How do competition and collaboration affect supply chain performance? An agent based modeling approach

Abstract

Supply chain collaboration is considered to be the main driving force of supply chain success. In practice, however, ideal supply chain collaboration is difficult to achieve. In particular, a factor that is presumed to hinder collaboration is competition between firms. Even though several studies suggest that competition benefits supply chains, other studies come to the opposite conclusion. In order to address this issue, this paper proposes an agent-based modeling approach to understand how competition and collaboration between firms affects supply chains in the market in which they operate. The model represents customers, manufacturers, and suppliers collaborating and competing in a supply chain strategic space. Preliminary results presented in this paper are reported for the purpose of illustration. These show that it is the bounded-rationality of each agent that drives the emergent outcomes, and that the market structure is determined primarily by competitive behavior and not by demand.

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