Risk assessment for the supply chain of fast fashion apparel industry: a system dynamics framework

Abstract

With the rapid progress of science and technology and continuously growing customer expectations, share of merchandise exhibiting characteristics of perishability is on the rise and a wide range of industries are affected by this phenomenon. This paper focuses on the fast fashion apparel industry due to its particular characteristics such as short life cycle products, volatile demand, low predictability, high level of impulse purchase, high level of price competition and global sourcing. A system dynamics model is proposed for analysing the behaviour and relationships of the fast fashion apparel industry with three supply chain levels. The Conditional Value at Risk measure is applied to quantify the risks associated with the supply chain of these products and also to determine the expected value of the losses and their corresponding probabilities. Multiple business situations for effective strategic planning and decision-making are generated. In particular, the impact of lead time and delivery delays on the supply chain performance (inventory, cost, backlog and risk) is analysed as the key to success for this industry is to satisfy customers’ needs in the shortest time.

Keywords:

• fast fashion
• apparel
• supply chain
• system dynamics
• risk
• CVaR