Performance improvement of manufacturing supply chain using back-up supply strategy

Abstract

Purpose – The purpose of this paper is to provide a simulation modelling framework to examine the behaviour of a serial make-to-stock (MTS) manufacturing system under the influence of various uncertainties. Further, the study analyses effect of propagation uncertainties from lower to upper stream of supply chain. Design/methodology/approach – System dynamics modelling approach has been adopted for modelling and analysing the behaviour of a serial MTS manufacturing system under the influence of different uncertainties such as demand, supplier acquisition rate, raw material (RM) supply lead time, processing time and delay due to machine failure. The backup supply strategy has been proposed to mitigate the adverse effect of the RM supply uncertainty. Findings – The effect of variations of various factors on the performance of a MTS manufacturing supply chain in measured through various performance measures like work-in-progress (WIP) inventory, backlog and RM shortage at both manufacturer’s and supplier’s end. The benefit of adopting backup supply strategy under RM supply uncertainty is demonstrated. Research limitations/implications – This work is limited to analysis of a serial MTS manufacturing system dealing with a single product having two machines only. The study can be easily extended to a more complex system with multiple machines, lines and products. Practical implications – A simple simulation framework has been proposed to analyse the effect of various uncertainties on the performance of a MTS manufacturing system. The managers can simulate complex systems using simulation approaches to generate if-then scenarios to gain insight into practical problems and formulate strategies to mitigate adverse effect of uncertainties at various level of supply chain. Originality/value – The study analyses behaviour of MTS manufacturing system under the effect of various uncertainties operating simultaneously in the system. A backup supplier strategy is proposed to improve the service level at the customer’s end through improving service level at the supplier’s end. Similarly, effective strategies can be tested with the proposed simple model to reduce the effect of uncertainty at different levels of the supply chain.