiency.

In particular, when it comes to excess inventory that inevitably occurs, a new option that combines reducing environmental impact and improving management efficiency is gaining attention: "used clothing purchases." In particular, using a service like OLD FLIP not only allows you to dispose of your inventory, but also strengthens your brand image and contributes to sustainable efforts.

By reviewing and streamlining inventory management, the apparel business will become more stable and will be able to move on to its next growth strategy.