Beyond the Blind Spot: Solving Inventory Visibility & Forecasting Challenges

Inventory visibility and accurate forecasting are the foundation of profitability, efficiency, and customer satisfaction. Yet, many still struggle with excess inventory, stock-outs, and unpredictable demand, leading to billions in lost revenue each year.

With new sustainability regulations, fast-changing consumer trends, and the rise of AI-driven analytics, brands must shift toward data-driven inventory management. This article explores the consequences of poor inventory visibility, how brands are addressing these issues, and the technology solutions transforming inventory forecasting.

The Inventory Crisis: Overproduction vs. Stock-Outs

Fashion and beauty brands are caught in a constant balancing act—producing enough to meet demand without creating excess stock. Unfortunately, poor forecasting leads to both overproduction and stock-outs, causing financial losses and reputational damage.

  • Between 2.5 billion and 5 billion items of excess stock were produced by fashion brands in 2023, with up to $140 billion in lost sales.
  • Luxury giants LVMH and Kering reported $5.4 billion in unsold inventory in 2023, with 4-8% of their total sales affected.
  • Lululemon’s weaker U.S. growth in Q1 2024 was attributed to stock-outs in key sizes, impacting customer trust and revenue.
  • Nike’s markdown rates rose from 19% in 2022 to 44% in 2024, reflecting the cost of poor inventory planning.

Luxury brands have invested heavily in AI-driven forecasting and digital inventory intelligence, leading to a 3.4% improvement in their inventory-to-sales ratio in 2024.

Why Fashion’s Inventory Visibility Problem Persists

Fragmented & Disconnected Systems

  • Many brands still rely on manual stock tracking and outdated ERP systems, leading to inaccurate demand predictions.
  • Omnichannel retailing (physical stores, e-commerce, social commerce) makes real-time inventory tracking difficult.
  • Only 12% of 250 major fashion brands disclose their raw material suppliers, making traceability a challenge.

The Bullwhip Effect

  • Small demand fluctuations can cause major distortions in production, leading to excess stock or underproduction further down the supply chain.
  • This effect is exacerbated by disconnected merchandising, sourcing, and logistics teams, leading to inefficient restocking and markdown cycles.

Regulatory Pressures & Sustainability Risks

  • E.U.’s Ecodesign for Sustainable Products Regulation (effective 2025) will require brands to report on unsold inventory and ban stock destruction by 2026.

How Leading Brands Are Solving the Visibility Challenge

1. AI-Driven Demand Forecasting

  • Predictive analytics and AI-powered demand planning can significantly reduce inventory mismatches.
  • AI-driven forecasting tools helped Kering improve inventory accuracy by 20%.
  • Retailers using AI forecasting have seen stock-out reductions of 15-25%.

Asos is expanding its “test and react” model. Initially ordering small batches, then adjusting production based on real-time demand.

Goal: 10% of Asos’ private-label inventory will use this model by end 2025, reducing excess stock and markdowns.

2. Real-Time Inventory Tracking & Omnichannel Integration

  • Centralising inventory pools across warehouses, stores, and online platforms ensures real-time stock availability.
  • RFID tags, IoT sensors, and automated warehouse systems improve tracking across supply chains.
  • Zara’s centralised inventory system allows stores to pull stock from regional distribution hubs in real time, reducing overproduction and improving availability.
  • 20% of U.S. consumers purchased fashion via social commerce in the last year, highlighting the need for integrated inventory tracking across all platforms.

3. Near-Shoring & Agile Fulfilment Networks

  • Moving production closer to consumer markets reduces reliance on long, unpredictable supply chains.
  • Near-shoring helps brands avoid logistical delays, offsetting impacts like the Red Sea and Suez Canal diversions, which have increased transit times by 30%.

Hugo Boss is investing over $160 million in digital intelligence to optimise inventory-to-sales ratios and improve regional distribution efficiency.

4. Digital Product Passports (DPPs) & Traceability Solutions

  • E.U. regulations will require Digital Product Passports (DPPs) by 2027/28, meaning brands must track product origins, durability, and environmental footprint.
  • RFID and blockchain solutions are enhancing supply chain transparency.
  • U.K. brand, Nobody’s Child, has already implemented Digital Product Passports—customers can scan a QR code to see a product’s entire lifecycle, from raw materials to final sale
  • By 2027/28, all E.U. brands will be required to implement DPPs, forcing greater supply chain transparency.

Powering Intelligent Inventory Strategies

With inventory volatility at an all-time high, Noatum Logistics helps fashion and beauty brands take control with advanced supply chain solutions, including:

  • Real-time inventory tracking with AI-driven demand forecasting.
  • Integrated multi-channel stock management to reduce stock-outs and markdowns.
  • Near-shoring and agile fulfllment solutions to increase supply chain resilience.
  • Sustainability compliance strategies to align with Digital Product Passport (DPP) and EPR requirements.

Discover how Noatum Logistics can optimise your inventory strategies.