Track: Supply Chain Management

Abstract

A supply chain is a network between a company and its suppliers to produce and distribute a specific product/service to consumers. This network constitutes people, entities, information, activities, and resources. A supply chain disruption occurs when demand or supply spikes or falls unexpectedly, resulting in a massive imbalance between the two. As supply chains become more global, the risk of such interruptions has aggravated considerably. In fact, catastrophic occurrences have highlighted the importance of analyzing disruption risk and developing mitigation plans to deal with it. In this research, we use the simulation software Arena to model a supply chain and analyze the consequences of network disturbances. The present research seeks to assist an organization in determining its level of risk in terms of disruptions that compromise product availability. A discrete-event simulation model of a multi-echelon supply chain consisting of a retailer, a manufacturing plant maintaining an input and output buffer, and a supplier is developed. Disruptions are introduced at different echelons of the system, and the dependence of customer fill rate and the demand fill rate on disruption durations are investigated in detail. The research offers a detailed understanding of the consequences of disruptions by capturing both risk profiles and material flow. Mitigation strategies, namely, safety inventory (inventory control) and contingency strategies for backing up specific suppliers or links in the supply chain (sourcing) are examined in the present paper. Furthermore, the effect of these mitigation strategies on the customer service level is also analyzed.