DEVELOPMENT OF A SUPPLIER SEGMENTATION METHOD FOR INCREASED RESILIENCE AND ROBUSTNESS: A STUDY USING AGENT BASED MODELING AND SIMULATION

• Main Author: Brown, Adam J.
• Format: Others
• Published: UKnowledge 2017
• Subjects: Resilience; Robustness; Supplier Relationship Management; Supplier Segmentation; Agent-Based Modeling and Simulation; Manufacturing; Operations and Supply Chain Management
• Online Access: http://uknowledge.uky.edu/me_etds/100; http://uknowledge.uky.edu/cgi/viewcontent.cgi?article=1104&context=me_etds

Supply chain management is a complex process requiring the coordination of numerous decisions in the attempt to balance often-conflicting objectives such as quality, cost, and on-time delivery. To meet these and other objectives, a focal company must develop organized systems for establishing and managing its supplier relationships. A reliable, decision-support tool is needed for selecting the best procurement strategy for each supplier, given knowledge of the existing sourcing environment. Supplier segmentation is a well-established and resource-efficient tool used to identify procurement strategies for groups of suppliers with similar characteristics. However, the existing methods of segmentation generally select strategies that optimize performance during normal operating conditions, and do not explicitly consider the effects of the chosen strategy on the supply chain’s ability to respond to disruption. As a supply chain expands in complexity and scale, its exposure to sources of major disruption like natural disasters, labor strikes, and changing government regulations also increases. With increased exposure to disruption, it becomes necessary for supply chains to build in resilience and robustness in the attempt to guard against these types of events. This work argues that the potential impacts of disruption should be considered during the establishment of day-to-day procurement strategy, and not solely in the development of posterior action plans. In this work, a case study of a laser printer supply chain is used as a context for studying the effects of different supplier segmentation methods. The system is examined using agent-based modeling and simulation with the objective of measuring disruption impact, given a set of initial conditions. Through insights gained in examination of the results, this work seeks to derive a set of improved rules for segmentation procedure whereby the best strategy for resilience and robustness for any supplier can be identified given a set of the observable supplier characteristics.