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

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.