Information sharing and control in homogenous and heterogeneous supply networks under different market conditions

A supply network consists of a focal organization and the network of firms that transact with it via goods, services, and information. Advances in information technology give a focal organization an unprecedented capability to communicate with, coordinate with, and even control its suppliers. However, it is unclear how information sharing and control will produce desirable performance and common welfare in the network, and how these factors should be adjusted under different conditions. In this study, we build a simple model of a supply network and run simulation experiments to investigate the effects of information sharing, control, homogeneity, and market conditions. The simulation results show that the best network performance is achieved under a high level of control. In the absence of such control, a supply network can achieve the same performance if the firms in the supply network behave in a homogeneous fashion and information is shared at the global level. In the case where agents behave in a heterogeneous fashion, the best performance is obtained when the agents are allowed to self organize based solely on information local to the agent.