"Cut to Clear": What Happens When Fashion Overcommits
Cut to clear your margins?
In fashion retail, few things induce a collective groan like the phrase "cut to clear." Anyone who's sat through these meetings knows they're a painful symptom of deeper issues in your production calendar, most notably, overcommitment on fabric and materials long before sales or orders are confirmed.
How "Cut to Clear" Happens
At its heart, "cut to clear" occurs when brands order fabrics based on projected sales or internal forecasts before having firm commitments from wholesale or even their own DTC channels. It's essentially placing a bet, and sometimes that bet doesn't pay off.
Picture this: you've booked 10,000 metres of premium fabric based on optimistic internal estimates. A few months later, wholesale orders arrive and surprise, you've only sold half that quantity. Now you've got excess fabric that's expensive, space-consuming, and rapidly becoming a liability.
Enter the "cut to clear" meeting, a painful discussion about salvaging this excess fabric.
Why it Hurts More Than Just Your Margins
Excess fabric isn't just money down the drain; it represents systemic issues in how production calendars are managed. When design phases run late, buying and merchandising teams scramble to provide accurate forecasts. Without the right visibility, those forecasts become little more than educated guesses.
The consequences:
Financial Losses: Excess stock often moves straight to markdown or outlets, hitting your profitability.
Operational Headaches: Time spent in crisis management rather than strategic planning.
Relationship Strain: Pressure on internal teams and suppliers, especially when quantities change late in the game.
Visibility and Accountability: Your Best Tools
In a recent conversation, we explored how many brands still rely on Excel sheets for their critical paths and forecasts. As detailed in "Your Production Calendar Is Broken", the issue with Excel is visibility, or rather, the lack thereof. Excel sheets don’t inherently highlight risks or flag delays clearly enough to prevent expensive "cut to clear" scenarios.
Better visibility tools, such as data trackers and production calendar systems can show at-a-glance status updates (think traffic-light systems of red, amber, green) on every SKU or fabric commitment. They help teams see clearly, early enough, where things are slipping and where decisions must be made.
Smarter Planning = Fewer Surprises
Brands who've moved beyond Excel have found ways to dramatically cut down on excess fabric. Here's how:
Linked Milestones: Every step, from fabric booking to final PO, is linked and visible across departments.
Real-Time Updates: Instead of chasing updates, teams receive automatic reminders of upcoming deadlines and tasks.
Clear Accountability: Each milestone has clear owners who understand the downstream consequences of missing deadlines.
Avoiding Your Next "Cut to Clear"
"Cut to clear" meetings are symptoms, not root problems. The real issue lies upstream: in forecasting, visibility, and calendar management. Fashion inherently involves risk, especially when betting on future sales. But improving transparency and accountability makes those risks manageable.
If you're regularly stuck in "cut to clear" meetings, it’s time to ask bigger questions about your production calendar. Better systems won’t eliminate every risk, but they will significantly reduce the number of painful meetings you'll need to endure.