Supply Chain Dynamics and Dynamic Simulation

Abstract

This chapter first focuses on the intrinsic dynamic interactions within supply chains. These are theoretically interesting and informative for understanding and managing supply chains. Next, the chapter explores the power of dynamic simulations for managing and understanding the workings and complex interactions in supply chains. Dynamic simulation grew out of the work of Forrester on Systems Dynamics. While general influences of the differing players and levels can be qualitatively described, the use of dynamic simulations permits exploration of the processes by which small changes and interactions of variables and parameters can have surprisingly large impacts on supply chain performance. As revealed by the literature survey in Chapter III, the short life-cycle case is increasingly important in practice. At the same time, the intrinsic dynamics of supply chains are especially problematical and potentially catastrophic in the short life-cycle case. The history of the well-known Tamagotchi? toy is used to provide an illustration both for the technique of dynamic simulation and for the difficulties that can occur in such supply chains.