Supply chain analysis methodology – Leveraging optimization and simulation software

This article outlines a four‐step approach in analysing a complex supply chain using optimization and simulation software tools. The first step consists of Multi‐Echelon Optimization to determine the best supply chain structures. The second step involves a Discrete‐Event Simulation to determine the appropriate supply chain configuration. The third step, Simulation‐Optimization, is then used to improve the supply chain's design established in the first two steps by optimizing the policies used to govern the network's behaviour. The final step, Design for Robustness, ensures that the final selection of the supply chain's network structure and policies will operate well under a wide variety of situations by minimizing the risk of undesirable outcomes. Using a four‐step methodology, supply chain modelling provides an efficient supply chain design operating under effective inventory, sourcing and transportation policies. A case study from a Fortune 500 manufacturing company is evaluated using the four‐step methodology. Future studies are outlined.