Planning of supply chain risks in a make-to-stock context through a System Dynamics approach

This paper proposes a System Dynamics approach to manage supply risks. In Supply Chain Risk Management field tools such as modeling and computer simulation are assuming an increasingly important role in supporting strategic, tactical and operational business decisions. In particular, these are applied to the risk sharing phase and to evaluate appropriate management and mitigation strategies. In a company's perspective, a SD approach provides a reading key of reality through an analysis of how policies and decisions influence and are influenced by the environment and how these impact on dynamics of available resources. In this context a model to assess supply risks has been defined. This model considers the operational characteristics of a generic company operating in its supply chain environment, and their interactions. This problem has been approached through several steps with an increasing level of detail. We start by decomposing the supply risk problem in its subparts, in order to understand the mechanisms making this system complex. The simulation based approach proposed here allows to carry out an analysis and subsequent mitigation of supply risks, furthermore providing some counterintuitive advices in order to maximize company's profitability.