Abstract
In the past, most companies in the European apparel industry focused on minimizing manufacturing costs in the design of supply chains in conjunction with long-distance shipping from production sites in the Far East and relatively long production cycles. Today, for some market segments, the speed of production cycles is more important than the cost because short throughput time allows the flexibility to adjust to rapidly changing fashion trends in these market segments. Accordingly, choosing the most beneficial supply chain strategy has become an established research topic. However, apparel markets are complex systems. Therefore, attempts to reduce the underlying complexity in order to model these markets have limited existing research to the consideration of only selected aspects of markets (e.g., considering only homogeneous buyers, a single period, a single product, or a single manufacturer in the absence of competition) rather than taking a more comprehensive view. These limitations can be overcome by applying an agent-based simulation approach—an approach that can account for a wider range of factors, including several competing manufacturers utilizing different supply chain strategies, individual consumer preferences and behavior, word-of-mouth communication, normative social influence, and first-hand experience, as well as advertising. In this paper, the capability potential of such agent-based market simulation is demonstrated by investigating two supply chain strategies (fast fashion vs. traditional fashion) with varying product and communication strategies (product attributes and advertising) in several market scenarios.
Highlights
What is the supply chain strategy of choice for the apparel industry? Over the last two decades, this question has become more and more important for managers of fashion man-Annals of Operations Research (2021) 305:487–512 ufacturers as well as for scientists in the field of business administration
We introduced an agent-based model of an apparel market that takes into account relevant stakeholders as well as their actions and interactions
The corresponding simulation tool can be used to study the benefit of a fast fashion supply chain strategy over a traditional strategy
Summary
What is the supply chain strategy of choice for the apparel industry? Over the last two decades, this question has become more and more important for managers of fashion man-. The fast fashion strategy, in contrast, differentiates between two separate product categories: basic products (e.g., plain t-shirts), which are procured analogously to those in the traditional supply chain strategy, and fashion clothes, which are sourced from producers located closer to the point of sale (mostly in European countries) The latter approach incurs higher labor costs and higher production costs, but it provides increased flexibility due to shorter transportation distances. Companies like Zara—the world’s largest fast fashion manufacturer and part of the Inditex group—serve as prime examples of the benefits of such a strategy When choosing between these two supply chain strategies, several factors must be considered, including the preferences and purchasing behavior of consumers and the nature and strategies of competitors.
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