Future trends in fashion logistics

Artificial intelligence, digital twins, predictive analysis and predictive logistics are increasingly being used for highly complex fashion logistics. AI also helps to make supply chains more resilient.

The fashion industry is considered to be an extremely fast-moving sector. On the one hand, new seasonal fashion trends are always driving the industry forward. On the other hand, companies in the fashion industry have to take into account a variety of future trends in their business model and adapt it again and again. Examples of these trends include e-commerce and omnichannel logistics, same day delivery, digitalisation and batch size 1, extremely high return rates and sustainability.

Logistics: a fundamental pillar of fashion e-commerce

Especially in the fashion industry, logistics is an enormously important pillar of a successful company. Due to the ever-increasing growth in e-commerce, further accelerated as a result of the Covid pandemic - customer expectations regarding delivery times have increased. Same-day order delivery of fashion items has become standard. In addition, there is an extremely high returns rate of up to 56%, which needs to be allowed for in the business model (1) Omnichannel models that combine both online and offline sales can lead to complex returns processing that require specialised reverse logistics and automated sorting systems. Fashion items returned directly from the customer to the logistics centre can cause problems, as important data such as the reason for the return are often missing. Although returns aren’t to be encouraged, they are part of the model and important data regarding customer needs can be gathered from returns. Such data can help understand customer tastes and help in the planning for future sales and fewer returns. Through integrated artificial intelligence (AI), even knowing what the customer does not want will improve product ideas for the future.

Sophisticated omnichannel logistics

In the past, online orders were often processed separately from offline orders sold through physical stores, often requiring a separate e-commerce logistics centre, whereas, today, both are usually integrated into one logistics centre. Developments such as Click & Collect, Click & Reserve, Endless Aisle and the return of goods to the shop all pose a challenge for fashion logistics. All of these developments require particularly flexible and automated logistics systems with an inventory management system (ERP) and warehouse management system (WMS). An example would be shuttle storage systems which are used in the goods-to-man system, increasing the throughput speed of orders or shorten the picking time. The next wave of automation is already taking place in fashion logistics through "robot colleagues"- robots and automated guided vehicles (AGVs) taking over the picking, transport and sorting of goods. Outside of the warehouse, drones and delivery robots are being used in parcel delivery (2).

Digitalisation and batch size 1

Industry 4.0 and the necessary digitalisation and automation will make the factory of the future possible. Machines and systems with integrated cyber-physical systems communicate with each other via the Industrial Internet of Things (IIoT). Using additive manufacturing, i.e. 3D printing, production can be set up to batch size 1. This means that individualised mass production can be realised. Examples are sports shoe manufacturers such as Adidas, which produce completely individualised shoe models according to customers‘ designs created online.

Digital twin for the simulation of logistical processes

Not only the entire smart factory and production in the fashion industry, but also the logistical processes can be represented in a so-called digital twin (3). A digital representation of real processes allows scenarios to be run through and processes to be optimised. Since we are often dealing with complex and sometimes non-transparent logistics systems and large amounts of data (big data), data-driven analysis with the help of AI on a detailed digital model is ideal here. This makes complex decision-making in logistics extremely easy. Digital twins can be created for very different objects and systems inside and outside of the company. Examples are digital twins for forklifts, warehouses, for entire branches in the fashion industry or also, for example, for systems in procurement logistics (sourcing strategies) and the route optimisation of an AGV system in real time. Here, the logistics twins can be classified according to their performance: monitoring, operational, predictive, learning (intelligent) and autonomous control.

AI, Big Data and Predictive Logistics

With Predictive Logistics, states of the logistics network can be predicted in the future (4). This is also an application of the digital twin. In other words, a digital twin of the logistics network is created. For some years now, the trend has been towards evaluating the purchasing behaviour of customers using Big Data and AI. In the historical data, patterns can be recognised that allow the occurrence of certain events (ordering behaviour, etc.) with a certain probability by using the Digital Twin and Predictive Analysis. Predictive analysis forms the basis for simulating future states of the fashion supply chain of companies in the fashion industry using a digital twin.

Building resilient supply chains

Another challenge, not only for the fashion industry, is the development of so-called resilient supply chains. The Covid pandemic, in particular, has shown how sensitive logistical processes and supply chains are. The great dependence of supply chains on suppliers in China, Bangladesh, India and Cambodia, among others, also became painfully clear. Important lessons from the crisis are therefore the need to diversify the fashion supply chain and also to build digital platforms to increase the transparency of companies' supply chains. The European fashion industry must shorten its supply chains and purchase or produce more regionally (near-shoring, 6). This can be done, for example, in countries such as Turkey and Morocco or in Eastern Europe (Poland, Serbia, Croatia, Bulgaria,). Active network and supply chain planning, digital inventory forecasting and scheduling, and comprehensive logistics capacity planning should ensure more crisis-proof supply chains in the future. Furthermore, the highly fluctuating freight rates in times of crisis must always be presented transparently on digital platforms.

Sustainability and supply chain law

The trend towards environmental compatibility and sustainability of products and companies is in the minds of the public and consumers. After the Paris Climate Agreement and government targets to reduce CO2 emissions such as the German government's "Climate Protection Plan 2050", the transport sector must reduce its greenhouse gas emissions by 40 to 42 percent by 2030 compared to 1990. By 2050, Germany wants to become largely greenhouse gas or CO2 neutral (7). Logistics companies are encouraged to make their businesses, processes and fleets energy-efficient and CO2-neutral. Before finally switching to electric drives, the vehicles used must first become more energy-efficient. CO2-neutral energy supply and efficient energy use must be ensured in logistics centres. A holistic view of the energy requirements and energy cycles in the logistics centre should be taken. On 1 January 2023, the Supply Chain Act will finally come into force in Germany and compliance with the law will then be monitored by the Federal Office of Economics and Export (BAFA) of the Federal Government. Unfortunately, fashion industry companies continue to be identified which violate labour and human rights in Europe and also worldwide (8). The Supply Chain Act is intended to oblige German and international companies (based in Germany) to take responsibility for their entire supply chain and to ensure human rights are recognised(9). Fashion companies must act now and, among other things, adopt a policy statement on respect for human rights. Furthermore, a risk analysis needs to be carried out with regard to adverse human rights impacts of the company's practices.


1 Bito Expertise, Decentralised Returns Processing in Fashion Logistics

2 Textile Industry Insights, Omnichannel Logistics, Link

3 Straube Frank Prof. Dr.-Ing., Typologies and application benefits of digital twins in logistics systems, Logistikpraxisseminar 2021: Digitale Zwillinge von Logistiksystemen: Typologies, Applications and Future Benefits, Link

4 Bito Expertise, Possible uses of AI in logistics, Link

5 Bito Expertise, Lessons from Covid: Crisis-proof supply chain and material supply, Link

6 Fashion industry: One in four suppliers in financial distress due to COVID-19, McKinsey & Company, May 2020, Link

7 Bito expertise, CO2-neutral logistics, Link

8 Exploitation Made in Europe, Report on human rights abuses in production for German fashion brands in: Ukraine, Serbia, Croatia and Bulgaria, Clean Clothes Campaign and Bread for the World, April 2020, Link

9 Bito expertise, More corporate responsibility: Supply chain law passed

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