Assessment of Supply Chain Flexibility Using System Dynamics Modeling

Abstract

Although personal care sector within fast-moving consumer goods industry has been known as a key contributor toward the growth of the economy, barely any study has been conducted to assess the flexibilities in the personal care supply chain. Further, being competitive and challenging environment of the industry, domestic personal care firms are stressed for their supply chain performance. The state of affairs is predominantly critical in the soap manufacturing firms, which have simple, but yet long, supply chain with ample amount of uncertainty due to intense competition, and therefore increase the challenges for firms such as “how much to produce” and “how much should be the production lead time.” Using expert views along with academicians and literature support, this paper investigates the flexibilities associated with soap manufacturing supply chain. The paper utilizes a distinctive approach of assessing the supply chain flexibility through system dynamics (SD) model and endorses the model in a soap manufacturing setting in India. The setting has been examined by changing the level of order rate and production lead time. The model along with the overall supply chain performance of a soap producing unit evaluated indicates the degree of flexibility achievable by the firm. Flexibility dimensions having considerable and outranked influence on enlightening the supply chain performance are recognized. The findings of study indicate demand pattern of packed and unpacked soaps shows seasonal fluctuations; interesting thing is that when one category soap demand increases, the other category’s demand shows slowdown. If case firm takes measures to improve the backlog or production gap through varying lead times, the performance of flexible supply chain can be enhanced. Finding also suggests that improved results may be obtained by varying the order rate. Simulation results show improvement in inventory of packed and unpacked soaps, shipment gap and hiring rate of the firm. The study is exclusive in reviewing the common man’s sector of personal care industry, which has received the least consideration in the literature and practice. The study claims to be unique by applying SD modeling to respond to research questions raised up along with inferences for practice and theory.