DARPA ULTRALOG Final Report - Industrial and Manufacturing ...

Supply Chain Network: A Complex Adaptive Systems Perspective
AMIT SURANA † , SOUNDAR KUMARA ‡* , MARK GREAVES**,
USHA NANDINI RAGHAVAN
In this era where on one hand, information technology is revolutionizing almost every
domain of technology and society, on the other hand the “complexity revolution” is
occurring in science at a silent pace. In this paper we look at the impact of the two, in the
context of supply chain networks. With the advent of information technology, supply
chains have acquired complexity almost equivalent to that of biological systems.
However, one of the major challenges that we are facing in supply chain management is
the deployment of coordination strategies that lead to adaptive, flexible and coherent
collective behavior in supply chains. The main hurdle has been the lack of the principles
that govern how supply chains with complex organizational structure and function arise
and develop, and what organizations and functionality is attainable, given specific kinds
of lower-level constituent entities. The study of Complex Adaptive Systems (CAS), has
been a research effort attempting to find common characteristics and/or formal
distinctions among complex systems arising in diverse domains (like biology, social
systems, ecology and technology) that might lead to better understanding of how
complexity occurs, whether it follows any general scientific laws of nature, and how it
might be related to simplicity. In this paper we argue that supply chains should be treated
as a CAS. With this recognition, we propose how various concepts, tools and techniques
used in the study of CAS can be exploited to characterize and model supply chain
networks. These tools and techniques are based on the fields of nonlinear dynamics,
statistical physics and information theory.
1. Introduction
Supply chain is a complex network with an overwhelming number of interactions and interdependencies
among different entities, processes and resources. The network is highly nonlinear,
shows complex multi-scale behavior, has structure spanning several scales, and evolves and selforganizes
through a complex interplay of its structure and function. This sheer complexity of
supply chain networks, with inevitable lack of prediction makes it difficult to manage and control
them. Furthermore, the changing organizational and market trends requires the supply chains to
be highly dynamic, scalable, reconfigurable, agile and adaptive: the network should sense and
respond effectively and efficiently to satisfy customer demand. Supply chain management
necessitates that decisions made by business entities take more global factors into considerations.
The successful integration of the entire supply chain process now depends heavily on the
availability of accurate and timely information that can be shared by all members of the supply
chain. Information Technology with its capability of setting up dynamic information exchange
network has been a key enabling factor in shaping supply chains to meet such requirements. A
major obstacle remains, however in the deployment of coordination and decision technologies to
achieve complex, adaptive, and flexible collective behavior in the network. This is due to the lack
of our understanding of organizational, functional and evolutionary aspects in supply chains. A
† Department of Mechanical Engineering, The Massachusetts Institute of Technology, Cambridge, MA, 02139, email:
surana@mit.edu
‡ The Harold and Inge Marcus Department of Industrial & Manufacturing Engineering, University Park, PA 16802,
email: skumara@psu.edu. * Corresponding Author
**IXO, DARPA, 3701 North Fairfax Drive, Arlingon, VA 22203, 1714, mgreaves@darpa.mil