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

Abstract

Problem definition: 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 goods that do not sell. In this paper, we study two major approaches to address this issue: quick response, whereby finished goods 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 goods production and waste disposal). Less is known, however, about their impact on upstream activities such as raw material acquisition, which we investigate in this work. Methodology/results: We analyze the effect of quick response and upcycling options on firms’ fabric acquisition and production decisions, as well as firms’ incentives to adopt these strategies. We then assess these strategies’ environmental impact in a life cycle framework. Our results show that quick response—when implemented in isolation—reduces deadstock of finished goods, but could increase the amount of fabric acquired. This not only results in more total deadstock (in both finished goods and fabric form), but also aggravates the environmental burden associated with fabric production in the upstream of the fashion supply chain, and could lead to a worse overall environmental impact for the industry. Upcycling together with quick response could alleviate total deadstock generation, but further increases the firm’s demand for fabric. We analyze the effectiveness of two types of policies—subsidizing quick response/upcycling and banning deadstock destruction—in reducing deadstock and curbing firms’ need for fabric. Managerial implications: 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.Supplemental Material: The online appendices are available at https://doi.org/10.1287/msom.2022.0040 .