The blunt reality is that the fashion industry has long been structured in ways that unintentionally incentivize overproduction. Entrenched buying practices, long lead times, and limited supply chain collaboration contribute to a persistent belief that a lost sale is more expensive than excess inventory — even though markdowns, overstocks, and late-stage margin erosion often cause far greater financial pain.
Across the industry, forward-looking brands are challenging this assumption by adopting more flexible planning and sourcing models. They are shifting away from rigid seasonal commitments toward approaches that allow them to buy closer to demand, respond faster to trends, and reduce inventory risk. This shift toward lead time optimization is becoming a meaningful path to improved profitability and a more resilient supply chain.
The hidden cost of “business as usual”
Anyone who has worked in merchandise planning knows how often teams must explain away markdowns:
“The weather wasn’t in our favor.”
“The trend moved faster than expected.”
“Our competitors were more promotional.”
But many of these outcomes were locked in months earlier. The traditional fashion business model requires large volume commitments four or five months before a season begins. Teams make big bets early, hope forecasts hold up, and rely on high initial margins to absorb the inevitable losses that come from mismatches between planned assortment and real demand.
This “make many to sell fewer” pattern may have worked in a slower-moving market, but today it creates operational fragility, financial risk, and environmental waste.
The case for lead time optimization
As retail becomes more dynamic, the ability to adjust buys closer to the moment of demand is becoming a competitive advantage. Companies with flexible supply chains consistently show better alignment between what they produce and what they sell, which translates into stronger margin capture, fewer stockouts in high-performing items, and fewer markdowns across the season.
Lead time optimization sits at the center of this transformation. It connects upstream choices — such as staging, hedging, and postponement — to downstream financial outcomes. Instead of committing everything upfront, planners can reserve a portion of their buys for later in the season, releasing orders only when demand signals are clearer.
This approach helps retailers:
- Respond faster to emerging trends
- Reduce the risk of overbuying
- Improve sell-through and full-price performance
- Protect working capital
- Strengthen supplier relationships
None of these improvements require wholesale reinvention. They come from challenging long-standing assumptions and rethinking how planning, buying, and supplier decisions interact.
Transforming the planning playbook
Retailers who want to benefit from shorter lead times and greater flexibility often find that success requires a shift in both mindset and practice. Four changes stand out as foundational.
1. From cost-first to risk-smart planning
Traditional approach: Focus on unit cost and initial margin.
New perspective: Evaluate total margin potential, including the cost of markdowns and inventory risk.
Key metric: Realized margin versus initial margin.
Action: Partner with suppliers to create flexible capacity models that respond to demand as it unfolds.
2. From seasonal to flexible buying
Traditional approach: Large upfront commitments made long before demand is known.
New perspective: A blend of base buys plus flexible capacity that can be deployed mid-season.
Key metric: Mix of committed vs. flexible inventory.
Action: Track the total cost of inventory across the supply chain, not just the initial price.
3. From silos to supply chain integration
Traditional approach: Merchandise planning decisions made independently from sourcing or suppliers.
New perspective: Collaborative planning that aligns stakeholders around demand signals and capacity constraints.
Key metric: Lead time flexibility or optimization score.
Action: Build stronger supplier partnerships that enable quick adjustments based on trend or demand changes.
4. From initial margins to true profitability
Traditional approach: Maximize initial markup and buy accordingly.
New perspective: Optimize for realized margin and full-price sell-through.
Key metric: Full-price sell-through rate.
Action: Create internal transparency around metrics that matter to both finance and merchandise planning.
Building cross-functional support
These shifts cannot be driven by merchandise planning teams alone. Lasting transformation requires leadership alignment across finance, sourcing, operations, and supplier networks.
Finance teams need visibility into the margin implications of buying decisions. Sourcing teams need agility in capacity planning. Suppliers need clearer, more timely signals to support flexible manufacturing. Organizations that align these stakeholders create an environment where flexibility becomes a shared advantage rather than a supply chain burden.
These collaborative approaches mirror the evolution seen in the world’s most innovative supply chains, where shared incentives and integrated planning support both financial performance and operational resilience.
Technology and systems integration
Despite the growing complexity of retail, many organizations still rely heavily on spreadsheets for planning. This limits visibility, slows decision cycles, and constrains teams when they need flexibility the most.
Modern planning platforms give teams the ability to evaluate scenarios quickly, align financial and operational plans, and connect supplier decisions to real business outcomes. Moving away from spreadsheet-heavy workflows is not just an efficiency gain — it is essential for adopting flexible supply models that reduce risk and improve profitability.
Taking action now
The industry is at an inflection point. Brands that modernize their buying models and adopt more flexible supply strategies will be better positioned to handle volatility and protect margin, while those that cling to rigid seasonal approaches may find it increasingly difficult to keep pace.
A few practical places to begin:
- Audit markdown patterns to identify systemic issues.
- Calculate your realized margin gap to quantify hidden losses.
- Evaluate supplier relationships to understand where flexibility is possible.
- Review your planning tools to determine whether they support responsive decision-making.
The question isn’t whether transformation is needed — it’s how quickly teams can act.
