System dynamics of supply chain network organization structure

Abstract.

Information technology is providing manufacturers with additional flexibility with regard to their supply chain network choices. Our research studies supply chain network organization structures categorized by the organic and mechanistic management control structures. The structural impacts on cost and fill rate performance are studied in two-echelon and two-supply-chain network organization models under different market coordination conditions using system dynamic simulations. Our results show significant effects of demand and network structural factors, and their interactions, on these measures. As demand becomes dynamic, the cooperative interaction model, where supply chains cooperate to satisfy customer demand, is found to have better system performance than the competitive supply chain model. The analysis also suggests that increasing the responsiveness at the downstream plant is particularly important to the overall system performance improvement.