Simulation of Chicken Meat Supply Chain Facing Bird Flu Crisis: Case Study: Khorasan Razavi Province

Poultry is now one of the largest industry in Khorasan Razavi province and chicken meat has an important role in household food needs. Developing appropriate studies that lead to strategies for handling poultry products to fulfil consumers’ demand have become quite a challenging issue especially due to crisis situation. Supply chain system in this paper means a chain of processes from the rearing farm to the final consumer of the finished product and provide useful operational analysis of system behaviors for managing supply chain under demand uncertainties and production disruptions.
In this paper, a system dynamics model is applied for studying the behavior of the chicken meat supply chain threatened by bird flu, demand fluctuation and Government (State Livestock Affairs Logistics) intervention under the Vensim environment. The model is an extended version of real-life practice which involves producers, consumers and government. A causal loop diagram used to show how interrelated variables affect one another and connect together. This important diagram can handle assumptions regarding facing various calamities and disaster which is an integral part of the poultry industry. This dynamic model development can track possible disasters in time to prepare facing them. To cover more possibility, we propose three scenarios of different levels for demand and present of loss bird. To find out the most efficient rearing rate in crisis situation, demand fluctuation and loss bird rate are considered simultaneously in scenarios. Importance of chicken meat strategic reserve for Norouz lead us to impose a constraint for government purchasing and expenditure during the last month of simulation. Operations during a 120 days are simulated and a what-if analysis performed to study the model stability under uncertainty environment.
As a starting position no bird losses rate and demand problems included and supply chain fills all of demands without purchase chicken meat from external markets. The equilibrium was reached when the available live chicken level equals to 382 (ton/day). Results showed that without changing demand levels for achieving supply chain stability, the system need to import chicken meat for entire of the crisis period and government intervenes in market to ensure remunerative prices for producers and affordable prices for consumers. In sanitary crisis situation, decreasing demand can reduce the external purchases and unexpected costs but it decreases net income of producers simultaneously. In all scenarios external purchases and unexpected government purchasing are zero when the demand decreasing level is maximum. The simulation results showed that 10 percent of domestic farms affecting by Bird flu can increase the amount of external purchases up to 40 (ton/day) and give rise to unexpected government expenditures by 3360 (million Rial). It is evident from the model that slaughtering all reared chicken (available live chickens) after exactly 42 days can give number of benefits to the industry and profit is maximize in the simulated behavior for this scenario test. Reduction of rearing time can increase the amount of available chicken meat and net income of producer by 18 percent. In contrast, an increase of 15 days in rearing time can considerably reduce net income of producer by 30 percent. This means that a reduction of rearing time (standardization of poultry size and weight) can be a solution to improve poultry industry in Khorasan Razavi province. Income of producer is sensitive to the crisis and it is reduced up to 27 percent at peak of bird loss rate. Poultry producers are suffering from economic loss due to management, bird disease and transportation stress. These factors not only affects the quantity but also decrease the quality of chicken meat. On the other hand, 5 percent decrease in slaughterhouse and transportation mortalities immediately leads to an increase in supply chain incomes and the level of chicken meat inventory. According to the result, with management of chicken transportation, slaughter and rearing time, even in the worst scenario when the loss bird rate was maximum, it is possible to fulfil demand with domestic production capacity.
The supply chain is affected by endogenous and exogenous factors such as government intervention. Therefore an establishment of an integrated system between rearing farms, transport system, slaughterhouse and government purchasing can be helpful especially in crisis period. Poultry industry can integrate complete supply chain network so decision-makers can assist calculating the economic returns and reduce the risk. Moreover, producers will be able to compete with the other provinces and global markets as well as reducing their operational costs. Future research can focus on the different variables and study poultry wastes of processing by-products on the poultry industry in Khorasan Razavi province.