Impact evaluation of supply chain initiatives: a system simulation methodology

Abstract

To maintain enterprise competitiveness, enterprises require appropriate initiatives to efficiently manage the product, information and cash flows among different supply chain (SC) partners. Co-operation, postponement, vendor managed inventory, transhipment, logistic consolidation etc., are some of the typical initiatives for performance improvement in SC. In an industrial scenario, two or more of these SC initiatives are undertaken simultaneously for superior enterprise performance on multiple performance dimensions. These factors render the analytical SC models inapt and simulation modelling becomes a suitable methodology to study SC performance that can accommodate the complexities present. The impact studies of these initiatives are difficult because these require exploitation of flexible and dynamic modelling elements which are analytically complex and mathematically intractable. We address these issues in the present research by developing a simulation platform to undertake studies with an industrial SC scenario. The challenges to explore SC performance under multiple initiatives are the major motivations for the present research. The novelty of this research lies in the development of a multi-product, multi-echelon SC simulation platform for realistic and industrial SC scenario encompassing the capability to accommodate multiple SC initiatives simultaneously. It is based on the building block approach using Arena®. We undertake SC performance studies under the application of several important SC initiatives. The results are encouraging and they underline interesting research areas to explore further.