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Simulation Modelling Practice and Theory 15 (2007) 185198 www.elsevier.

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A continuous simulation approach for supply chains in the automotive industry


Henri Pierreval *, Romain Bruniaux, Christophe Caux
` mes UMR CNRS 6158, Research Group in lisation et dOptimisation des Syste Laboratoire dInformatique de Mode ` re, France zeaux, BP 265, F-63175 Aubie Manufacturing Systems of IFMA IFMA, Campus des Ce Available online 6 December 2006

Abstract In the automotive industry supply chains, several factories collaborate to manufacture a product (car, engines, etc.). In order to fulll customers needs, they have to be designed and organized in the proper way. The dynamic analysis of their behavior through simulation provides important information to improve their performances. Most existing research works addressing the modeling and simulation of supply chains are generally based on a discrete event worldview. We are concerned here with medium or long term decision problems, which necessitate macroscopic models of the supply chain. At these levels, the representation of the individual ows of the numerous parts that circulates in the supply chain being quite dicult, given the objectives considered, we chose a continuous worldview. The models are based on Forresters system dynamic paradigms. The proposed approach is actually applied to a large French company, in the automotive industry. The supply chain presented in this article is composed of ve existing plants, located in two dierent production areas. The results show the concrete benets that can be achieved. Several research directions are suggested. 2006 Elsevier B.V. All rights reserved.
Keywords: Simulation; Intra rm network; Supply chain; Distributed enterprise; Modeling; System dynamic; Extended enterprise; Manufacturing systems; Automotive industry

1. Introduction Nowadays, many companies have to collaborate through a network of production units, so as to provide the customer with the desired products. Supply chains (SCs), which are more precisely addressed in this article, generally refer to a set of networked organizations working together to source, produce and distribute products and services to the customer [36,40]. In this article, emphasis is put on the sector of automotive industry, which includes various types of production units (e.g., forge, foundries, mechanics and assembly) and of complex products, which are composed of numerous sub-components. The production rates reach several thousands products per day and the production is managed according to a just in time strategy. Because of the high competition that exists in this sector, it is very important that the costs and the production lead times
Corresponding author. Tel.: +33 473 28 81 06; fax: +33 473 28 81 00. E-mail addresses: henri.pierreval@ifma.fr (H. Pierreval), romain-bruniaux@wanadoo.fr (R. Bruniaux), christophe.caux@ifma.fr (C. Caux). 1569-190X/$ - see front matter 2006 Elsevier B.V. All rights reserved. doi:10.1016/j.simpat.2006.09.019
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can be reduced, and that the due dates can be met. In this respect, these last decades, tremendous eorts have been put on better designing and managing each production facilities individually. It clearly appears, both from the increasing number of publications in the area, and from the directions taken by most enterprises, that working globally on the improvements of the supply chain has become a major issue. This article is concerned with the dynamic analysis of the supply chain through simulation modeling. The research reported here, has been carried out during three years, from 1997 to 2000, to study the behavior of a large network of plants producing cars, so as to point out directions of improvements and assist decision makers in the global management of the supply chain. This research constituted the basis of Romain Bruniauxs unpublished dissertation [8]. Simulation of supply chains has shown of growing interest these last years [47,44]. The area of automotive industry, presents several specic features. When the objective is to understand the global behavior of the network of plants, then we have to model the ows of products inside and between the production units. However, the parts, or more precisely the components that circulate from one plant to another, are complex and of numerous types, so that capturing their dynamic behavior turns out to be quite dicult. In this respect, the system modeling approach considered in this article is macroscopic: we are not interested in following or tracking the behavior of particular entities (moreover, that would be quite dicult due to the too large number of components that ow in the network). Rather, we aimed at addressing the following objectives: (1) To highlight global dynamic trends of the global system behavior, considered as a collection of manufacturing units that collaborate. (2) To understand the major reactions of the whole network to particular situations, such as sudden increases or decreases in the demand of certain classes of products, and the impact of major technical problems in given production units, (3) to address questions about how dierent strategies to increase the production capacities (e.g., employee overtime) of certain production units could contribute to avoid overloads or bullwhip eects. To address such macroscopic objectives, a continuous simulation worldview was used. Continuous simulation approaches to tackle supply chains seem to be little reported in the related literature [38], where discrete event models, often developed at a more microscopic level are mainly found. The article is organized as follows. After introducing current works in the area, the suggested approach to model supply chains and networks of production units is presented. It is based on Foresters system dynamic (SD) principles, which are briey recalled. Then the application of this approach to a real industrial supply chain is described and discussed. Several research perspectives will nally be given. 2. Modeling and simulating the supply chain 2.1. Discrete world view Concerning the research on supply chain behavior and characteristics, Holweg and Bicheno [21], observed that the fundaments were laid by Forester [18], with his works on industrial dynamics. He was probably the rst to highlight the major concepts and issues related to the modeling of extended enterprises, considering ows of dierent natures. Unfortunately, this area of research seems to have been then less investigated in the next decade, and articles addressing more specically the dynamic modeling of the supply chain were mainly published since the late 1990s. The necessity to evaluate dynamically the performance of the dierent production units involved from the suppliers of the raw material to the nal customer was pointed out in a growing number of articles (e.g., [25,23,24,5,41,36,7,44]). The simulation studies aim at analyzing such problems as the possible overload of production units, the behavior of the inventory and the possible supply shortages, or the well know bullwhip eect [28]. The models can be used to better understand how the supply chain dynamically behaves [21] and as decision support, to determine the impact of possible allocation strategies for human and technological resources, such as employees overtime, and new investments [32]. Thus simulation has appeared as a powerful approach to study and design global strategies for the enterprise. Bruniaux [8], also pointed out that simulation is a very relevant approach to study both the exibility and the reactivity of the

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supply chains to unexpected event, at a macroscopic level (e.g., logistic perturbations, raw material shortages, etc.). Other authors have put the emphasis on studying the eciency of the logistic system, which insures the transportation of parts, raw material or components between each location of the production activities [42]. These potential benets have led to intensive publications [44], which address modeling methods for supply chains and for networks of plants. Object oriented modeling has been suggested by Changchien and Shen [11], and Biswas and Narahari [6] to model SC, for evaluating and analyzing reengineering proposals, and for decision support purposes. Because of the uncertainty of the production environment, fuzzy sets theory has been incorporated in the modeling approach [35]. Of course, more classical discrete event simulation packages have been used to model the SC and to provide animation capabilities. For example, ARENA was used at dierent levels of abstractions [22] for evaluating the business processes and inventory control parameters of a logistic and distribution SC. Benjamin et al. [4] have used WITNESS and PROSIM within the toolkit they suggest to provide intelligent support to SC. The use of other well known simulation tools, such as Taylor II and Automod is reported in [44]. The growing interest of both researchers and industrial decision makers in the modeling and simulation of SC has led to the development of dedicated environment based on such simulation tools as ARENA or EXTEND [37]. To cope more specically with the integrated management issues, with the exchanges of information, or to integrate software modules that already exist, a Java-based approach is proposed by Chateld et al. [12] and Zeigler et al. [48], propose to use the DEVS methodology and a CORBA framework. The high level architecture (HLA) has also been used to develop discrete event simulation based on SCOR models of the supply chain [3]. A few case studies, addressing real problems have been published. For example, an Ericssons SC of the mobile communication industry was simulated [34] to compare several designs, with respect to quality, lead-times and costs, as well as to learn about the interrelations among parameters in the SC. Banerjee et al. [2] study a three echelons SC network to examine the eect of transshipment approaches. Rota [41] studies the behavior of a complex SC in the aerospace industry to provide assistance with the planning problems. Telle et al. [43] have simulated, using an agent-based discrete approach the customersupplier relationships in an integrated supply chain. Higuchi and Troutt [20] report some lessons derived from their experience of simulating the Tamagotchi supply chain 2.2. Continuous world view As noted by Lee et al. [26], most of these published works are based on a discrete event worldview. Typically, in classical manufacturing system simulations, one models the ow of individual products through a set of production resources (e.g., machines, operators, and automated guided vehicles), waiting in queues if necessary. At the supply chain level one studies the ow of batches of products (instead of products) that ow between production unit or work center (instead of machines), which wait in inventories and ow from one unit to another using logistic resources (e.g., trucks). To help in the modeling, communication models are used, which can be based on business owcharts, IDEF3, or SCOR models, as it is often done when modeling manufacturing systems. As a consequence, very few works have addressed the simulation modeling of supply chains using a continuous simulation worldview. In a very specic area [33], have addressed a very specic problem using a master equation to model attitudes between individuals in a network of small and medium enterprises. Lee et al. [26] suggest a combined discrete event-continuous approach. In fact, they argue that SCs are neither completely discrete nor continuous. If the continuous nature is not obvious (we will explain further why a continuous approach is relevant), their article demonstrates that part of the dynamic behavior of the SC can be described in a relevant way using equations, especially when one is concerned with strategic levels. The interest and potential of system dynamics in several areas of production engineering has already been identied. Baills and Vessilier [1] indicate that this approach was useful to solve several types of problems in the automotive industry, in particular in marketing research and forecasting issues (see also [29]). Its application in the simulation of manufacturing facilities has already been discussed [17,45]. Movahedkhah [31] suggests SD to study the interrelation of performance indicators in food industries. Its more specic application to the supply chain [7] has been addressed in few research publications. Minegishi and Thiel [30] present the

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simulation of a supply chain in the food industry. However, in their article, very little is said about the SC. Except [18], who clearly identied the possibility of his method to address various types of links between suppliers, factories, distributors and retailers, the simulation of supply chains using SD has been addressed in Haez et al. [19,24]. In the latter, the potential of SD is underlined and a Vensim simplied model of certain ` gre s et al. [13,15], present real applications of SD aspects of the supply chain is given. Haez et al. [19] and De in steel industry, which clearly demonstrate the potential of SD in modelling real world SCs. Rabelo et al. [38] shown that SD can be combined with neural networks and eigenvalues to analyze supply chains. Their approach is illustrated by a case in the electronics manufacturing industry. This work addresses a very dierent type of system and has dierent objectives. We are concerned with the automotive area, which is characterized by numerous products with assembly operations and convergent bills of material [10]), while the steel industry is closer to process industries, with divergent bill of material. In the next section, our research orientations are more precisely explained and justied. 3. System dynamic modelling of the supply chain 3.1. Global principles In this work, emphasis is put on decisions to be made that concern the next 36 months and that are related to the behavior of plants that interact to manufacture or assemble a product. Hence, the manufacturing processes are represented at a macroscopic level [45]. We are not interested here in evaluating the average utilization of a machine, nor in determining when a given task will be completed. Instead, we would like to know what will be the global dynamic behavior of entire sectors of plants. System dynamics [18,39,7] privileges the study of the important ows of products or components through the main production areas of the network, rather than a detailed study of the ow of each product through the set of resources available in the network. Indeed, because of the large sizes of the plant considered in the automotive industry and of the numerous parts and components, a detailed model may not be realistic [45,17,24]. 3.2. Main features of system dynamics Forresters System Dynamics [18] has been used in many elds, such as management, nance, agri-food industries [46], production systems [45], tactical strategies for automotive industry [29], supply chain [7], automotive industrial plant networks [8] and steel industry [15]. In this approach, much attention is paid to the ows that control the organization, and therefore not only to the entities that compose it. To develop a model, Forrester suggests four main concepts, which are as follows: Levels describe accumulations within the system and are drawn as tanks. Levels represent the present values of the variable they contain that have resulted from the accumulated dierence between inows and outows. Flows, which transport the content of one level to another. Decision functions, which control the rates of ows between levels (drawn as valves). Information channels, which connect the levels to the decision functions. These concepts are associated with graphical representations, which allow diagrams to describe the studied system (Fig. 1). Fig. 1 depicts a very simple structure of a reservoir or level, with an inow and an outow. To specify the dynamic behavior, a system of equations is dened. It consists of two types of equations, which correspond to levels and decision functions (rates). Equations control the changing interactions of a set of variables, as time advances. The continuous advance of time is broken into small intervals of equal length dt. For example the equations describing the state of the level in Fig. 1 is Levelt Levelt dt Decision function 1 Decision Function 2 dt INITLevel 0 1

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Level Decision function 2

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Decision function 1

Input flow

Output flow

Information

Fig. 1. System Dynamics basic symbols.

Level in Fig. 1 at time t depends on its own value at time t dt and the value going in from decision function 1 minus the value going out to decision function 2. It is necessary to give the initial value of it to solve this equation. There are as many equations as variables. To determine the variables behavior, the dierential equations system is integrated. Several software tools exist that support this approach (for example Vensim, I think or Powersim). 3.3. Modeling approach To apply these system dynamic paradigms to the supply chain, we decompose each production plant into logistic units, which are dened as follows [8]: a logistic unit concerns a physical sector of the plant (which can belong to the same enterprise or be an external supplier), which has an upstream storage area, generally used for raw material or part components, and its own human and technical resources and facilities, to perform tasks on the products. These logistic units are key concepts that are used to dene the adequate level of details (granularity) of the simulation models. This granularity may vary according to the types of problems studied and to the simulation objectives. We are interested here in studying decisions at strategic or tactical levels (some months) rather than operational levels. As a consequence this macroscopic level of modelling is also required to model the numerous parts or components that ow through the logistic units of the network of plants. Therefore, it is not desirable (it would be anyway extremely dicult), to integrate the details of part routings, bills of materials and of the production orders involved in the studied supply chain. Parts are modelled through families of products that share common characteristics and that have the same dynamic behavior in the global system. These families are built through an aggregation procedure, whose purpose is to identify macroscopic ows, which is presented in Bruniaux et al. [9]. The basic principles of this aggregation approach rely on a number of rules and constraints that needs to be taken into account, and on similarity criteria between the ow (rate, routings, etc.) of the considered products. For example, 2 products that do not use the same resources of a given logistic unit cannot be grouped in the same family. Therefore, in a rst step, the product ows that are relevant to consider regarding the simulation objectives are identied, and the other will not be considered. Then, basic rules (such as the one given above) are used in an iterative procedure that converges towards a admissible decomposition of the set of product ows. If the resulting decomposition does not lead to a suited level of details, then statistical clustering methods [9] or optimization methods [14] can be used to search for an adequate number of classes. The equations used in the simulation models are deduced from several types of analysis: from a systemic analysis of the supply chain [18], from the identication and the analysis of the dierent logistic units involved, from the partition of the set of product ows and from the production rates and the production calendars. This modelling approach has been used to study the industrial case in the automotive industry presented in the next section. 4. Case study 4.1. The system The global study was carried out on a number of networked industrial production facilities belonging to a well known cars producer in France, with the objective of identifying weaknesses, studying the exibility of the

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network and its global reactivity to disturbances and changes of the customers demand. Both for the sake of concision and condentiality, we focus here on a particular supply chain, which is a subset of the global network. Detailed data and results cannot be provided. From a methodological point of view, in a preliminary step, a systemic approach was conducted to identify the key variables and their relationships. Several static models were built using the Modular Analysis of Systems methodology [27], and data ow diagrams [16], so as to identify the ow of products and information and dene the logistic units involved. Causal diagrams were also used to highlight the interrelation between the variables. The static models have led us to decompose the studied system in 5 logistic units, located in two dierent production sites, which are connected to the suppliers (upstream) and to the customers (downstream), as depicted in Fig. 2. The global system transforms raw material, provided by the suppliers, into engines, delivered to customers. The activity, location and output of each logistic unit is given in Table 1. A calendar, which details what are the days on and o, the daily production rate (i.e., number of parts per day) is also associated with each unit. The considered supply chain being managed according to a just in time strategy, customers send Kanban cards to unit 1, which sends cards to unit 2 and so on. These cards allow the production or shipment of each unit to be controlled. Several objectives are assigned to the simulation experiments. We are interested in studying the dynamic behavior of inventories on a time horizon of four months. One important objective is to analyze possible penuries of products, which constitutes inputs and outputs of the dierent units. We are also concerned with the number of orders waiting in each unit and with comparing the possible (i.e., theoretical) throughput rates of each unit with the actual throughput rates. With regard to these objectives, several assumptions have been made. The suppliers are supposed to be able to provide unit 5 with enough raw material, and the eect of quality defects on the ow of parts is neglected (in reality, the corresponding rate of defect is lower than 0.01 for the machining of cases and for the assembly of engines). The daily capacity of shipping is assumed to be innite (units 1 and 4). Therefore, these units work according to their production calendar (generally from Monday to Saturday). The initial conditions turn out to have a great inuence on the dynamic behavior of the supply chain, in particular, the initial level of stocks. The volume of orders on the time period of the study and the way they
Engines

Suppliers

Flow of products

Flow of orders

Customers

Raw material

Unit 1

Raw cases

Unit 2

Raw cases

Unit 3

Machined cases

Unit 4

Engines

Unit 5

Plant 2

Plant 1

Fig. 2. Supply chain modeled.

Table 1 Characteristics of the logistic units Logistic units Unit Unit Unit Unit Unit 1 2 3 4 5 Activity Shipping Assembly Machining Shipping Production Location Site Site Site Site Site 1 1 1 2 2 Output products Engines Engines Machined cases Raw cases Raw cases

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uctuate constitutes essential factors. In the results given in the following, the orders generated in the model have been dened according to commercial forecasts on four months, as well as the production calendar of each unit. The initial state has been stated in a pessimistic ways, with low hypothesis about the stock levels, in order to better point out the system reactions to dicult situations. 4.2. Supply chain modelling The model was built using the simulation system I think. Fig. 3 presents the ow diagram of plant 2 (dened as the logistic unit 4), which is in charge of shipping row cases. Given the very high number of existing product references, the data have had to be aggregated, as introduced in the previous section. After aggregation, 7 families of products were dened and approved by the managers of the system. Below are examples of important model equations
Engagement shippping plant 2Cases MIN Stock raw cases plant 2Cases=dt; Orders raw cases plant 2 waitingCases=dt; Throuput maxi shipments plant 2Cases Calendar shipping plant 2

Eq. (2) states that the shipments actually performed depends upon the available quantity of raw cases in stock, of the raw cases waiting (in progress), upon the maximum production rate and upon the shipments calendar

Fig. 3. Example of ow diagram : unit 4.

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End shipping plant 2Cases WIP shipments plant 2Cases=Transportation time from plant 2Cases Calendar shipping plant 2 3 Eq. (3) characterizes the transportation time between plant 2 (unit 4) and site 1 (unit 3). Conso cases plant 2Cases Engagement shippping plant 2Cases Eq. (4) means that the stock level of raw cases decreases according with the shipments performed. 5. Results Given the very large model size and the condentiality inherent to this study, it is not possible to give many details about the obtained results. Hence we have selected the most representative family of product (type 3 engines), in a particular initial context (initial upstream stock levels, availability of resources), which is not favorable to a quick completion of orders. First, let us notice that each graph given in the following presents oscillations that correspond with opening and closing periods of the production calendars. If we focus on the analysis of the dynamic behavior of the plants modelled, Fig. 4 shows a shortage of raw transmission cases in unit 4. This shortage means that area 4 would be capable of processing more cases if the upstream area (unit 5), could deliver more parts. Then, this shortage is propagated to the downstream units. Fig. 4 shows that a shortage occurs soon after in unit 3. Then a shortage of transmission cases occurs in unit 2 and to unit 1, which nally has no more engine to produce. Therefore the consequences are particularly severe because the nal customer will have to face a lack of available engines. 4

Figure Caption Missing

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We can now try to focus on the causes that have induced these shortages. Thanks to the simulation model, it is possible to analyze the behavior of each stock of the logistic units. Fig. 5 shows that the number of raw transmission cases becomes lowest at the beginning of the considered period. The stock in unit 3 compensates this shortage for a limited period of time only. The same type of behavior occurs for the stocks in units 1 and 2, which compensate the lack of delivery of products of upstream units and then become too low. Therefore, these intermediary stocks do not allow these shortages in the supply chain to occur. From these simulation results, it can be deduced that the origin of these problems is in unit 4: the stock level of cases turns out not to be sucient. The simulation model also allows the evolution of the set of orders waiting in each unit of the supply chain to be studied. Fig. 6 shows the orders waiting in the unit, not sent in production (their number is limited because of the pull strategies used). Fig. 6 also demonstrates that orders are accumulated in units 1 and 2 at the end of the studied period since these two units cannot process the orders they receive. Finally let us consider the production rates. The charts given in Fig. 7 allow the possible production rate (i.e., what is theoretically possible to produce if every required component was available) and the eective production rate (i.e., what can be eectively achieved given the available components) to be compared. From these results, we can note that units 2 and 3 do not use the total of their production capacities: the resources available to produce are sucient: there is no bottleneck. Unfortunately, in unit 5, we can see that the 2 curves (possible and eective rates) are quite close, which means that the production facilities are saturated.

Fig. 5. Stock levels available along the supply chain.

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Fig. 6. Orders waiting at the dierent stages.

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Fig. 7. Comparison between possible production rates and actual production rates.

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Therefore, as a conclusion, we can suggest that, in order to eliminate or reduce the shortages pointed out from these simulation results, it is necessary for the rm to check in priority whether the capacity of unit 5 can be increased. This would contribute to help to absorb the orders waiting in this unit and to increase the stock levels of the downstream units. 6. Conclusion In this article, a continuous worldview has been suggested and used to model supply chains. In this approach, the production units are considered at a macroscopic level. The dynamic behavior families of products owing through logistic units, which are managed in just in time, is studied so as to better understand the global performance of the supply chain and how it reacts in particular circumstances. This approach has been successfully applied to a network of factories located in dierent places in France. We have reported the simulation results of a subset of this network, a supply chain that produces engines. The simulation results have turned out to be very useful. In particular, they have pointed out that the global system can have an undesired behavior, depending on the initial level of inventories and the volumes of the orders, which results in delivery shortages or in increased lead-times, due to insucient available capacities. This approach also allows the possibility to study the eects of variations in the demand, which are modeled through equations representing more or less sudden and more or less cyclic variations of customer orders [8,15]. System dynamic turns out to be relevant in contexts where the system is observed at a low level of details. In fact, as far as large and complex networks of production facilities are concerned, detailed modeling approaches can be dicult to implement. The large amount of data necessary to describe the numerous products and the processes can be extremely dicult to collect, and the eort required to develop detailed models of each production unit and of their interrelations can appear unrealistic in many cases. As a counterpart, one has to note that, at this macroscopic level, the analyst expectations about the results are concerned with identifying global trends of the system behavior, rather than computing estimated of particular performance measures, as it is commonly done in discrete event simulation of manufacturing systems. There are several research issues that can be addressed as future works. More sophisticated methodologies can be used to study the sensitivity of the SC to disturbances and to variation of the demand. Chaotic behavior might be identied in certain cases. Based on Foresters theory and methodology the causal relationships between the variables can be studied more in depth, to identify and diagnose, from a more qualitative point of view, typical cause-eect phenomena (analyzing loops, etc.). Let us nally note that the use of alternative modeling approaches, such as bound graphs or continuous (or hybrid) Petri nets can be contemplated. References
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