A systematic approach for supply chain improvement using design structure matrix

Supply chain is a complex system that involves many system elements from various functional areas. Performance of a supply chain heavily depends on the effectiveness of communication and coordination among these system elements and functional areas. However, a large and complex supply chain usually makes it difficult to coordinate and thus degrades its performance. This paper focuses on the development of a systematic approach with the following objectives: (1) to identify and quantify the interactions among the system elements in a supply chain; (2) to decompose the large interdependent group of system elements into smaller and manageable sub- groups; and thus (3) to improve the structure of the supply chain system. A supply chain system is first decomposed into subsystems and system elements from which the interactions (i.e., independent, dependent and interdependent relationships) are studied and documented by design structure matrix (DSM). Next, the interaction strengths among the related system elements are quantified. Cluster analysis is used to decompose the large interdependent group into smaller ones in order to provide a better supply chain system structure. The effectiveness of this systematic approach is demonstrated by an illustrative example. The result shows that it is able to improve the system structure of a supply chain that will be useful for the supply chain reengineering.