Modelling viable supply networks with cooperative adaptive financing

TL;DR

This paper introduces a scalable autonomous control method for supply networks that emphasizes cooperative financial policies, demonstrating that distributed governance enhances viability and resilience in complex adaptive supply chains.

Contribution

It presents a novel scalable autonomous control framework for supply networks that integrates cooperative financial policies and demonstrates the benefits of distributed control.

Findings

Viability requires cooperation among firms.

Visibility and viability increase together in scale-free networks.

Distributed control outperforms centralized control in supply networks.

Abstract

We propose a financial liquidity policy sharing method for firm-to-firm supply networks, introducing a scalable autonomous control function for viable complex adaptive supply networks. Cooperation and competition in supply chains is reconciled through overlapping collaborative sets, making firms interdependent and enabling distributed risk governance. How cooperative range - visibility - affects viability is studied using dynamic complex adaptive systems modelling. We find that viability needs cooperation; visibility and viability grow together in scale-free supply networks; and distributed control, where firms only have limited partner information, outperforms centralised control. This suggests that policy toward network viability should implement distributed supply chain financial governance, supporting interfirm collaboration, to enable autonomous control.