Track: Supply Chain and Logisitcs Competition

Abstract

Supply chains face challenges associated with the natural conditions of their operations, which depend on the characteristics of their products. There is a growing trend in the identification of new risks that may be associated with public health, socioeconomic and environmental factors, which condition the planning and execution of productive activities. Supply Chain Risk Management (SCRM) defines a procedure for risk management in organizations with the aim of identifying, measuring and mitigating the presence of possible adverse events.

We develop a raw material supply methodology that allows defining material flow management policies (MTS, MTO), considering risks and operating costs. We identify risks and inventory positioning criteria with the help of experts. Subsequently, we measure the risk through a simulation model to show the risks and costs generated by contingency and mitigation actions, through valued scenarios that give rise to the configuration of the raw material supply with a short useful life.

The designed model evaluates the feasible operating conditions of the supply process in a Colombian company dedicated to the meat sausages production that operates in four regions nationwide, vertically integrated from the animal gestation, to the finished product distribution to the marketers. To measure the impact that mitigation actions have on the modeled configurations, the baseline scenario does not consider material flow disruptions. This work evidenced the need to evaluate the MTO methodology application to activate the productive nodes in the logistics processes that consume 50% of the shelf life of the material; additionally, the configuration of the material flow in the supply process depends on the percentage of shelf life that is available for consumption. In financial terms, inventory costs, freezing, thawing, expiration and out-of-stock were included. We compared the MTO, MTS methodologies according to DDMRP and MTS according to coverage, under nine scenarios where demand and production sources were varied, resulting in operating costs to the MTO methodology as the one with the best performance with a 50% decrease compared to MTS according to DDMRP, and 23% if we compare it with MTS according to coverage. In terms of service level and robustness, the MTS methodology according to coverage has a slight advantage with 99.62%, compared to MTO and MTS according to DDMRP, with 99.49% and 98.71% respectively.

We use systems dynamics as a simulation methodology for its benefits when understanding the generality of the processes, the variables relationship with their environment and the identification of a research opportunity with this method.