Step 2: Modeling

Example of one step in the chain. This System Dynamics picture was taken from “Responding to the Lehman Wave: Sales Forecasting and Supply Management during the Credit Crisis”, by Robert Peels et al, published as BETA Working Paper Series, nr 297.

With the knowledge from the analyzing phase we build a supply chain model. The prototype that Flostock has developed based on an exclusive license from Eindhoven University of Technology will be tailor made into a model that fits the situation. Various bolt-on functions are available in modular form. After testing, the model is shared with your team, challenged, and calibrated. Output is: a model for your supply chain.

System Dynamics

The modeling will be done in System Dynamics software, in a commercial program called Vensim. System Dynamics was developed at MIT in Boston in the 60ies and 70ies and has become much more prevalent since it is available in easy to use software. Also you can use it and build it. 

System Dynamics is like a calculation spread sheet, but then graphical. You can draw a supply chain on the screen and enter the causal relations, with their delays and feedback loops as you speak. The model is especially strong in picturing stocks and flows. The whole world consists of stock and flows, but most people ignore the stocks, or in any case the effects that stocks can have on the flows.