6. Modelling and Simulating Supply Chains

The dynamism of the business environments in which many organisations are operating has resulted in the acceptance that competitive advantage is often regarded as a temporary phenomenon. Organisations require lively and flexible management systems to be able to respond to market changes and retain competitiveness. Traditional organisations are structured into functional departments, utilising the concepts of the division of labour, or work specialisation. Such a configuration presents many disadvantages: it is not a customer-focused structure, it can result in sluggish performance, it does not show in a clear manner the products or services that will be provided to customers and it does not reveal how work flows satisfy the customers’ requirements. Functional and individual objectives are often pursued with such structures, inadvertently ignoring the global objective of the organisation. This problem is exacerbated when the organisation grows in size and complexity. These disadvantages become even more apparent and problematic when the supply chain is taken into account. In such circumstances, the local objectives of the organisations making up a supply chain cannot easily be aligned with the overall ambitions of the entire network. Attention is increasingly focused on critical and value-adding processes due to their direct influence in business success; therefore organisations are evolving from hierarchical structures to a more integrated perspective where business process management crosses the functional boundaries of an enterprise and the organisational boundaries of a supply chain.