Using system dynamics in warehouse management: a fast‐fashion case study

TLDR

The paper analyzes how sourcing policies and resource usage influence warehouse operational performance dynamics. The system dynamics methodology models warehouse operations at a fast‑fashion retailer’s distribution centre, analyzing item flow, staff assignment, inventory policy, and order processing. Simulations show that flexible human‑resource use, outsourcing selected operations, and sourcing from reliable manufacturers can increase efficiency, reduce costs, lower inventory, and shorten lead times, confirming SD as a valuable tool for strategic and operational decision‑making.

Abstract

Purpose The purpose of this paper is to present an analysis of how different sourcing policies and resource usage affect the operational performance dynamics of warehouse processes. Design/methodology/approach The system dynamics (SD) methodology is used to model warehouse operations at the distribution centre of a leading fast‐fashion vertical retailer. This case study includes a detailed analysis of the relationships between the flow of items through the warehouse, the assignment of staff, the inventory management policy, and the order processing tasks. Findings Case scenario simulations are provided to define warehouse policies enabling increased efficiency, cost savings, reduced inventory, and shorter lead‐times. Practical implications The case study reaffirms that a flexible usage of human resources, outsourcing of selected warehouse operations, and sourcing from reliable manufacturers may result in important performance improvements for centralised warehousing. Originality/value It is proved that SD is a valuable tool in the field of operations management, not only to support strategic evaluations but also to execute a detailed analysis of logistical processes and make scenario‐based dynamic decisions at the operational level.