Systems dynamics modelling of a manufacturing supply chain system

Supply chains are multifaceted structures focusing on the integration of all the factors involved in the overall process of production and distribution of end products to the customers. Growing interest in supply chain systems has highlighted the need to adopt appropriate approaches that can ensure the efficient management of their complexity, enormity and broadness of scope. With the main aim of supply chain management being to optimise the performance of supply chains, attention is mainly drawn to the development of modelling frameworks that can be utilised to analyse and comprehend the dynamic behaviour of supply chains. While there have been only a few supply chain modelling attempts reported in the literature, this paper proposes a modelling framework that is used to simulate the operation of a supply chain network of moderate complexity. The proposed model comprises four echelons and is build around a central medium-sized manufacturing company operating as a typical Make-to-Order (MTO) system. The developed model was built using a systems dynamics (SD) approach. The operations performed within a supply chain are a function of a great number of key variables which often seem to have strong interrelationships. The ability of understanding the network as a whole, analysing the interactions between the various components of the integrated system and eventually supplying feedback without de-composing it make systems dynamics an ideal methodology for modelling supply chain networks. The objective of the paper is to model the operation of the supply chain network under study and obtain a true reflection of its behaviour. The modelling framework is also used to study the performance of the system under the initial conditions considered and compare it with that obtained by running the system under eight different scenarios concerning commonly addressed real-life operational conditions. The modelling effort has focused on measuring the supply chain system performance in terms of key metrics such as inventory, WIP levels, backlogged orders and customer satisfaction at all four echelons. The study concludes with the analysis of the obtained results and the conclusions drawn from contrasting the system’s performance under each investigated scenario to that of the benchmark model.