What Is Supply Chain Simulation?
Test the Network Design Before You Commit

An optimizer tells you what your network should be. A supply chain simulation tells you whether that design holds up against variable demand, late suppliers and long lead times. You can try both on sample networks in the Sandbox Networks tier.

When to use supply chain simulation

Simulation earns its place when the answer depends on timing, not just totals. Reach for it when:

• You have a candidate design and need to know if it holds up. An optimizer or a planning team has proposed a footprint, and you want to see it run before anyone signs a lease.
• Inventory policy is the question. Order points, order quantities and where safety stock sits all play out over time, not in an annual average. Safety stock simulation covers where the formula stops.
• You’re adding, moving or closing a DC. The network after the change is one nobody has run yet.
• Sourcing is moving. A tariff, a reshoring decision or a co-pack contract changes which lanes carry product and how long it takes to arrive.
• Demand swings. Seasonal peaks and spikes decide where stock runs short, and averages hide both.

If you’re still choosing among thousands of possible designs, start with optimization instead. How supply chain simulation works covers the mechanics, and the supply chain simulation software page covers what ReliaSim® does with it.

What simulation answers that optimization can’t

Network optimization answers one kind of question. Given a fixed set of choices, which combination is best? It decides which facilities open, which supplier serves which customer and how much moves on each lane, and it returns the best decision under the model’s assumptions.

Those assumptions are where the gaps are. Optimization usually works from averaged annual or monthly demand and assumes capacity is fully usable. It has no view of time. A 75% service rate might mean a steady 75%, or 100% for 270 days and 0% for 90. A discrete-event simulation can tell those apart, because it runs the network forward through time.

Demand that isn’t an average

Day-to-day demand swings, stochastic lead times and supplier reliability all go into the run. The simulation tests the design against the variation the optimizer averaged away.

When service fails, not just how often

Fill rate and lead time come out of the run shipment by shipment. A design that stocks out for a month shows up before you commit to it.

How stock actually moves

Inventory draws down and replenishes at every site over the run, so you can see whether a DC drains faster than its supplier can refill it.

What optimization answers that simulation can’t

A simulation evaluates the design you give it. It doesn’t search the alternatives for the best one. Ask a simulator how many DCs you need and it can only tell you how the configuration you entered performs. That’s why a well-run network design project uses both. Optimize to find the candidate design, then simulate it to check that it holds up under realistic variation. Supply chain network optimization explained covers the math and the classic problem types.

Design, optimize, simulate and prove on one model

Most network tools stop at optimization. Here every step works on one model, edited in place, so there’s no import and export between tools and no second copy to drift out of date.

1. Design the network. Lay out suppliers, plants, DCs, customers and lanes as a graph. Start from demand with greenfield siting, or from the footprint you already have.
2. Optimize it. The optimizer (AMOS) solves for sourcing and footprint, covering facility location, flow paths, landed cost, capacity and site-count constraints. Tariffs and duties are a direct cost in that solve, not a separate module.
3. Simulate it. The simulator (Supply Chain Builder) runs the optimized design as a discrete-event simulation on the same database, with stochastic lead times, supplier reliability and stockouts. The model the optimizer designed is the model the simulator tests.
4. Prove it. When the executive committee asks whether it will work, the answer comes from the same model in the same tool. Data validation, base-case calibration and scenario analysis are part of the method rather than improvised for each project. How to know your supply chain model is right covers the validation step.

What you get from it

• A design you’ve seen run. The network has been played forward through time before the money moves, not just scored on an average.
• Policy you can compare. Different order points and stock locations run on the same network, so the difference between them is the policy and nothing else.
• A shared picture. Inventory curves and shipments on a map are easier to argue over in a meeting than a cost total.
• Your data stays yours. Models are desktop files on your own machine.

Greenfield vs brownfield network design

Greenfield design places facilities from scratch where demand clusters. Brownfield design starts from the sites you have and chooses which to keep, with some pinned open. Footprint rationalization asks the brownfield question of a larger network that grew over time. Greenfield, brownfield and footprint explains the difference and links a demo of each.

Two narrower questions have their own guides. Center of gravity analysis covers the siting method in plain terms, and how many distribution centers do you need? covers the count. Before trusting any scenario, validate the model against history.

What would happen if…

Each of these questions runs as a demo in the Sandbox Networks tier, in your browser, with no sign-up.

• …we started over and placed DCs where demand is? Greenfield Design, US
• …we kept only some of our existing DCs? Brownfield Design, EU
• …we cut the network down to fewer DCs? Footprint rationalization
• …a tariff made the offshore supplier more expensive? Tariff: Offshore vs. Reshore
• …diesel prices changed the case for a co-packer? Coffee Co-pack Design
• …we held safety stock at a different tier? Safety Stock Optimization
• …demand spiked on a simple supplier-to-customer chain? Simple Supply Chain
• …one plant fed 12 DCs through a month of random demand? Cookie Production
• …we added a second plant and more DCs to the network? Three-Tier Network
• …we put capacity at a different candidate DC? DC Placement
• …our network looked like the one on our whiteboard? Sketch your network

Network demos in the Sandbox

The Networks tier of the Sandbox runs sample models on our engines, and you watch the results in your browser. Each demo has its own page in the free supply chain simulator index, with what it shows and what to change. Each demo exercises one part of the method. For a supply chain study on your own network, talk to us.

A simulation run shows inventory over time at every site against its order point, and every shipment on the map. You can also replay the simulated shipments along their lanes.

Tariff scenarios

A tariff is a cost on a sourcing or lane arc, and the optimizer weighs duties as one input among many. The hard part is showing that the redesign holds up. Re-optimize under the new rates, then simulate the redesign on the same model before any capital moves. The tariff network redesign guide walks through it.

Where the model and the data live

ReliaSim is desktop software. Models are files on the modeler’s own machine, there’s no cloud service for the product to call, and model contents aren’t sent anywhere as telemetry. The public Sandbox uses sample data only. Security and deployment covers the questions IT usually asks.

Getting started

1. Try the sample networks. Open the Networks tier and run the demo closest to your question.
2. Write down the decision. One question, such as which DCs to keep or where to hold stock, makes a better first model than “model everything.”
3. Gather what you already have. Sites, lanes, transit times and demand history are enough to start.
4. Scope it with us. A supply chain study on your own network is set up as a project. How a ReliaSim project runs shows each step.

When a different tool fits better

Network simulation is built for strategic questions, such as what the footprint should be and whether it holds up. Some questions belong elsewhere.

• Running today’s network day to day. Planning and execution belong in ERP, TMS and S&OP. They run the network you have, and simulation tells you whether it’s the right network.
• Modeling inside the plant. Machines, buffers and downtime on a line are production line simulation, a finer level of detail. That’s the plant side of ReliaSim.
• Having someone build and run the study. ChiAha does simulation consulting.
• Only siting facilities from demand data. That narrower question is covered at Greenfield Analysis.
• A cloud model fed by live data. These tools are desktop by design, with no always-on data feed. That suits network and tariff work and doesn’t suit a live operational dashboard.

Frequently asked questions