Designing an Interactive Supply Chain with Simulation Modelling

There are a number of interconnected organisations in a typical supply chain. Suppliers provide the raw materials needed for manufacturing products, manufacturers make the products, warehousing facilities store the finished products. From warehouses products are sent to distribution centers or whole sale facilities, who in turn transport goods to retailers, and finally, customers at the end of the supply chain buy products from retailers.

This chain of integrated events requires robust supply chain management to ensure that the goods required are manufactured to specific requirements, delivered in the right quantities, at the right time, while at the same time reducing costs to remain competitive, satisfying customer expectations. Increasingly, managers are under pressure to drive down transportation and warehousing costs, work with shorter lead times and maintain tight inventories.

This is best accomplished by organisations having clear visibility of their overall supply chain plans which should be robust and flexible enough to adapt quickly to sudden and unexpected changes in the supply chain. An awareness of customer and supplier plans is also needed to effectively adapt plans to real time, unplanned events.

In a fast moving, rapidly changing world, supply chains are constantly under pressure, subject to increased risks of failure or poor performance, uncertain outcomes and stability. Supply chains are increasingly faced with random events, uncertain external factors, changing policies, configurations or flows, all of which have increased the need for the use of discrete real-world event simulation for modeling the entire supply chain before a firm plan is implemented.

Simulation modeling enables a company to visualise and predict the results of a particular strategy or plan, therefore reducing risks by assessing operating performance ahead of a plan being implemented, all while keeping the real system working. Simulation allows various scenarios and different plans to be considered, providing valuable insight and information in order to agree on the best way forward.

Spreadsheets are static and can only provide a quantitative result for one moment in of time, where simulation replicates your dynamic business reality.