DARPA ULTRALOG Final Report - Industrial and Manufacturing ...

are or ignored perturbations. The evolution of protocols can lead to a
robustness/complexity/fragility spiral where complexity added for robustness also adds new
fragilities, which in turn leads to new and thus spiraling complexities (Csete and Doyle 2002).
However all this complexity remains largely hidden in normal operation becoming conspicuous
acutely when contributing to rare cascading failures or chronically through fragility/complexity
evolutionary spirals. Highly Optimized Tolerance (HOT) (Carlson and Doyle 1999) has been
introduced recently to focus on the "robust, yet fragile" nature of complexity. It is also becoming
increasingly clear that robustness and complexity in biology, ecology, technology, and social
systems are so intertwined that they must be treated in a unified way. Given the diversity of
systems falling into this broad class, the discovery of any commonalities or “universal” laws
underlying such systems requires very general theoretical framework.
The scientific study of CAS has been attempting to find common characteristics and/or formal
distinctions among complex systems that might lead to better understanding of how complexity
develops, whether it follows any general scientific laws of nature, and how it might be related to
simplicity. The attractiveness of the methods developed in this research effort for generalpurpose
modeling, design and analysis, lies in their ability to produce complex emergent
phenomena out of a small set of relatively simple rules, constraints and the relationships couched
in either quantitative or qualitative terms. We believe, that the tools and techniques developed in
the study of CAS, offers a rich potential for design, modeling and analysis of large-scale systems
in general and supply chains in particular.
3. Supply Chain Networks as Complex Adaptive Systems
A supply chain network is where information, products and finances are transferred between
various suppliers, manufacturers, distributors, retailers and customers. A supply chain is
characterized by a forward flow of goods and a backward flow of information. Typically a supply
chain is comprised of two main business processes: material management and physical
distribution (Min and Zhou 2002). The material management supports the complete cycle of
material flow from the purchase and internal control of production material to the planning and
control of work-in-process, to the warehousing, shipping, and distribution of finished products.
On the other hand, physical distribution encompasses all the outbound logistics activities related
to providing customer services. Combining the activities of material management and physical
distribution, a supply chain does not merely represent a linear chain of one-on-one business
relationships, but a web of multiple business networks and relationships.
Supply chain network is an emergent phenomenon. From the view of each individual entity, the
supply chain is self-organizing. Although the totality may be unknown individual entities partake
in the grand establishment of the network by engaging in their localized decision-making i.e. in
doing their best to select capable suppliers and ensure on-time delivery of products to their
buyers. The network is characterized by nonlinear interactions and strong interdependencies
between the entities. In most circumstances, order and control in the network is emergent, as
opposed to predetermined. Control is generated through nonlinear though simple behavioral rules
that operate based on local information. We argue that a supply chain network forms a complex
adaptive system:
• Structures spanning several scales: The supply chain network is a bi-level hierarchical
and heterogeneous network where at the higher level each node represents an individual
supplier, manufacturer, distributor, retailer or customer. However at the lower level the
nodes represent the physical entities that exist inside each node in the upper level. The
heterogeneity of most networks is a function of various technologies being provided by
whatever vendor could supply them at the time their need was recognized.
• Strongly coupled degrees of freedom and correlations over long length and time
scales: Different entities in a supply chain typically operate autonomously with different
objectives and subject to different set of constraints. However when it comes to