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