The apparel sector loses $15.3 billion in supply chain waste every year through overproduction and damage, according to a new report from materials science company Avery Dennison.
The report, titled ‘The Missing Billions: The Real Cost of Supply Chain Waste’, said that 6% of stock is lost each year – the equivalent of three per cent of annual profits.
Two-thirds of this is down to overproduction while the remainder of the written off stock is damaged or perished, according to the study of more than 300 businesses and 7,500 consumers.
The report focuses on five key sectors – apparel, food, beauty, automotive and pharmaceuticals – and five countries – the US, UK, France, China and Japan.
It analyzed 65 global apparel firms including manufacturers, wholesaler and distributors, and retailers. The biggest contributor to supply chain waste was faulty packaging followed by inefficient transport and delivery, and damage to products when handled.
“The scale of what we uncovered is worth paying attention to,” said the report’s executive summary.
“Global organizations are overproducing and exacerbating the supply chain crisis — estimating that on average eight per cent of their stock perishes or is discarded annually, which is approximately US$163 billion worth of inventory,” it added.
The report also surveyed consumer attitudes and found that cost and quality were the highest priorities for consumers globally.
Just 16% of consumers put sustainability in their top three considerations for buying products and only 12% prioritized ethical sourcing.
The report makes a series of recommendations for companies. These include reducing packaging waste, providing easy access to sustainability information for consumers, and increasingly supply chain transparency through new technology.
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