H&M puts AI forecasting at the heart of its supply chain sustainability

H&M claims to be making fast fashion more sustainable. Action is being taken on a grand scale, the company assures. So the retail world waits to see if sustainability across a massive, growth-hungry company is really possible.

The Swedish fashion giant, which runs the eponymous retailer along with Arket, Weekday, Cos, Monki, and & Other stories, reported this week that net sales in the financial year 2018/2019 increased by 11% and amounted to $24,138 million. Profits also rose by 11%.

How sustainable is H&M?

  • The retailer has pledged to reach 100% recycled or sustainable materials across the company’s supply chain by 2030 and 100% sustainable cotton sourcing by 2020.
  • It has an entire collection dedicated to showcasing more sustainable sourcing.
  • The company has had a robust sustainability reporting practice going back to at least 2010.
  • Supply chain efficiency, using AI is seen as a key route to sustainability.

AI and Data Analytics can boost sustainability in retail

Arti Zeighami, global head of advanced analytics and AI at H&M, spoke about sustainability at the National Retail Federation’s Big Show in New York City in January.

The presentation focused on how to build an intelligent supply chain and empower your business by harnessing the right mix of technologies.

Beyond understanding the environmental nuances of every raw material and input into apparel supply chains, artificial intelligence and predictive technology have a big role to play in making all supply chains, in fashion and beyond, more sustainable, explained Zeighami.

The key is using AI to align demand and supply he said.

“How can you make sure the right product is in the right place at the right time and is transported into the warehouse in line with accurate forecasts? Data analytics allows us to do that. You see a significant impact. And we’re thinking of how can we do this for our entire production.”

AI informing business decisions at H&M

H&M created its AI department in 2018, with the goals of helping the company make more sustainable business decisions, according to its 2018 Sustainability Report. Now 270 people are working to apply AI to different segments of the company to be as data-driven as possible, Zeighami told the NRF audience.

“We are working very specifically on being able to, for instance, calculate and quantify how many cases you’re going to buy of a particular item,” he said.

With precisely honed demand forecasts, supply chains can use only the resources they need and no more. Without precise demand planning, the result is waste — historically a major problem for the fashion industry.

Fashion brands often celebrate sustainably-sourced materials, but prudent and smart supply chain management could go a long way in making the industry use fewer resources, create fewer emissions and produce less waste.

Read Rubikloud’s report on using AI–enhanced forecasting to reduce waste in the grocery supply chain.

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