Understanding supply chain dynamics via simulation

The aim of this chapter is to outline the generic aspects of a simulation study in understanding and then improving on the dynamic behaviour of a supply chain. The chapter describes the various types of simulation that are available to supply chain designers. The chapter focuses on one particular type of simulation, namely Systems Dynamics. The principals of a simulation study are explained via a case study in which a simulation-based business diagnostic is undertaken in a low-value fit-out construction supply chain. The purpose of the business diagnostic is to investigate the dynamic performance of several re-engineering strategies. The dynamics of the strategies are assessed via a range of performance measures. The current supply chain suffered from a large number of merchants and protracted lead-times. The impact of replacing the 16 merchants with a single supplier who provided “kits” of components to the building site is considered. The benefits from an implementation of a supply chain wide IT system are also investigated. Aligning the supply chains planning buckets and ensuring that everyone in the supply chain works to the same “beat” is examined. Overlaying each of these scenarios is a simulation-based investigation of the influence of mistrust and information sharing. The simulation study allowed us to confirm current practice, predict future dynamic performance, identify improvement opportunities, and validate previously known supply chain management strategies in our construction industry case study. Strohhecker, S., Disney, S.M. and Naim, M.M., (2008), “Understanding supply chain dynamics via simulation”, Chapter 9 in “Construction Supply Chain Management Handbook”, Edited by O’Brien, W.J., Formoso, C.T., Vrijhoef, R. and London, K.A., CRC Press, Boca Raton, USA, 30pp. ISBN 978-1-4200-4745-5.

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