Assessing benefits of supply chain integration using system dynamics methodology

The driving force of effective Supply Chain Management (SCM) is integration among the channel members. With this in mind, the objective of this paper was planned. The research work models the Total Supply Chain Cost (TSCC) of grain supply chain and analyses the effectiveness of the various types of integration possible in the grain supply chain. A causal loop methodology has been used to identify dynamic interaction among key variables affecting grain supply chain cost. This was then used to formulate the system dynamics model of TSCC. The model was used to validate nine possible scenarios on the basis of three types of integration, namely cooperative model, contract farming and collaborative supply chain model, and on the basis of their likelihood of occurrence - optimistic, pessimistic and most likely. The paper concludes with a set of managerial implications for increasing supply chain effectiveness.