April 1996 € Volume 23 € Number 2

Supply Chain Simulation Model

The analysts at IBM Research developed a supply chain simulation model that allowed detailed modeling of various business processes of a manufacturing and distribution supply chain (see Figure 4). The discrete event simulation was implemented in the MODSIM II object-oriented simulation language from CACI Products Company. Many of the ideas used in developing the supply chain simulation objects have been incorporated into SIMPROCESS, a software tool for business process modeling marketed by CACI and jointly developed by IBM Research and CACI.

Figure 4

The modeling system consisted of a set of approximately 80 objects which can be used to represent supply chain processes. These simulation objects can be broadly partitioned into three groups: nodes, entities and supporting data structures. The nodes captured the behavior of various business functions such as manufacturing, transportation, supply planning and customers. Movement of both physical goods (e.g. products being delivered) as well as information (e.g. base plans and customer orders) were modeled by various types of entities.

The support class category contained other information necessary to model and analyze a supply chain such as bills of material and statistical output reports.

Creating a model of the European PC business was then a matter of integrating these objects into a network that represented all the relevant business processes and their interactions. The next step was to collect appropriate data that would drive the simulation. After a validation process which involved comparing simulation output with historical data, numerous experiments were performed to evaluate alternative business strategies under different market scenarios.

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