The Behavior of Lean and the Theory of Constraints in the Wider Supply Chain: A Simulation-Based Comparative Study Delving Deeper into the Impact of Noise

Abstract

The design and implementation of systems thinking strategies for supply chains, based on collaboration among partners, is gaining ground as a key source of competitive advantages. Therefore, a growing number of companies is moving the scope of their lean management (LM) and theory of constraints (TOC) solutions from the production system to the wider supply chain. Building on prior research studies, we explore their robustness against noise in a supply chain setting. To this end, we consider the Kanban and drum-buffer-rope (DBR) control systems, respectively, from the LM and TOC paradigms; we model a four-echelon supply chain by means of an agent-based approach; and we measure the net profit of the supply chain under six scenarios with increasing level of noise. As can be expected, we observe that the net profit decreases significantly as the severity of the noise grows. This happens both for the LM- and TOC-based supply chains. However, it is relevant to note that the gradient of the curve is stronger for the Kanban system. This means that DBR makes the supply chain more robust against noise. As a result, we conclude that the benefits derived from implementing DBR, in comparison with Kanban, increase significantly as the noise becomes more demanding.