A system dynamics modeling framework for the strategic supply chain management of food chains

Abstract

The need for holistic modeling efforts that capture the extended supply chain enterprise at a strategic level has been clearly recognized first by industry and recently by academia. Strategic decision-makers need comprehensive models to guide them in efficient decision-making that increases the profitability of the entire chain. The determination of optimal network configuration, inventory management policies, supply contracts, distribution strategies, supply chain integration, outsourcing and procurement strategies, product design, and information technology are prime examples of strategic decision-making that affect the long-term profitability of the entire supply chain. In this work, we adopt the system dynamics methodology as a modeling and analysis tool to tackle strategic issues for food supply chains. We present guidelines for the methodology and present its development for the strategic modeling of single and multi-echelon supply chains. Consequently, we analyze in depth a key issue of strategic supply chain management, that of long-term capacity planning. Specifically, we examine capacity planning policies for a food supply chain with transient flows due to market parameters/constraints. Finally, we demonstrate the applicability of the developed methodology on a multi-echelon network of a major Greek fast food chain.