Simulate Your Supply Chain to Compete More Effectively

By definition, we all want supply chain optimization. What Steve Banker says most businesses lack in an article for Forbes are good supply chain simulation tools. Such tools help to ensure demand is satisfied at a given service level at a low cost. Banker uses and modifies a diagram created by Toby Brzoznowski in order to create a four-part explanation of why simulation is such a useful idea.

Simulate Success

Supply chain design tools help to develop a baseline model, which is based on the current network and demand. Baselines are used to verify assumptions simplified by the design tools, and the process of developing a baseline often weeds out inefficient existing practices. Quantification meanwhile is another sort of modeling that simulates the future network using the current demand, to address questions such as, “What if we source from Mexico instead of China?”

Forecasting is the process of predicting future demand within the current network, which as a best practice should be integrated into the sales and planning process. And finally, there is network structure, the scenario of simulating a future network with future demand. For deeper insights on the various methods of simulation outlined here, you can read Banker’s full article: http://www.forbes.com/sites/stevebanker/2014/08/08/simulate-your-supply-chain-to-compete-more-effectively/

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