AI-Driven Inventory Success: What Big Brands Are Doing Right

In today's AI-driven world, technology is solving problems faster and more efficiently than ever—including in supply chains. However, the fashion industry still struggles with outdated management strategies and technology, making AI a game-changer in this sector.

Talk about fashion, there are a vast number of micro-trends and consumer preferences changing overnight. It’s hard for fashion brands to predict what will be a bestseller or the next big trend, it is a major challenge for brands. Social media plays a huge role in this rapid shift—on TikTok alone, videos tagged #fashion has grown 2.5x in the past three years, shaping customer demand in real time.

Plus, the impacts of climate change are making it harder to foresee real-time demand. In 2024, the weather was extremely hazardous, and people around the world faced unpredictable conditions that were worse than in previous years. For example, Europe’s summer stayed colder for longer than expected.

With the growth of the supply chain system, fashion goods routing is becoming more and more complex than ever before. Brands and manufacturers are facing longer lead times and limited agility. Shoppers now buy fashion from many different places, making it hard for brands to offer all sizes and colors everywhere—especially without a shared stock system. For example, one in five US shoppers bought clothes through social media in the past year.

Fashion Brands Still Battle Both Excess Stock And Stock-Outs

According to BoF–McKinsey, the report showed that 2.5-5 billion excess garments were produced in 2023, with unsold stock valued between $70B-$140B. Despite stable inventory levels in 2024, one-third of brands still struggle with stock management. Luxury inventories rose 2%, with LVMH and Kering holding €5B ($5.4B) in excess stock. To manage overstock, brands increased discounting—Nike marked down 44% of its products in 2024, up from 19% in 2022.

20% Profit Loss – Brands lose up to 20% of monthly profits due to inaccurate stock buying. Stock-outs, driven by vendor issues and poor forecasting, frustrate shoppers and hurt sales. Lululemon saw slower U.S. growth in early 2024 due to inventory gaps, especially in smaller women's sizes. Poor inventory forecasting, vendor delays, and inaccurate stock planning remain key challenges, leading to missed revenue opportunities.

In 2025, brands will focus more on profits as sales stay flat and discounts rise. Since selling products faster boosts profits, managing inventory wisely will be key. At the same time, rising storage costs—up 10% in 2023—are forcing brands to clear out unsold stock. In the purpose of fixing the bad-old way of the supply chain system and avoiding the explosion of stock issues, leading to wasted products, lost money and harm to the environment. Winning fashion brands are responsively adopting AI-driven tools in their fashion business to improve end-to-end planning with smart strategies and allow greater supply chain agility.

Case Studies of Winning Brands’ AI Inventory Management System

Zara is renowned for its agile supply chain and eco-friendly fashion programs. To stay ahead in dealing with this hazard problem, Zara has integrated AI-powered forecasting tools that analyze customer preferences, sales patterns, and emerging trends in real time. By leveraging AI, Zara easily predicts demand more accurately, adjusts production accordingly, and avoids overproduction.

SCM Globe notes that "Zara sells 85 percent of its items at full price compared to the industry average of selling only 60 percent of items at full price.". Additionally, Forbes highlights that "It takes the company only 10 to 15 days to go from the design stage to the sales floor." All these metrics underscore Zara’s efficient supply chain and effective inventory management strategies. They also improve profit margins while minimizing waste and markdowns, reinforcing its position as a leader in efficient, sustainable fashion retail.

Demand-Driven Material Requirements Planning (DDMRP) has been used by Louis Vuitton for their efficient supply chain. This system helps the brand keep better track of inventory, reduce waste, and restock products faster. As a result, Louis Vuitton has cut inventory levels by 30% and sped up delivery times by 50%.

By focusing on real customer demand, the brand avoids making too many products and keeps popular items in stock. This approach also makes their supply chain more flexible and efficient. Additionally, Louis Vuitton is working towards sustainability, with 78% of its raw materials responsibly sourced and a goal of reaching 100% by 2025.

Fashion Brands Need to Adopt AI-Driven Tools With Inflow

Today, more and more fashion companies are focusing on better inventory management to improve profits and make their businesses more sustainable. They are using data-driven tools to plan and forecast demand more accurately. Around 75% of fashion executives are prioritizing these tools, relying on platforms like o9, Nextail, and Blue Yonder to automate processes such as demand forecasting and inventory allocation. This approach can reduce inventory by 5 to 15% and improve stock availability by 15 to 25%. For example, Kering reported a 20% improvement in forecasting accuracy by using AI for demand planning.

Brands are also adjusting their purchasing strategies by increasing in-season buying. Methods like "test and react" and "on-demand" production like Inflow allow them to buy smaller quantities first, test market reactions, and then reorder based on demand. This reduces the risk of overstocking. In 2023, Asos aimed to apply the "test and react" method to 10% of its own-brand products.

Additionally, big companies are optimizing their supply networks to improve efficiency. Many are turning to production hubs like Inflow, a digitalized manufacturing platform based in Vietnam, to reduce costs and streamline operations. As supply chains grow more complex, brands are using advanced analytics and digital simulations to plan better. According to the Business of Fashion (BoF), Hugo Boss, for instance, is investing over €150 million ($163 million) in digital intelligence by 2025 and has already reduced its inventory-to-sales ratio by 3.4 percentage points in the second quarter of 2024 compared to the previous year.

Why Choose Inflow for Smarter Inventory Management?

Smarter Demand Forecasting – Say goodbye to overproduction and dead stock. Inflow’s AI tools analyze real-time data, consumer trends, and purchasing behaviors to predict demand accurately.
Faster, More Efficient Production – Speed is everything in fashion. Inflow’s AI-powered processes optimize workflows on our manufacturing platform, cut lead times, and improve resource allocation, ensuring production stays agile and responsive to changing market trends—without sacrificing quality.
Sustainable & Cost-Effective Solutions – AI helps brands cut down extra stock, use materials wisely, and make better decisions with data, saving money and reducing waste. Inflow makes this even easier with AI-powered design tools and virtual try-ons for digital prototyping—helping brands create more efficiently while staying eco-friendly. Now, brands can be both sustainable and profitable without extra hassle.
Global-Standard Manufacturing – Inflow partners with 150+ suppliers in Vietnam, producing 2,000,000+ high-quality products each month for global fashion brands. By combining AI-driven manufacturing with on-demand production, Inflow helps brands scale efficiently while maintaining exceptional quality.

Inflow is one of the top production partners of winning fashion brands for efficient stock management and smart fashion production platform. Let’s discover Inflow’s innovative approach to digital fashion and smart inventory management: From Risk to Reward: Transform Your Inventory with Smart Demand Planning. Moreover, you can automatically operate the digitized manufacturing from far away by just an all-in-one platform.

Book a demo with us for a personalized training session from our in-house experts. At Inflow, we work closely with fashion brands to understand their needs and their customers' preferences. This allows us to tailor our manufacturing services to fit seamlessly into your operations, ensuring efficiency and alignment with your business goals.