Supply Chain Structure Design for a Short Lifecycle Product: A Loop Dominance Based Analysis

Designing a supply chain structure for a volatile market can be tricky. This is more so for products with a short lifecycle. A capacity constrained supply chain in such a setting impedes the product´s market acceptance by limiting product availability and thereby frustrating customers. This paper presents an experimental method, which can be used by channel designers for this purpose. We use a two-echelon supply chain system to elucidate the method. The supply chain structure is represented using system dynamics formalism. Experiment on the model leads to an indication of the cost that the system would incur. Using this cost and through loop dominance analysis we identify feedback loops that primarily determine system behavior. We show that by strengthening the dominant feedback loop, significant improvement in performance can be achieved. The method we claim can easily be deployed in supply chains of other products and can also be used to justify information technology investment decisions.