Simulation modeling of distribution networks – network adaptability – part 2
The turbulent environment in which most enterprises currently operate encourages the consideration of chaos theory at the level of strategic management. Consequently, a research trend has clearly emerged in recent years covering chaos theory and the theory of adaptive management systems derived from it. These considerations in the article will be applied to distribution networks, which have been treated as complex management systems taking responsibility for adapting supply chains to turbulent environmental changes. The first part of the article will present a literature review indicating the importance of complex adaptive systems theory and the research methodology derived from this theory. Next, distribution networks will be considered in terms of complex adaptive systems. The last part of the article presents the results of experiments conducted on a simulation model built based on management system dynamics as a methodology dedicated to complex adaptive systems.
Complex Adaptive Systems
An organization characterized according to the theory of Complex Adaptive Systems (CAS) is a network of non-linear feedback loops. When these loops are dominated by negative feedback, the organization is in a state of stability. Positive feedback means that the organization becomes unstable [Rokita J. 2009]. The interactions of feedback loops that are opposite to each other or neutralize or balance each other are the primary source of chaos and complexity. Understanding them is the basis for dealing with the complexity and interdependence of system elements. Many authors emphasize the importance of chaos theory in understanding Complex Adaptive Systems. The chaotic nature of an organization is determined by the degree of freedom of its communication and cooperation processes. U. R. Muller (2005) points out that the complexity of a system increases with the increase in connections between the elements of the organization. The increase in connections, however, is correlated with the freedom of the organization’s management system. The freedom of management and complex, multi-directional relationships between the elements of the organization allow for an increase in the number of action variants, and therefore the behavior of the organization is more creative, on the one hand focused on a quick reaction to environmental changes, and on the other hand on capturing market opportunities. The main category of chaos theory is the attractor. R. Krupski (2005) defines an attractor as a distinguished state of system dynamics towards which the elements of the system non-linearly tend. It is a specific boundary towards which a non-linear dynamic system strives. Long-term dynamics are governed by its attractors, and the shape of the attractor determines what kind of dynamics occurs. The shape of the attractor is therefore what can be predicted.
Distribution networks as an organization focused on adapting the supply chain to changing environmental conditions
Flexible, or otherwise agile, supply chains are dedicated to products that are highly differentiated, also at the distribution stage. Depending on the location of the material decoupling point of the supply chain, separating the part of the chain oriented towards the supply side (push strategy) from the part of the chain oriented towards the demand side (pull strategy), flexibility built through inter-organizational relationships is a premise for creating supply networks, production networks, or distribution networks. The article focuses on distribution networks, which are the result of locating the material decoupling point at the make-to-stock and assemble-to-order production stage. Distribution networks created in supply chains at the make-to-stock or assemble-to-order material decoupling point can be defined as complex systems due to the number and complexity of the inter-organizational relationships formed. The article considers the problem of distribution channel participants taking over tasks related to deferred production. Hence, in selected links, processes of adapting the product to customer needs take place through a slight change in the form of the product. The elements of this system are organizations performing logistical and production functions in the area of distribution channels. The network distribution system aims to connect distribution companies with different geographical reach. The complexity of inter-organizational relationships and the blurred boundaries of this system are intended to increase the degree of adaptation of enterprises to changing environmental conditions, and on the other hand, provide the opportunity to capture market opportunities. The distribution system with deferred production is a system of supplies, information, transformation, and feedback. In its study, it is important to include a cause-and-effect analysis for the entire system, and not just for the individual parts that make it up. Fig. 1 presents the distribution network subjected to analysis in the context of the entire supply chain.
The article comes from the journal “Logistyka” 2/2011.