A Critical Review of Simulation Applications in Supply Chain Management

Supply Chain Management is a process that manages the flow of goods and services and related information from the point of origin to the point of consumption. Supply Chain Management is a complex process as it involves a lot of activities like purchasing, production, inventory management, logistics and transportation. Globalization has increased this complexity due to the numerous suppliers, customers and logistics service providers located in different geographical locations. In order to manage this complexity, simulation software’s can be used as they mimic real life situations and they will help managers in making superior decisions on areas like facility location, transportation choice and inventory model choices. This paper analyzed the literature and identified Supply Chains adopting simulation to aid in the decision making process thereby improving Supply Chain Performance. A critical analysis of the case studies was conducted and the results reveal that simulation is a powerful tool that can be used in modeling complex supply chain activities. Simulation models however fail to provide optimum solutions for decision variables inherent in predefined objectives. Therefore, integrating optimisation models would offer best likely alternatives for decision makers. Managers should therefore select the most suitable model that best symbolizes the system under study.