Duration of Collaboration from a Market Perspective: An Agent-based Modeling Approach

Authored by Niniet I Arvitrida, Antuela A Tako, Duncan A Robertson, Stewart Robinson

Date Published: 2017

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Model Documentation: Other Narrative Flow charts

Model Code URLs: Model code not found

Abstract

Maintaining a long-term partnership with a supplier is considered an effective strategy to achieve collaboration success in supply chain management (SCM). However, individual companies find that this approach does not always improve business performance. In this paper, an agent-based model (ABM) is developed to investigate the effect of duration of collaboration on supply chains from a market perspective. The model represents two-stage supply chains of an innovative product market, involving suppliers and manufacturers. The model outputs are measured by the rate of demand fulfilment and the number of supply chains which can survive in the market. The results show that duration of collaboration has no significant impact on both demand fulfilment and survivability of supply chains. This finding contradicts the common belief held in the literature about the benefits of long-term collaboration, but it corroborates examples encountered in practice. This study provides new insights to the practice of supply chain collaboration by taking a market perspective. The results show that a longer duration of collaboration does not provide a significant improvement to the supply chain's competitiveness from a market point of view, in terms of demand fulfilment and supply chain's ability to survive over the long-term. The implications of this finding to practice are discussed in the paper.

Tags

Simulation Management Performance Dynamics Supply chain partnerships Logistics Framework Duration of collaboration Market perspective Agent-based modeling Supply chain integration Long-term relationships Dark side