Sustainability Analysis of Foolad Kaveh Kish Supply Chain Using the System Dynamics Approach

Background and Objectives: Sustainability has increasingly become a central theme in the field of supply chain management, particularly as organizations face mounting pressures from environmental regulations, stakeholder expectations, and global competition. Over the past decade, the integration of sustainability into supply chain operations has shifted from a peripheral concern to a strategic necessity. Sustainable supply chain management (SSCM) encompasses economic efficiency, social responsibility, and environmental protection — often referred to as the “triple bottom line.” In this context, the ability of companies to understand, evaluate, and improve sustainability performance within their supply chains plays a crucial role in achieving long-term competitive advantage. The present study addresses this need by developing a system dynamics model to assess and analyze the sustainability of the supply chain in Foolad Kaveh Jonoub Kish, a major steel manufacturing company operating in southern Iran.
Materials and Methods: This study employs a system dynamics approach to develop a comprehensive supply chain sustainability model. This approach analyzes the interdependencies, interactions, and feedback loops among economic, social, and environmental variables, enabling the identification of delays and long-term effects of managerial decisions. Using system dynamics, the conceptual model is then transformed into a quantitative simulation model to examine long-term trends and evaluate various strategic scenarios. The conceptual model was then translated into a quantitative simulation model using Vensim software, which is particularly suited for system dynamics modeling due to its ability to capture non-linear behaviors, delays, and policy impacts over time. The simulation was carried out over a 10-year horizon to explore long-term trends and evaluate various strategic scenarios.
Results: The simulation results provided several important insights. First, environmental improvements—such as reducing carbon emissions and managing industrial waste—had a positive impact not only on ecological outcomes but also on the social and economic dimensions by improving the company’s reputation and lowering compliance costs. Second, enhancing information transparency across the supply chain emerged as a critical factor. When suppliers, manufacturers, and distributors shared accurate and timely information, it led to more synchronized decision-making and reduced inefficiencies.Another major finding was the role of collaboration. Higher levels of trust and cooperation between stakeholders improved the adaptive capacity of the supply chain in response to disruptions. In particular, joint investments in cleaner production technologies and collaborative training programs for employees led to synergistic improvements across all sustainability dimensions. The model also allowed for sensitivity analysis and the testing of several policy scenarios, such as government regulations, subsidies for green technologies, and shifts in consumer behavior.Scenarios that combined investment in green technology with community engagement and employee education consistently outperformed those based on isolated interventions. Moreover, it was observed that without coordinated efforts, some well-intentioned policies led to unintended consequences, such as increased short-term costs or trade-offs between environmental and economic performance. These findings underscore the importance of systems thinking in sustainability planning.
Conclusion: This study demonstrates that system dynamics modeling is a powerful tool for understanding the complexity of sustainable supply chains. By capturing the feedback loops and time-lagged effects inherent in socio-environmental systems, the model developed for Foolad Kaveh Jonoub Kish offers actionable insights into how various strategies influence long-term sustainability outcomes. The results highlight that integrated approaches — particularly those that combine environmental investment, capacity building, and stakeholder collaboration — yield the most sustainable outcomes.For decision-makers at Foolad Kaveh Jonoub Kish and similar industrial organizations, the proposed model serves not only as an evaluation mechanism but also as a strategic decision-support system. It enables proactive policy testing and long-term planning based on data-driven insights rather than intuition alone. Furthermore, this modeling approach can be extended to other sectors and adapted for use in national sustainability planning.Ultimately, by adopting such analytical tools and embracing systems thinking, companies can transition toward more resilient and responsible supply chains, contributing to both their own success and the broader goals of sustainable development.