Assessment method for supply chain benefits

Abstract

Competitiveness in an agrichain is associated with efficient internal organization and with the communication systems and coordination of activities between companies in the chain. The objective of this paper is to describe how the system dynamics (SD) methodology can help the re-formulation processes of economic and productive systems, while also evaluating new interventionist policies. The SD methodology seeks to model each of the casual links explicitly, and to track the resulting system behavior over time. In this paper, a network of companies in the Brazilian milk supply chain is defined in terms of an SD model. In particular, it shows that before actions are taken, their impacts on the agent's production costs can be forecasted, giving more consistency to the study. Three scenarios are developed to study the system behavior over the simulation time by varying the expected performance of the technical assistance service introduced in the network. The network is composed of three representative groups of rural producers and a dairy company. Input data are based on a network in the central region of the state of São Paulo. The agents' unit costs are forecasted to decrease after coordinated actions are taken throughout the network over the simulation time. As a result, non-negative operational profit margins can be reached giving more stability to the whole system.