Apparel retailers are turning to AI as supply chain regulations tighten in the US and Europe

As supply chain regulations tighten in the US and Europe, apparel retailers are increasingly turning to artificial intelligence (AI) to help them manage the complex and ever-changing landscape. Companies like ASOS, H&M, and Gap are using AI-powered platforms to identify and mitigate risks in their supply chains, such as human rights issues, environmental concerns, and compliance with new regulations.

AI allows these retailers to streamline the process of compliance documentation, which can often take days or longer to complete manually. By automating this process, AI enables retailers to save significant time and prevent operational problems caused by hidden risks in their supply chains. Moreover, AI can quickly surface potential issues before they become larger problems, allowing companies to address them proactively.

Extended producer responsibility (EPR) policies in the US and digital product passports in Europe require businesses to submit accurate documentation to prove compliance with regulations. AI-powered platforms help retailers map and trace the multiple layers of their supply chains, providing visibility into factories, suppliers, and even suppliers' suppliers.

This helps companies identify potential risks and take corrective action sooner rather than later, particularly in light of frequent risk events such as the pandemic, tariff increases, and geopolitical conflicts.

For instance, OMJ Clothing, a custom suit maker in North Carolina, used AI to develop a custom dashboard that keeps track of factory orders and their status, allowing the company to spot delays and address them before customers even inquire. Similarly, large brands like Vera Bradley, Adidas, and H&M are leveraging AI to monitor risk databases, identify environmental risks, and ensure compliance with strict regulations.

As the industry continues to adapt to these new regulations, AI is becoming an essential tool for retailers looking to maintain transparency, reduce waste, and meet sustainability goals. While some companies, like ASOS, have already implemented AI traceability tools to trace their supply chains all the way to the farm level, the process remains a challenge for most retailers.

However, as regulations continue to evolve, the adoption of AI in the apparel supply chain is likely to increase, enabling businesses to navigate the complexities of modern supply chains more effectively.