From Linear to Circular: A System Dynamics Approach to Sustainable Garment Production at PT XYZ Garment

Abstract

PT XYZ Garment is a garment manufacturer operating a make-to-order system that still relies on traditional, manual processes, which limits monitoring, tracking, reporting, and efficiency measurement of the overall production system. The company also applies a linear economy model in which fabric waste is disposed of without reuse. This study evaluates current production performance and predicts performance under a circular economy model using a system dynamics approach. The research stages include observation, interviews, literature review, system identification, causal loop diagram development, stock and flow diagram modeling, and a 208-week simulation using historical production data. Two scenarios were compared: the existing linear model and a circular model that reuses fabric waste through an intermediary-and-craftsmen mechanism. The simulation results show that the circular scenario produced higher values across key indicators: total demand increased by approximately 98% (from 8,122 to 16,095 units), total sales by approximately 98% (from 8,123 to 16,096 units), and average customer satisfaction by 10.77% (from 4.14 to 4.58 on a 5-point scale). The circularity rate reached 16,575 units compared to 0% under the linear model, and the mean Green Image Factor was 0.069, indicating that recycling contributed approximately 6.9% relative to sales. These findings indicate that system dynamics can capture the dynamic interrelationships among production variables and support the evaluation of sustainability-oriented policy changes. However, they are simulation-based and require empirical validation of key parameters before real-world implementation. This study provides a simulation-based framework for assessing the feasibility of circular economy transition in garment companies.