APPLYING SYSTEM DYNAMICS APPROACH TO FAST FASHION SUPPLY CHAIN: CASE STUDY OF AN SME IN INDONESIA

• Main Author: W. LIDIA (29010026) ; pembimbing : Dr. Aya Ishigaki & Prof. Dr. Takeshi Arai & Dr. Gatot Yud, MARIANY
• Format: Theses
• Language: Indonesia
• Online Access: https://digilib.itb.ac.id/gdl/view/16364
• Institution: Institut Teknologi Bandung

The fashion industry is the biggest contributor among 14 creative industries in Indonesia. Recently, its industrial contribution to the gross domestic product was 7.74 percent on average. In addition, the industry has grown rapidly with the proliferation of boutiques and factory outlets. Currently, many apparel companies are shifting toward the vertical integration, and accordingly, their production processes range from raw materials to ready-to-wear clothes. Fast fashion is a concept whereby retailers orientate their business strategies to reduce the lead time for fashion products to store. This is can be achieved by working on a system of in-season buying so that product ranges are consistently updated throughout the season. <br /> <br /> <br /> <br /> <br /> Since success depends on speed, in the apparel industry, fast fashion retailers must quickly respond to market demand. In addition, defining the target market is essential for running a successful fashion business. Without sufficiently analyzing an appropriate setting for the target market, a company is likely to waste time, money, and resources; for instance, marketing to the wrong customers and communicating with those not interested in the products. Supply chain activities transform natural resources, raw materials, and components into a finished product that is delivered to the end customer. Therefore, supply chain management has important roles in coordinating processes along the supply chain to reduce the lead time of finished goods and meet consumer demand. <br /> <br /> <br /> <br /> <br /> ii <br /> <br /> <br /> <br /> <br /> Small and Medium Enterprises (SMEs) face the challenge of learning to manage their financial performance and attain high profit without incurring redundant costs. Hence, defining the target market and planning the optimum supply chain are critical issues in a fast fashion company. Therefore, this research develops a model on supply chain of an SME apparel company in Indonesia and proposes a decision-support system that applies System Dynamics (SD) and helps the management identify the best business strategy. Moreover, SD facilitates the formalization and visualization of consumer behavior by structuring the decision-making process and then linking that process to financial variables. Given customer behavior, the marketing investment alternatives can be leveraged using suitable financial matrices. Simulated scenarios can aid the management identify the most appropriate policy to apply in the future. <br /> <br /> <br /> <br /> <br /> This research applies a case study method. Data were collected from a typical fast fashion firm in Indonesia that produces its own wares ranging from raw materials to be ready-to-wear clothes. The firm has three stores, a warehouse, and runs an online sales system. The result of simulation shows three important parameter settings that greatly affect business performance: designer skill, seamster techniques, and website expansion. When all three parameters were changed, the companies were able to reduce the amount of disposable cloths from unsold items, increase sales, and attract customers to purchase their products.