Waste Not Want Not? The Environmental Implications of Quick Response and Upcycling

Abstract

Overproduction is often cited as the fashion industry's biggest environmental issue, as textile production is notoriously resource intensive and pollutive, and much of the textile produced may end up as “deadstock” fabric or finished products that do not sell. In this paper, we study two major approaches commonly adopted by the fashion industry to address this issue: quick response, whereby finished product inventory is replenished on demand, and upcycling, whereby deadstock fabric is reused to make new clothes. Proponents of these strategies typically focus on their positive environmental impact in downstream supply chain stages (e.g., finished products production and waste disposal). Less is known, however, about their impact on upstream supply chain activities such as raw material acquisition. In this work, we study the effect of quick response and upcycling options on firms' fabric acquisition and production decisions, as well as the firms' incentives to adopt these strategies. We then assess these strategies' environmental impact by analyzing their influence on both deadstock generation and total input (i.e., fabric) acquired by the firm. Our results show that quick response--when implemented in isolation--reduces deadstock of finished products, but could have the unintended consequence of increasing the amount of fabric acquired, which results in more total deadstock (in both finished products and fabric form). Upcycling together with quick response could alleviate total deadstock generation, but further increases the firm's demand for fabric from the upstream of the fashion supply chain. We discuss the optimal design of two types of waste reduction policies--subsidizing quick response/upcycling and banning deadstock destruction--and analyze their effectiveness in reducing deadstock and curbing firms' need for fabric. Overall, our work highlights a tradeoff between downstream deadstock reduction and upstream fabric acquisition, and suggests that regional policies that aim to reduce local deadstock could often have adverse global impacts.

Keywords: Environmental Operations, Supply Chain Strategy, Quick Response, Upcycling