Few industries are as notorious as the apparel industry for having such difficulty predicting demand1. Product proliferation and shorter product life cycles lead to demand uncertainty on the one hand, long lead times due to a highly complex and fractioned supply chain on the other compel retailers to make commitments far in advance and thus make accurate forecasts almost impossible. The consequences are high costs of stockouts, markdowns and inventory carrying costs, and are mainly borne by the retailers. Coping with this fashion risk has become a central issue, and supply chain integration is a valuable starting point to tackle it.
The advent of information technology and the retailers’ increasing bargaining power have led to changes in retailing and to several industry initiatives, such as Vendor Managed Inventory or the apparel sector’s Quick Response, that changed the retailer-supplier relationships. They greatly shortened replenishment times and thus lowered inventories of basic products, but were only of little help to cope with the very perishable fashion items.