SCM Globe simulations focus on the interactions between the four supply chain entities: Products; Facilities; Vehicles; and Routes. And we employ a map-based user interface to present essential supply chain activities and information in an easily understandable visual format. Maps provide an organizing context for displaying detailed performance data generated by the simulations. This makes SCM Globe understandable and usable by a wide professional, business and academic audience (not just a small group of experts).
SCM Globe models and simulates supply chains by tracking the flow of products through a network of facilities. Flow can be modeled using basic differential equations from fluid dynamics. Flow is influenced by the demand for products at facilities and the storage capacity at facilities. Flow is also influenced by the cargo capacity of vehicles moving products between facilities, plus vehicle speeds and trip frequencies on delivery routes.
SCM Globe is a deterministic, non-linear simulation. The simulation logic used is similar to a simple weather forecasting model. The non-linear dynamics of SCM Globe simulations exhibit what is known as “deterministic chaos”, and the simulation results are highly sensitive to initial starting conditions. There are endless changes you can make. And each time you make a change, your simulation takes its own unique trajectory determined by the cumulative effect of all the changes you have made to your supply chain model so far.
A Useful Model
There’s a saying in the statistics profession, “All models are wrong, but some are useful.” This saying is attributed to the distinguished British statistician George Box. What he meant is all models must be summaries or approximations of reality, and because they are approximations, they are wrong to some degree. Builders of models must select key variables that capture the essence of a situation because it is not possible to include all the different variables that exist, and address all their possible interactions. In a paper published in the Journal of the American Statistical Association, Box said, “Since all models are wrong the scientist cannot obtain a “correct” one by excessive elaboration. On the contrary, following William of Occam, he should seek an economical description of natural phenomena. Just as the ability to devise simple but evocative models is the signature of the great scientist, so over elaboration and over parameterization is often the mark of mediocrity.” ( Box, G. E. P. (1976), “Science and Statistics” (PDF), Journal of the American Statistical Association, Vol. 71: 791–799)
There is a famous mathematical model that is an example of what George Box means. This model captures the essence of the relationship between energy and matter in the universe. It says energy equals mass times the speed of light squared, expressed as: E = mc2. There are many other variables (beyond energy, mass and the speed of light) that could potentially be included in a more elaborate model, but they would only increase the complexity and not significantly improve the model’s accuracy.
A map is another example of a model that summarizes reality. To contain all the detail of the real world a map would have to be as big as the world itself. So maps leave out a lot of detail, yet many are still quite useful.
A Mathematical Model Combined with a Map
To make SCM Globe usable by a wide audience, we summarize and simplify certain aspects of supply chain modeling and simulation. SCM Globe combines a useful mathematical model (defined by the four entities) with a useful map (such as Google Maps). It leaves out some supply chain detail and complexity yet models the essential operations of any supply chain. The resulting simulations create an accurate picture of the performance of whatever supply chain you wish to explore. Listed below are links to pages in this online guide where you can learn more about techniques and best practices for building supply chain models and using simulations to explore options and solve problems:
- Tips for Building Supply Chain Models
- All Supply Chain Models are Approximations
- Adjusting Rate of Missed Deliveries
- The Butterfly Effect
- Analyzing Simulation Data
- Cutting Inventory and Operating Costs
- Supply Chain Optimization with Reporting Template Version 2
- Balancing Supply Chain Risk and Performance
- Modeling and Simulation Services
There are Big Differences between Simulation and Optimization
People are often confused about the meaning of “simulation” and “optimization”. When people say “supply chain simulation” often they really mean optimizing the layout or operations of a single facility such as a warehouse or a factory. Doing such optimization requires loading lots of detailed data into a software application that uses complicated linear programming algorithms to crunch the data and calculate optimal answers. That’s NOT what SCM Globe does.
SCM Globe models and simulates entire supply chains, not just single facilities. A single facility may be part of a supply chain, but a single facility is not a supply chain. Define the four entities (products, facilities, vehicles and routes), using only a small data set. Then drag and drop the entity icons to place them on a smart map (Google Maps) to create an accurate model of any supply chain. Place entities where they really are in existing supply chains, and place them where you want them to be in new supply chains. Simulations show how well your supply chain will work and finds points of failure. Data from the simulations can be analyzed and used to make changes to your supply chain to fix problems and improve performance. You can download the simulation data to spreadsheets and optimizing templates that help you optimize your supply chain designs (see beta test version of optimizing template described below).
We continuously make improvements based on feedback from people using our application. There are reporting templates that use downloaded simulation data to create monthly Profit & Loss Reports plus key performance indicators (KPIs). Find out more about this in Analyzing Simulation Data – scroll down to the heading titled “Download Simulation Data to Spreadsheet Reporting Templates“.
There is a beta test version of the reporting template that includes a performance dashboard which shows where the biggest opportunities are to optimize your supply chain design. Read more about it here – Supply Chain Optimization with Reporting Template and Dashboard
MODELING, SIMULATION AND TRAINING SERVICES
Advanced supply chain modeling, simulation, optimization, and risk assessment services are available through us and our consulting partners. We can work with you online or in person. See more in Modeling and Simulation Services.
NOTE: The academic version of SCM Globe supports supply chain models containing up to 15 – 20 products and a similar number of facilities, vehicles and routes. Models exceeding these limits will run slowly and experience other problems. See “Tips for Building Supply Chain Models” for further explanation and ways to work with these limits.