MFCA-based simulation analysis for environment-oriented SCM optimization conducted by SMEs

The environmental and economic benefits of Small and Medium Sized Enterprises (SMEs) are rarely considered during supply chain optimization. In this study, using the concept of Material Flow Cost Accounting (MFCA), an AS-IS simulation model for the supply chain comprising a Japanese gear manufacturing SME and its customer was constructed to visualize the enormous amount of waste generated by the production process. A TO-BE simulation model for the process innovation plan conducted by the above SME confirmed that the reduction in the machinery allowance and in the production lead time of the entire supply chain could be achieved, which will provide environmental and economic benefits to the entire supply chain.