partners selection in supply chain asing system dynamics approach

Firms no longer compete as autonomous entities and prefer to join in a supply chain alliance to take advantage of highly competitive business situation. Supply chain coordination has a great impact on firm’s strategic partnering and success in competitive business environment. Our model addresses a supply chain including suppliers and retailers. It presents an approach to simulate each supplier’s (retailers) tendency to select downstream (upstream) partner selection and the impact of their policies in the whole supply chain. In this paper, we propose a system dynamics simulation model for strategic partner selection in supply chain. System dynamic is a well stablished tool for determining the behavior of pre-determined variables of the system called Level Variables. The proposed model has the flexibility of adapting any number of suppliers and retailers in a given supply chain. Price and service level are considered as two important factors impacting dynamically on each retailer’s priorities to buy from suppliers over time. Order ratio and loyalty are also considered as factors that influencing each supplier’s priorities to sell product to retailers. The whole model consisting of two suppliers and two retailers is simulated and the impact of policy of suppliers and retailers is discussed. Four scenarios are designed and their results are discussed appropriately.

Keywords:

Supply chain coordination , strategic partnering , upstream and downstream partner selection , information sharing , system dynamics , scenario analysis