Scenario Analysis for Supply Chain Management of Milled Grain Products in South Africa: A System Dynamics Approach

Abstract

This study aimed to identify the interactions between the sub-systems of the supply chain system of milled grain products, in South Africa, namely: (1) farming (agricultural);(2) transport (transportation); (3) manufacturing (milling); and (4) trade (retail).Furthermore, this paper investigated how these sub-systems are affected by economic and natural external factors namely: (1) the exchange rate between ZAR and USD; (2) the price of international crude oil; and (3) climate change and/or droughts.For this purpose, system dynamics (SD) model was developed and used, which enabled to accommodate the system components and factors influencing the performance of the supply chain system of milled grain products.The SD model runs demonstrated the interdependent relationships among the four sub-systems of the supply chain of milled grain products.Furthermore, the simulation results and scenario analysis showed the impact of the three external factors on the overall performance of the milled grain supply chain and its four sub-systems in terms of the availability and utilization of farming land, grain yield, transportation costs, milling costs, retail costs and farming profits.