Impact of Product Variety on Supply Chain in Fast Fashion Apparel Industry

Contemporary customers change their product preferences rapidly and are inclined to purchase only what they need or want. In response, the companies need to increase their product variety to improve market share and remain globally competitive.Apparel industry, viewed as one of outstanding economic engines in history, has been radically evolving over the past 25 years due to retail consolidation, globalization and e-commerce. Challenges specific to fast fashion apparel industry include tremendous product variety and very short product life cycles. In such environment, it is of high importance to effectively manage trade-offs between variety benefits and inventory and/or other costs arising from variety increase. For a category of apparel variants differentiated by some attributes such as color, style or size, detailed modelling is required to investigate the effect of product variety on performance of an apparel supply chain. For this reason, the System Dynamics methodology, a simulation and modeling technique developed specifically to address the long term and dynamic management issues, is adopted in this study. The focus of the proposed model is on the interaction between physical processes, information flows and managerial policies of the apparel supply chain in order to create the dynamics of the variables of interest such as product variety, inventory, backlogs, costs and profit.