Supply chain redesign for resilience using simulation q Helena Carvalho a , Ana P. Barroso a,⇑ , Virgínia H. Machado a , Susana Azevedo b , V. Cruz-Machado a a UNIDEMI, Departamento de Engenharia Mecânica e Industrial, Faculdade de Ciências e Tecnologia da Universidade Nova de Lisboa, 2829-516 Caparica, Portugal b NECE Research Unit, Department of Management and Economics, University of Beira Interior, Pólo IV – Edifício Ernesto Cruz, 6200-209 Covilhã, Portugal article info Article history: Received 6 December 2010 Received in revised form 1 September 2011 Accepted 6 October 2011 Available online 21 October 2011 Keywords: Supply chain design Supply chain resilience Case study Simulation abstract Supply chains are facing numerous changes that are contributing to increasing their complexity and vul- nerability to disturbances, therefore, to survive, supply chains must be resilient. The paper presents a supply chain simulation study for a real case concerned with the Portuguese automotive supply chain. The subset automotive supply chain involved in the case study is a three-echelon supply chain, composed by one automaker, two 1st-tier suppliers, two 2nd-tier suppliers, and one outsource entity. The purpose of the study is to evaluate alternative supply chain scenarios for improving supply chain resilience to a disturbance and understanding how mitigation strategies affect each supply chain entity performance. Two strategies widely used to mitigate disturbance negative effects on supply chains were considered and six scenarios were designed. The scenarios differ in terms of presence or absence of a disturbance in one hand and presence or absence of a mitigation strategy in other hand. To evaluate the scenarios designed, two performance measures were defined per supply chain entity, Lead Time Ratio and Total Cost. Ó 2011 Elsevier Ltd. All rights reserved. 1. Introduction There is general awareness that organizations cannot compete as isolated entities; it is obvious that working together in networks would be a lot easier (Min & Zhou, 2002). The supply chain (SC), as a network, is expected to provide the right products and services on time, with the required specifications, at the right place and to the right customer. Nowadays, supply chains (SCs) are facing numerous changes that are contributing to increasing their com- plexity, such as the globalization of businesses and the adoption of some business philosophies as lean, efficient consumer re- sponse, and quick response programs. The implementation of these philosophies or practices may bring other new problems, since SCs may become more vulnerable to disturbances (Christopher & Towill, 2000; Norrman, Sweden, & Jansson, 2004; Tang, 2006). Once an SC is affected by a disturbance, its performance is jeopar- dized, e.g., short-term financial performance is reduced, losing competitiveness (Ji & Zhu, 2008). To survive, organizations and their SCs must be resilient; they must develop the ability to react to an unforeseen disturbance and to return quickly to their original state or move to a new, more advantageous one after suffering the disturbance (Carvalho & Cruz Machado, 2007; Ji & Zhu, 2008; Peck, 2005). To help organizations become more resilient and, eventu- ally, less vulnerable to disturbances, adequate design strategies reflecting contingency and mitigation policies must be defined (Machado, Azevedo, Barroso, Tenera, & Cruz Machado, 2009). Beyond these mitigation policies, SC design has also been con- sidered as an important factor in influencing SC resilience. Pettit, Fiksel, and Croxton (2010) argue that SC resilience increases as capabilities increase and vulnerabilities decrease. According to this author, SC resilience is reached not only through the SC’s strengths, but mainly by finding a balance between capabilities and vulnera- bilities. Among the vulnerability factors identified by these authors, there is connectivity. This factor is related directly to the SC design and allows strong capabilities in the areas of collabora- tion, visibility, and flexibility to be created, contributing to bal- anced resilience through the management of interrelated operations between multiple tiers of suppliers and customers. Also, Ponomarov and Holcomb (2009) defend the influence of SC design on SC resilience. From their point of view, to reduce SC vulnerabil- ity and for the SC to become more resilient, SCs must be designed to incorporate event readiness, provide an efficient and effective response, and be capable of recovering to their original, or an even better, state after a disruptive event. The approaches identified by so much research justify the need to adopt resilience research as an important issue in defining SC design strategies. The main objective of this paper is to use simu- lation as a tool to support the decision making process in SC design to create a more resilient SC. Simulation allows SC behavior to be observed under different SC design strategies in order to improve SC resilience. A case study related to the simulation of a Portuguese automotive SC is presented. This paper has the following structure: 0360-8352/$ - see front matter Ó 2011 Elsevier Ltd. All rights reserved. doi:10.1016/j.cie.2011.10.003 q This manuscript was processed by Area Editor Paul Savory. ⇑ Corresponding author. Tel.: +351 212948542; fax: +351 212948546. E-mail address: apb@fct.unl.pt (A.P. Barroso). Computers & Industrial Engineering 62 (2012) 329–341 Contents lists available at SciVerse ScienceDirect Computers & Industrial Engineering journal homepage: www.elsevier.com/locate/caie