System Dynamics Modeling for Strategic Management of Green Supply Chain

Abstract

Environmental issues are rapidly emerging as one of the most important topics in strategic manufacturing decisions. Perusal of the literature has shown many models to support executives in the assessment of a company’s environmental performance. Unfortunately, none of these identifies operating guidelines on how the systems should be adapted to support the deployment of different types of green supply-chain strategies. This chapter seeks to investigate how system dynamics modeling can be supportive for management of feasible green supply-chain strategies. Besides conceptual considerations, we base our arguments on the development of efficient performance measurement systems for remanufacturing facilities in reverse supply chains, taking into account not only economic but also environmental issues. The behavior of the green supply-chain management under study is analyzed through a simulation model based on the principles of the system dynamics methodology. The simulation model can be helpful for green strategic management as an experimental tool, which can be used to evaluate alternative long-term strategies (“what-if” analysis) using total supply chain profit as measure of strategy effectiveness. Validation and numerical experimentation further illustrate the applicability of the developed methodology, while providing additional intuitively sound insights.