A system dynamics approach to unlock the complexity of the S&OP in virtual enterprises

Abstract

ABSTRACT Virtual Enterprise (VE) enables organisations to compete by strengthening their core competencies and sharing risks through collaboration. However, for manufacturing-based VE, the literature fails to provide adequate simulation-based methods for understanding the complex behaviour of the production planning step at the tactical level, known as Aggregate Production Planning or Sales & Operations Planning (S&OP). In this context, this paper proposes a novel System Dynamics-based model to help to understand the dynamic behaviour of S&OP in VE. Results suggest the efficiency of the proposed model, including its ability to straightforwardly make simulation-based S&OP scenarios comparisons, thus expanding the analytic decision-making capacity of managers desiring to push the limits of traditional S&OP in VE.