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Modeling Fashion
IFAC-PapersOnLine Retail
48-3 (2015) 1290–1295 Supply Chain
Modeling
Modeling
through Fashion
Fashion
CausalRetail Retail
Loop Supply
Supply
DiagramChain
Chain
Modeling Fashion Retail Supply Chain
through
through Causal
Causal Loop
Loop Diagram
Diagram
through
Raffaele
Raffaele Iannone,
Causal
Iannone, Giada
Giada Martino,
LoopSalvatore
Diagram
Martino, Salvatore Miranda,
Miranda,
Raffaele
Raffaele Iannone,
Iannone, Giada Stefano
Stefano
Giada RiemmaSalvatore
Martino,
Riemma
Martino, Salvatore Miranda, Miranda,
Raffaele Iannone, Giada Stefano Martino,
Riemma Salvatore Miranda,
Stefano Riemma
Department
Department of of Industrial
Industrial Stefano Riemma
Engineering,
Engineering, University
University of of Salerno,
Salerno, via via
Giovanni
Department
Giovanni Paolo
Department Paolo
of II, 132,
Industrial 84084,
II, 132, Engineering,
of Industrial Fisciano
Engineering,
84084, Fisciano (SA)
University
(SA) - of
University - Italy
of
Italy (e-mail:
Salerno,
(e-mail:
Salerno, via
via
Department
Giovanni of Industrial
Paolo II, 132, Engineering,
gmartino@unisa.it)
84084, Fisciano
gmartino@unisa.it) University
(SA) - of
ItalySalerno,
(e-mail: via
Giovanni Paolo II, 132, 84084, Fisciano (SA) - Italy (e-mail:
Giovanni Paolo II, 132, 84084, Fisciano (SA) - Italy (e-mail:
gmartino@unisa.it)
gmartino@unisa.it)
gmartino@unisa.it)
Abstract:
Abstract: The The increasing
increasing request
request for for speed
speed andand efficiency
efficiency in in today’s
today’s FashionFashion and and Apparel
Apparel
Retail
Abstract:
Retail Supply
Supply The Chains,
Chains, is
increasing
is adding
request
adding more
more forand
and more
speed
more andcomplexity
efficiency
complexity
Abstract: The increasing request for speed and efficiency in today’s Fashion and Apparel to
to in the system
today’s
the system which
Fashion
which asks
and
asks for
for high
Apparel
high
Abstract:
product
Retail
product Supply The
availability increasing
Chains,
availability and
andis request
quick
adding
quick more forand
response
response speed
to
to more and
always
always efficiencyto
changing
complexity
changing inthe
market
markettoday’s demand.
system
demand.Fashion
which In
In and
this
asks
this Apparel
context,
for high
context,
Retail Supply Chains, is adding more and more complexity to the system which asks for high
Retail
using
product
using Supply
System Chains,
Thinking
availability
System Thinking andis adding
approach,
quick more
this
response and
paper
to more
always complexity
aims at to
developing
changing the
market a system
Causal
demand. which
Loop In asks
Diagram
this for high
context,for
product availability andapproach,
quick responsethis paper aims changing
to always at developing market a Causal
demand. Loop Diagram
In this context,for
product
the availability
definition of the and
cause quick
and response
effect to always
relationships changing
between market
the several demand.
variables In this
which context,
define
using System Thinking approach, this paper aims at developing a Causal Loop Diagram for
using
the System
definition Thinking
of the approach,
cause and this
effect paper aims
relationships at developing
between the a
severalCausal Loop
variables Diagram
which define
for
using
the System Thinking approach, this paper variable
aims between
at in
indeveloping ain
inCausal Loop whichDiagram for
the system
the definition
system
definition under
underof the
of exam.
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exam.
causeBeing
andtime
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time
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a crucial
relationships
crucial variable
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this thefield,
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fact, dynamic
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exam.
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Being
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crucial and
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evolving
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situations.
this field,several
in In
fact, variables
this context,
dynamic which our define
complexitywork
the system under exam. Being timeover time and
a crucial evolving
variable situations.
in this In this
field, in fact, context,complexity
dynamic our work
the system
highlights
arises due and
highlights under
to
and exam. all
analyses
interaction
analyses Being
of the
all time
agents
the a crucial
conflicting
over
conflicting time variable
requirements
and inthat
evolving
requirements this field, be
must
situations.
that must in fact,
be In dynamic
accurately
this
accurately context, complexity
evaluated
our work
evaluated and
work
and
arises due to interaction of agents over time and evolving situations. In this context, our
arises
balanced duein
highlights
balanced toorder
and
in interaction
order to
analyses
to of the
all agents
effectively
effectively manageover the
conflicting
manage time
the and evolving
complex
requirements
complex network situations.
that
network of retailers
must
of be
retailers In andthisto
accurately
and to context,
help
help the our
evaluated
the work
decision
and
decision
highlights and analyses all the conflicting requirements that must be accurately evaluated and
highlights
making
balanced
making and
process
in order
process analyses
behind
to
behind all the
the
effectively
the conflicting
purchasing,
manage
purchasing, the requirements
delivery
complex
delivery and
and that ofmust
replenishment
network
replenishment be
retailers accurately
steps.
steps.and to helpevaluated
the and
decision
balanced in order to effectively manage the complex network of retailers and to help the decision
balanced
making processin orderbehind
process to effectively manage the
the purchasing,
purchasing, complex
delivery andnetwork of retailers
replenishment steps.and to help the decision
making behind the delivery and replenishment steps.
© 2015,
making
Keywords: IFAC
process (International
behind the Federation
purchasing, of Automatic
delivery Control)
and Hosting
replenishment by Elsevier
steps. Ltd. All rightsApparel reserved.
Keywords: System System Thinking,
Thinking, System
System Dynamics,
Dynamics, CausalCausal Loop
Loop Diagram,
Diagram, Fashion Fashion and and Apparel
Industry,
Industry,
Keywords: Retail,
Keywords:Retail, System Supply
SystemSupply Chain
Thinking,
Chain
Thinking, System Dynamics,
System Dynamics, CausalCausal Loop
Loop Diagram,
Diagram, Fashion Fashion and and Apparel
Apparel
Keywords:
Industry, Retail,SystemSupply
Retail, Thinking,
Chain System Dynamics, Causal Loop Diagram, Fashion and Apparel
Industry, Supply Chain
Industry,1. Retail, Supply Chain
1. INTRODUCTION
INTRODUCTION normally
normally do do notnot change
change quicklyquickly over over time
time andand have
have a a stable
stable
1. INTRODUCTION
1. INTRODUCTION and
and predictable
normally do
predictable not demand,
change
demand, innovative
quickly over
innovative
normally do not change quickly over time and have a stable products,
time and
products, have like
a
like fash-
stable
fash-
Today,
Today, Fashion
Fashion and and1. Apparel
INTRODUCTION
Apparel (F&A)
(F&A) Supply
Supply Chains
Chains (SC) (SC) and normally
ion
and apparel,
ion apparel,do not
predictable are change
are characterized
demand,
characterizedquickly over
by
innovative
by time
newness, and
products,
newness, have
greater
greater avariety
like stable
fash-
variety
predictable demand, innovative products, like fash-
are more
Today, strategically
Fashion and important
Apparel (F&A) than ever
Supply before,
Chains due
(SC) and
(Vaagen
ion
(Vaagenpredictable
apparel,and
andareare demand,
Wallace,
characterized
Wallace, 2008)innovative
2008) and and
by products,
customisation
newness,
customisationgreater like
(De fash-
varietyFe-
are more
Today, strategically
Fashion and Apparel important(F&A) than ever Chains
Supply before, (SC)
due ion apparel, characterized by newness, greater(De varietyFe-
Today,
to
are added
more
to added Fashion
pressureand
strategically Apparel
brought
pressure brought (F&A)
by
important Supply
globalization
than
by globalization ever Chains
(De
before, (SC)
Felice
(De Felicedue ion
lice
lice apparel,
et
(Vaagen
et al.,
and
al., are
2012)
2012) characterized
Wallace, which
which needs
2008)
needs by
and newness,
low
low greater
production
customisation
production variety
volumes
(De
volumes Fe-
are more strategically important than ever before, due (Vaagen
(Vaagen
and Wallace, 2008) and customisation (De Fe-
and Wallace, 2008) andlow customisation (De Fe-
are
and
to
and more
Petrillo,
added
Petrillo,strategically
2013)
pressure
2013) and
and important
digitalization
brought by
digitalization than ever et
(Abtan
globalization
(Abtan before,
et al.,
(De
al., due lice
2013)
Felice
2013) (De
(De Carlo
lice et
et
Carloal., et
et al.,
2012)
al., 2013)
which
2013) and
andneedsflexibility
flexibility (Sammarco
production
(Sammarco et
volumes
et al.,
al.,
to added pressure brought by globalization (De Felice lice et al., al.,
2012) which needs low production volumes
2012) which needs low production volumes
to
and
and added
by the
Petrillo,
by the pressure
growth
2013)
growth brought
of
and
of Quick by
digitalization
Quick globalization
Response
Response and
(Abtan
and et(De
Fast
Fast al., Felice
Fashion
2013)
Fashion 2014)
(De
2014)
(De and
Carlo
and
Carlo makes
et
makes
et al.,
al., demand
2013)
demand
2013) and
and unpredictable
flexibility
unpredictable
flexibility (Wang
(Sammarco
(Wang
(Sammarco et
et
et
et al.,
al.,
al.,
and Petrillo, 2013) and digitalization (Abtan et al., 2013) (De Carlo et al., 2013) and flexibility (Sammarco et
and Petrillo,
(Bhardwaj
(Bhardwaj the and
by the 2013)
and and
Fairhurst,
growth digitalization
of Quick
Fairhurst, Quick 2009).
2009). These
Response
These(Abtan
issues
and
issues etcontribute
Fast al., 2013) 2014)
Fashion
contribute 2012).
2014) and
2012). In
In addition,
and makes demand
addition,
makes their
their life
demand cycle
cycle is is short
unpredictable
life unpredictable short (Barnes,
(Wang et
(Barnes,
(Wang 2009),
et
2009),al.,
al.,
and by growth of Response and Fast Fashion 2014) and makes demand unpredictable (Wang et al.,
and
to by
add the growth
complexity
(Bhardwaj and
to add complexity to of
the
Fairhurst, Quick
whole
to the whole Response
2009).system
These
system and
which
which Fast
must
issues
must Fashion
respond
contribute because
2012).
because Inas
as imitators
addition,
imitators erode
their
erode the
life
the competition
cycle is short
competition
respond 2012). In addition, their life cycle is short (Barnes, 2009), advantage
(Barnes,
advantage that
2009),
that
(Bhardwaj and Fairhurst, 2009). These issues contribute 2012).
(Bhardwaj
quickly
to add and and
and
add complexity
quickly complexity Fairhurst,
efficiently
to the
efficiently theto 2009).
always
whole
towhole
always These
changing
system
changing issues
which market
must
market contribute
demand
respond because
demand becauseInas
innovative
innovative asaddition,
productstheir
products
imitators
imitators enjoy,
erode
enjoy,
erode
life
the cycle
companies
companies
the
is short
competition
competition are (Barnes,
are forced
advantage
forced
advantage to 2009),
to intro-
that
intro-
that
to to system which must respond because as imitators erode the competition advantage that
to add
quickly complexity
(Battista
(Battista andand
and to
efficiently the
Schiraldi,
Schiraldi, to whole
2013).
always
2013). system
changingwhich must
market respond
demand duce
duce a
innovative
a
innovativesteady
steady stream
products
stream
products of
enjoy,
of
enjoy, newer
newer innovations.
companies
innovations.
companies are
are forced
forced to
to intro-
intro-
quickly and efficiently to always changing market demand innovative products enjoy, companies are forced to intro-
quickly
In this and
this
(Battista
In efficiently
context,
and
context, purpose
Schiraldi,
purpose to2013).
always
of thischanging
of this work
work is is market
to demand
to construct
construct With
duce aathese
aa duce
With steady
these
steady peculiarities,
stream of
peculiarities,
stream F&A
of newer
newer products
products require
innovations.
F&A innovations. require a a funda-
funda-
(Battista and Schiraldi, 2013). duce athese
steady stream ofthan
newer innovations.
(Battista
Causal
In this
Causal LoopandDiagram,
context,
Loop Schiraldi,
purpose
Diagram, 2013).
through
of
through the
this
the application
work is to
application of System
construct
of System a mentally
With
mentally different
peculiarities,
different SC
SC F&A
than do
do stable,
products
stable, functional
require
functional a prod-
funda-
prod-
In this context, purpose of this work is to construct a With With
these peculiarities, F&A products require a funda-
these peculiarities, F&A products require aon funda-
In this Loop
Dynamics
Causal
Dynamics context,
(SD)
(SD) purpose
principles,
Diagram, offor
through
principles, forthis
the
the
the work is to of
definition
application
definition construct
of the
of
the cause
System
cause ucts.
mentally
a mentally
ucts. While
While an
different
an efficient
SC
efficient SC
than
SC strategy
do stable,
strategy with
with focus
functional
focus on cost
prod-
cost
Causal Loop Diagram, through the application of System mentally different different
SC than do stable, functional prod-
SC than do stable, functional prod-
Causal
and Loop
effect
Dynamics Diagram,
relationships
(SD) through
principles,between
for the
thethe application
several
definition of
factors
of theSystem
which
cause minimization
ucts. While anshould
efficient be used
SC for
strategy functional
with products,
focus on costa
Dynamics (SD) principles, for the definition of the cause ucts. While an efficient SC strategy with focus on costa
and effect relationships between the several factors which minimization
ucts. While anshould
efficient be used
SC for
strategy functional
with products,
focus on cost
Dynamics
define
and
define a
effect (SD)
typical
a typical principles,
F&A
relationships Retail
F&A Retail for
between the
Supply
Supply thedefinition
Chain.
several of the
factors cause
which responsive/demand
minimization
responsive/demand driven
driven SC
SC strategy
should be used for functional products, aa
should be used for
strategy with
functional
with focus
focus on
products,
on prod-
prod-
and effect relationships between the Chain.
several factors which minimization minimization should be used for functional products,
and effect
Motivation
define a
Motivation relationships
behind
typical
behindF&A this between
research
Retail
this Supply
research the
is
is several
to
Chain.
to help
help factors
the
the decision
decision ucts
ucts availability,
responsive/demand
which responsive/demand
availability, matching
driven
matching
driven the
SC marketplace
strategy
the strategy
SC marketplace with with
with focus
with
focus prod-a
customer
on prod-
customer
on
define a typical F&A Retail Supply Chain. responsive/demand driven SC strategy with focus on prod-
define
making a
Motivation
making typical
process
behind
process F&A
behind
behind Retail
this the Supply
research
the Chain.
purchasing,
is to
purchasing,to helpdelivery
help
delivery and
and re-
the decision
decisionre- uctsdemands,
ucts
demands, could
availability, best
matching
could matching
availability, fit innovative
the
best fit innovative
the marketplace products
marketplace
products with (Lam
customer
with(Lam
customer and
and
Motivation behind this research is the ucts availability, matching the marketplace with customer
Motivation
plenishment
making behind
process
plenishment steps
steps of this
behind
of a
a research
company
the
company is
that
purchasing,
that to help
manages
manages the
an
delivery
an decision
extended
and
extended re- Postle,
demands,
Postle,
demands, 2006).
could
2006).
could A
A demand
best
demand
best fit
fit driven
innovative
driven
innovative SC
SC must
products
must
productsoffers
offers real-time
(Lam
real-time
(Lam and
and
making process behind the purchasing, delivery and re- demands, could best fit innovative products (Lam and
making
network process
plenishment
network of stepsbehind
of direct
direct operated the
of aa company
company
operated purchasing,
mono-brand
mono-brand delivery
retailers.
that manages
manages
retailers.an Thisandpro-
extended
This pro- information
re- Postle,
information2006).on
Postle, 2006). onAAdemand
demandand
demand
demand driven
and
driven inventory
SC must
inventory
SC must levels
offers
levels
offersin order
order to
real-time
in real-time to
plenishment steps of that an extended Postle, 2006).onA demand driven SC must offers real-time
plenishment
cess must
network
cess must of be steps
highly
direct
be of adynamic
company
operated
highly dynamic that
due
mono-brand
due to
to manages
constantly
retailers.
constantly an This
extended
changing
pro-
changing react
react quickly
information
quickly and
demand
and effectively
and
effectively when
inventory
when unexpected
levels
unexpected in changes
order
changes to
network of direct operated mono-brand retailers. This pro- information information
on demand and inventory levels in order to
on demand and inventory levels in order to
network
conditions,
cess must
conditions,of be
direct
such operated
as
highly
such as market
dynamic
market mono-brand
demand,
due
demand,to retailers.
thus
constantly
thus This
adding
adding pro- react
com-
changing
com- arises
arises (Budd
react quickly
quickly
(Budd et
et al.,
and
al.,
and 2012).
effectively
2012).
effectively when unexpected
when unexpected changes
changes
cess must be highly dynamic due to constantly changing react quickly and effectively when unexpected changes
cess must
plexity to
conditions,
plexity besuch
to the
the highly
as dynamic
whole
whole system
market given
system due to
demand,
given theconstantly
the strong
thus adding
strong changing
interactions
adding com- arises
interactions arises (Budd
(Budd et et al.,
al., 2012).
2012).
conditions, such as market demand, thus com- arises (Budd et al., 2012).
conditions,
between
plexity to such
factors.
the
betweentofactors. as
whole market
system demand,
given the thus
strong adding com-
interactions
plexity the whole system given the strong interactions 1.2 1.2 Principles
Principles of of System
System Thinking
Thinking and and System
System Dynamics
Dynamics
plexity
Then,
between
Then, tofactors.
after
after the
a wholeintroduction
a brief
brief system given
introduction of the
of the strong interactions
peculiarities
peculiarities of
of the
the 1.2 in
1.2Supply Chain
Principles of Management
System Thinking and System Dynamics
between factors. in Supply Chain Management
Principles of System Thinking and System Dynamics
between
Fashion
Then,
Fashion factors.
Industry
after a
Industry briefand
and a
a summary
introduction
summary ofof
of the
the
the SD
SD principles,
peculiarities
principles,of we
the
we 1.2
in Principles
Supply Chain of System
Management Thinking and System Dynamics
Then, after a brief introduction of the peculiarities of the in Supply Chain Management
Then,
Fashionafter
define the a briefand
background introduction ofofthe
thepeculiarities
describeof into
the
define
Fashion Industry
the
Industry and aa of
background of our
our research
summary
summary research
of the and
and
SD describe
SD principles,
principles, we System
into
we in Supplydynamics
System Chain Management
dynamics (SD)
(SD) is is aa methodology
methodology developed developed by by
Fashion
details
define Industry
the
the
details the proposed
the background and
background
proposed Causal a summary
Causal
of ourLoop
Loop of the
Diagram.
research
Diagram.SD
and principles,
describe we
into Forrester to
System dynamics
dynamics understand(SD) the
is a structure
methodology and dynamics
developed of
by
define of our research and describe into System Forrester to understand(SD) the
is a structure
methodology and dynamics
developed of
by
define
details the
the background
proposed Causal of our
Causal Loopresearch
Diagram.and describe into complex System
Forrester dynamics
systems
to (SD) isthe
(Forrester,
understand a1961).
methodology
This
structure and developed
approach has
dynamics beenby
of
details the proposed Loop Diagram. complex systems (Forrester, 1961).
Forrester to understand the structure and dynamics of This approach has been
details the proposed
1.1 Causal Loop Diagram.
1.1 Demand
Demand DrivenDriven Fashion
Fashion SupplySupply Chain
Chain Forrester
used
complex
used in
in to understand
several
systems
several fields,
(Forrester,
fields, from
fromthe1961).structure
project
project
complex systems (Forrester, 1961). This approach has been This and dynamics
management
approach
management has(Toole,
been
(Toole, of
1.1 Demand
1.1 Demand DrivenDriven Fashion
Fashion SupplySupply Chain
Chain complex
2005)
used in
2005) and
in
andsystems
SC
several (Forrester,
SC management
fields,
management 1961).
from(Gnoniproject
(Gnoni This
et al.,approach
al., 2003)
2003) to
management
et management tohas been
product
(Toole,
product
1.1 Demand Driven Fashion Supply Chain used several fields, from project (Toole,
According
According to to Fisher
Fisher (1997),
(1997), products
products can can bebe divided
divided intointo 2005)used
2005)in
life-cycle
and
life-cycle several
management
SC fields, (D’Amico
management
management from(Gnoni
(D’Amico project
et
et management
al.,
et
al., 2013)
al., 2003)
2013) and
andto (Toole,
capacity
product
capacity
and SC management (Gnoni et al., 2003) to product
two
two categories:
According
categories: either
to Fisher
Fisher
either primarily
(1997),
primarily functional
products can be
functional be or primarily
divided
or primarily 2005)
planning andmanagement
life-cycle
into life-cycle
planning SC management
(Vlachos
(Vlachos et
et al.,
(D’Amico
al., (Gnoni
2007),
2007), et
etand
andal.,al., 2003)
describes
2013)
describes andtoa product
system
capacity
acapacity
system
According to (1997), products can divided into management (D’Amico et al., 2013) and
According
innovative.
two to
categories:
innovative. Fisher
While
While either(1997),
functional
primarily
functional products
products, can
functional
products, be
such
such divided
or as
as into
grocery,
primarily
grocery, life-cycle
behaviour
planning
behaviour management
through
(Vlachos
through the
et
the (D’Amico
structure
al., 2007),
structure et
of
ofandal.,
its
its 2013)
feedback
describes
feedback and capacity
loops.
a system
loops.
two categories: either primarily functional or primarily planning (Vlachos et al., 2007), and describes a system
two categories:
innovative. While either primarily
functional functional
products, such orasprimarily
grocery, planning
behaviour (Vlachos
through et al.,
the 2007), ofand
structure its describes
feedback a system
loops.
innovative. While functional products, such as grocery, behaviour through the structure of its feedback loops.
innovative.
Copyright While
© 2015 IFACfunctional products, such as grocery,1354behaviour through the structure of its feedback loops.
Copyright © 2015 IFAC 1354
2405-8963 ©
Copyright © 2015, IFAC (International Federation of Automatic Control)
2015 IFAC 1354Hosting by Elsevier Ltd. All rights reserved.
Copyright
Peer review© 2015 responsibility
IFAC 1354Control.
Copyright ©under
2015 IFAC of International Federation of Automatic
1354
10.1016/j.ifacol.2015.06.263
INCOM 2015
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Basic elements of this methodology are causal loop dia-
grams and stock and flows diagrams. The first ones repre-
sent the feedback structure of the system while stock and
flow diagrams are tools for assessing variables dynamics
through a period (Gnoni and Lanzilotto, 2012).
Main elements of these diagrams are (Sterman, 2000),
(Georgiadis et al., 2006):
• Variables which are relevant for the system descrip-
tion;
• Oriented arches which suggest causal relationships.
The + and - sign indicate that the effect is positively
or negatively related to the cause;
• Positive loops: they are self-reinforcing loops, iden-
tified with R. In a positive feedback loop, an initial
disturbance leads to further change, suggesting the
presence of an unstable equilibrium;
• Negative loops: they are self-correcting or balancing
loops, identified with B. In a negative feedback loop,
after a disturbance, the system seeks to return to an
equilibrium situation;
• Delays which describe the inertia of physical system,
according to which it is not possible that a quantity
changes instantaneously;
• Stocks which represent quantities that are accumu-
lated or disposed over time;
• Flows which indicate an entity flow from/to one or
more Stocks.
All these elements will be part of the Causal Loop Diagram
(CLD) which graphically illustrates causal relationships
and major feedback loops among variable of the system.
The construction of a CLD for the description of the
planning, purchasing, supply and replenishments processes
of a Fashion Retail SC is the main goal of this research
work and will be described into detail in next section.
2. A CAUSAL LOOP DIAGRAM FOR THE FASHION
RETAIL INDUSTRY
Strategic supply chain management involves a wide spec-
trum of issues and includes several types of decision-
making problems, such as the determination of number,
location and capacity of warehouses and the flow of mate-
rial through the logistics network, inventory management
policies, distribution strategies, etc. (Georgiadis et al.,
2005). All these issues must be constantly faced in the
F&A Industry adding complexity due to seasonality of
products, fluctuating and unpredictable demand and short
product life cycle.
2.1 Motivation behind research
Present work aims at defining and modeling SC dynamics
in the F&A retail industry and represents a preliminary
study for future implementation of the model through sim-
ulating tools. Even if no experimental result is presented,
this study represents the core of the simulation process
since it performs a careful analysis of the problem, setting
main goals and issues, and it defines the conceptual model
by analysing interactions and causal relationships between
variables both graphically and in mathematical terms.
1355
Fig. 1. Planning and Operations steps of the model
2.2 Context and problem description
According to Iannone et al. (2013) and Lanzilotto et al.
(2014), we divided the main supply chain processes as
illustrated in Fig. 1.
The Pre Season stage, as the name implies, is performed
before the beginning of the selling season and includes
all the phases which go from the design of the clothing
collection to the first deliveries to the stores. The In
Season stage, instead, starts with the first sales recorded
in the stores. At this point, after comparing real sales with
forecasts, an adjustment process starts.
In next sections, we will describe into detail each diagram
block together with an economic performance evaluation,
identifying variables and related causal relationships.
In the diagrams, Stocks will be represented in capital
letters while Flows in italic underlined letters.
2.3 Pre Season
a) Collection definition and planning
Many companies operating in the fashion industry
highlight that the most relevant core competences to
keep in house are those related to the design phase,
which defines material requirements, aesthetic aspect
and style of the product (Brun et al., 2008). Then,
this phase, also named as New Product Development
(NPD) is considered crucial and very time consuming,
since it usually begins almost two years before produc-
tion (Bandinelli et al., 2013).
Main output data of the collection definition process
which are considered relevant to our model are the
Number of Items and their Price.
The first variable has a positive relationship with the
Number of Suppliers. Since it is likely that each clothing
item requires one or more specific manufacturing skills
or processes, their production will be committed to the
most suitable supplier. To simplify, we can consider
that each item is produced by one specific supplier.
The variable Price, instead, has a clear relationship of
direct proportionality with Revenues.
Another significant variable is the Collection Attrac-
tiveness, which is evaluated in terms of design, quality
and assortment (i.e. the number of different clothing
items) but not less significant is the price factor (Mari-
any et al., 2012). To increase attractiveness there is also
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Marketing Investment (m), intended as the planned in-
vestment in advertising and communication campaigns,
which is defined as a percentage of the Budget allocated
to the entire selling season.
b) Forecasting
As already mentioned in previous paragraph, demand
for fashion items is highly unpredictable, since isolating
external effects such as season, weather conditions or
mediatic phenomena can be extremely complex (Souza
et al., 2014). In last years several sophisticated mod-
els have been proposed (Fumi et al., 2013), (Nenni
et al., 2013) and most of them use generic algorithms
based on the assumption that demand can be predicted
uniformly for all companies and across all industries,
product lines and geographies. This one-size-fits-all ap-
proach yields a forecast that fails to reflect the relative
impact of different demand drivers and to adapt as
market conditions and consumer behaviours evolve (B.
and Caffrey, 2014).
Nevertheless, all researchers agree in basing sales fore-
casting on historical data, which in our case are repre-
sented by Demand data of the Previous selling Seasons.
This idea is represented in our CLD (refer to Fig. 2) by
a delay. It is clear that these demand data are aggregate
data coming from all the stores of the network, then the
global Demand is positively related to the Number of
Stores managed by the company.
Fig. 2. Causal relationships for Collection Definition and
Planning, Forecasting and Purchasing processes
c) Purchasing
Main output of the purchasing process is the defi-
nition of the global Purchase Quantity for each item
included in the collection.
The Purchase Cost (CP ) will be then calculated as:
N

CP = Qi ∗ cui (1)
i=1
Where N is the Number of Items, Qi is the Purchase
Quantity for the i-th item and cui is the i-th item’s
unitary cost (Items cost).
It is clear that this cost must fall within the Budget (B)
allocated according to the following equation:
m + CP ≤ B (2)
where m is the Marketing Investment.
1356
Then, the CLD for these first three processes is
shown in Fig. 2.
d) Delivery
The deliveries (or primary transport) from the sup-
pliers to the Central Warehouse (Deliveries to Ware-
house - DW ), which are an incoming flow in the Ware-
house Stock (SW ), are defined by the Delivery Plan
which contains information concerning delivery quan-
tity (Purchase Quantity) and times for each supplier
(Number of Suppliers).
The first balancing loop (B1) identified in this system
is defined between DW and SW . The positive causal
relationship (from DW to SW ) is given by the material
flow incoming into the warehouse with an unavoidable
delay due to Delivery Lead Time increasing with Sup-
pliers Distance. The negative feedback (from SW to
DW ), instead, refers to the updating process in the
delivery plans: warehouse physical limits, concerning
both storage and material handling capacity, must not
be overcome, then delivery quantities and times must
be revised accordingly.
The cost item related to this process is the Primary
Transport Cost (CP T ) given by:
M
CP T = (Ctf,j + Ctv,j ∗ QDj ∗ DISTj ) (3)
j=1
Where, M is the number of suppliers and, Ctf and
Ctv are constant values and are respectively fixed and
variable cost for primary transport for the j-th supplier,
QD is the quantity delivered and DIST is the distance
between suppliers plant and central warehouse.
The CLD for this process is showed in Fig. 3.
Fig. 3. Causal relationships for Delivery process
e) Replenishment
In a fast changing environment, such as the fashion
one, the generic problem of allocating inventory from a
central warehouse to several locations satisfying sepa-
rate demand streams, is considered the most crucial.
This replenishment process (or secondary transport)
principally aims at dynamically optimizing the assort-
ment of the stores trying to minimize overstock or out
of stock events. In this process we can identify two
different balancing loops (refer to Fig. 4):
B2) between Warehouse Stock (SW ) and Deliveries to
Stores (DS ):
• The negative causal relationship (from DS to
SW ) is given by the material flow out coming
from the warehouse;
• The positive feedback (from SW to DS ) is given
by the necessity to respect physical warehouse
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limits (refer to Delivery process). In order to 2.4 In Season

avoid overloading of the warehouse, when stocks
a) Sales
increase, deliveries to store must become bigger
The In Season phase starts with the first Sales recorded
and more intensive.
in the Stores.
B3) between Deliveries to Stores (DS ) and Stores
In this process we can clearly identify a balancing loop
Stock (SS ):
(B4) between Demand (d), Sales (s) and Stores Stock
• The positive causal relationship (from DS to
(SS ):
SS ) is given by the material flow incoming in
• The negative causal relationship (from s to SS ) is
the stores, with a delay due to transport lead
given by the real Sales which represent a material
time increasing with Stores Distance from the
flow out going from the stores;
warehouse;
• The positive causal relationship (from SS to d ) re-
• The negative feedback (from SS to DS ) is given
flects customers impulsive and compulsive purchas-
by the necessity to respect physical internal
ing behaviour (refer to Replenishment process),
stores warehouse limits, such as for the central
then an increasing demand will be observed with a
warehouse.
higher assortment level;
This second loop also reflects two conflicting re-
• The positive feedback (from d to s) shows the
quirements of the fashion retail environment. From one
direct proportionality between Demand and Sales
side, given customers impulsive purchasing behaviour,
(refer to equation 6).
we need to ensure high availability of products, not
only in terms of product range but also in sizes and
In addition, in order to estimate uncensored cus-
colours. From the other side, higher stock levels may
tomer requests, Caro and Gallien (2007) define Demand
lead to the overloading of internal stores warehouses
as the sales that would have been observed had all
and consequent related costs, and to the increase in
merchandise been displayed without any stock out.
unsold stocks.
Then we can define the following equation:
The two cost items related to this process are:
Demand = Sales + Outof Stock (6)
• Warehouse Management Cost (CM W ):
The cost item connected to this process is the Stores
N
Management Cost (CM S ):

CM W = Cmf + chi ∗ cui ∗ N
i=1

M L
CM S,k = cmf + chi ∗ cui ∗ (QR,i − si ) (7)
  i=1
∗( QD,ij − QR,ik ) (4)
j=1 k=1 Where cmf is the fixed store management cost, chi
is the store holding cost for the i-th item expressed
Where Cmf is the fixed warehouse management
as percentage of its value. This value is higher than
cost, chi is the holding cost for the i-th item
the same chi for the central warehouse since products
expressed as percentage of its value and QR is the
stored in the stores can not be used any more for
quantity delivered to the k-th store.
the replenishment of other stores and other possible
• Secondary Transport Cost (CST ):
transfers will generate higher costs.
L
 Another variable that must be considered in this pro-
CST = ctf,k + ctv, k ∗ QR,k ∗ distk (5) cess is Revenues (R), expressed as:
k=1
N 
 M
Where, for the k-th store, ctf and ctv are con-
stant values and are respectively fixed and variable R= sij ∗ P ri (8)
cost for secondary transport, QR is the quantity i=1 j=1
delivered and dist (Stores Distance) is the distance The CLD for this process is showed in Fig. 5.
between central warehouse and the k-th store.

The CLD for this process is showed in Fig. 4.

Fig. 5. Causal relationships for Sales process

b) Adjusting
Fig. 4. Causal relationships for Replenishment process Supply and demand are easily matched if demand is
steady over time with no change in volume or mix.

1357
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As soon as demand changes, however, a company must
adjust the supply levels accordingly at each step of the
supply chain (Budd et al., 2012).
According to these considerations, the best designed
fashion supply chains must be (Abtan et al., 2013):
• Fast, demonstrating particular speed in fulfilling
customer orders and adapting to changes;
• Flexible, creating efficient processes that enable
flexibility in the end-to-end supply chain;
• Lean, emphasizing effective, low-cost operations.
This adjusting process is based on the comparison
between real Demand and Forecasts, which allows us
to perform two different deviation analysis:
• Supply Chain Deviation: it evaluates aggregate
data from Warehouse Stock and Stores Stock and,
if this deviation is higher than a fixed threshold, the
system will update Purchasing Quantity possibly
cancelling some orders or issuing new ones;
• Replenishment Deviation: through the analysis of
current Stores Stock, it evaluates in real time how
much Demand was under or over estimated and, if
it overcomes a fixed threshold, we will have to ad-
just the replenishment plans (Deliveries to Stores).
The CLD for this process is showed in Fig. 6.
Fig. 6. Causal relationships for Adjusting process
2.5 Economic Performance
For each Retail SC and, generically, for each Supply
Chain, main purpose is the maximization of the Profit (P)
expressed as:
L

P = R − CP − CP T − CM W − CST − CM S,k − M (9)
k=1
The causal relationships representing this economic eval-
uation are showed in Fig. 7.
Fig. 7. Economic relationship
2.6 The Final Causal Loop Diagram
Integrating all the variables and interactions previously
described, the final CLD of the system under exam is
shown in Fig. 8.
1358
3. CONCLUSION AND PERSPECTIVES
Effective management to achieve competitive advantages
includes the ability to manage a complex network as a
whole. In the fashion industry, the operational strategy
consists of ordering, well in advance, a large number of
different references, each having a relatively short life
cycle of only a few weeks. However, on the contrary,
a fashion supply chain must respond quickly to market
changes in order to meet customers requests and increase
profitability. In this context, this paper proposes a Causal
Loop Diagram which describes into detail the conflicting
typical needs of the Fashion and Apparel Industry. These
opposing requirements, force the management to face
several decision making problems in order to find the
best definition and mix of all the variables, such as the
definition of the Seasonal Budget, the selection of the items
composing the collection, the choice of the quantities to be
purchased etc., with the aim of maximising profits. The
present work only represents a preliminary study since it
does not offer any experimental result even if it represents
the core of the simulation process. Then, next steps will be
the implementation of the model through simulating tools
and design of an experimental campaign for the analysis
of supply chain performances under different conditions.
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