Science - September 13, 2012

Simulation model exposes logistical weaknesses

Food industry is vulnerable due to complex logistics. Simulation model helps make risks manageable.

Needless logistical hitches cost companies a lot of money.

For many food companies, the logistics have become more vulnerable in recent years. Through globalization, food travels increasingly long distances and consumers demand higher standards of quality and variety. Also, companies hold less stock due to cost considerations. PhD student Jelena Vlajic analysed the bottlenecks causing incidental problems for food companies and pinpointed the weak links in the chain.
'Food companies should be prepared for these disturbances', says Jelena Vlajic. 'Hitches in the system cost money. Take the amount of waste in the supply chain caused by products that don't meet the standards of the purchaser.'
Vlajic looked at possible improvements that could reduce the vulnerability of companies and used her data to develop an Event Management System: a simulation model with which food managers can simulate the consequences of a kink in the chain. The model can also be used to test ways of preventing the problem or of limiting the damage.
Kink in the chain
In food logistics there are no blanket solutions, emphasizes Vlajic's supervisor Jack van der Vorst - solutions depend on the policy choices food companies make. They can reject products that don't meet their standards and send them back, making the supplier foot the bill. That costs your company nothing but the chain costs are high and you end up with less of the product. You can also make deals with suppliers regarding the quality of the product they deliver. Then you impose some quality control before the product reaches you. You only do this when a product is very important to you, says Van der Vorst. The risk management choices made can differ per company and product category, depending whether a company prioritizes low prices or sustainability. The method developed by Vlajic, who receives her PhD on 12 September, clarifies the consequences of these strategies if something goes wrong.