Modelling Electronic Data Interchange through Simulation: an Industry-wide Perspective

Business process modelling (BPM) is an emerging field of simulation application. Simulation of business processes is increasingly being recognised as an extremely useful tool for assessing the feasibility, efficiency, and effectiveness of process re-engineering decisions. However, almost all of the reported experience is confined to re-engineering initiatives within a single organisation. The problems that seem to arise in more complex situations where re-engineering extends beyond the boundaries of a single organisation to include multiple businesses in the value chain, seem to be quite different and more difficult to overcome. In this paper, we present the development of a simulation model for the assessment of the expected benefits from the implementation of EDI across an industrial sector. The model simulates trading between a number of companies at three sequential stages of production. The simulation keeps track of inventory levels in order to assess the efficiency gains on inventory management introduced by EDI. Based on this study of interorganisational process simulation, we identify a set of requirements for the effective application of simulation as a decision making tool for inter-organisational BPM. Finally, we derive some general conclusions that were obtained from the particular study and indicate some areas for further research on the development of simulation models for business process analysis.