Supply Chain Modeling Using Simulation Techniques

In today’s global market, managing the entire supply chain becomes a key factor for the successful business. World-class organizations now realize that non-integrated manufacturing processes, on-integrated distribution processes and poor relationships with suppliers and customers are inadequate for their success. They realize the impact of an organization’s plan on the other areas of the supply chain. The impact of an organization’s plan on the whole supply chain is unpredictable before its execution. Simulation permits the evaluation of operating performance prior to the execution of a plan. In the practical application of this concept, the development of the simulation model for the supply chain management has become a necessity. This paper discusses the issues of supply chain management and the requirements for supply chain simulation modeling. In a today’s highly competitive market manufacturers face the challenge of reducing manufacturing cycle time, delivery lead-time and inventory reduction. However, every organization (company) has its own objectives and its own way of decision-making processes. Due to the conflictions among the objectives of each organization and non-integrated decision making processes, there has been a need for a new mechanism, which help to resolve those conflictions and to integrate processes. In the early 1990s, the phrase “supply chain management” came into use. Supply chain management is a process of integrating/utilizing suppliers, manufacturers, warehouses, and retailers, so that goods are produced and delivered at the right quantities, and at the right time, while minimizing costs as well as satisfying customer requirements.