Hierarchic change system dynamics supply chain model: impact of demand information sharing on holding cost and downstream project completion

Abstract

The interrelationships between system components are critical to improving the performance of a complex supply chain system. Thus, any improvement or development can be carried out systemically and comprehensively. The complexity of coordination grows as the number of echelons in a supply chain increases. In practice, coordination becomes more difficult to implement in a supply chain with more echelons. Through demand information sharing, this research attempts to figure out how coordination can have implications for complex multi-echelon supply chains with a modeling approach. The Aggregate Andesite Stone Supply Chain is used as an empirical model with four echelons. Changes in dimensions and values per ton of product in each echelon displacement add complexity. Total holding cost is not the only consideration. The timely completion of projects downstream is also a priority. So the system's behavior that runs and changes over time also needs to be observed. To accommodate this complexity, a system dynamics modeling approach is used. This modeling technique could capture fluctuations in volatile conditions that change in time sequences. The pattern of model behavior shows that demand information sharing in the andesite aggregate supply chain is faint, and the "bullwhip effect" occurs. The demand information sharing can eliminate this effect, reduce up to 73.5 % of total supply chain holding costs, and increase the percentage of project completion on time downstream of the supply chain. These results provide a scientific and practical understanding that although there are many obstacles, demand information sharing can significantly improve performance in multi-echelon complex supply chains and be worthwhile applied