Complexity transfer in supplier-customer systems

Abstract

This paper uses a multiple case-study methodology to investigate complexity transfer (CT) in manufacturing supplier-customer systems, leading to a new model of complexity transfer. An entropic-related complexity measure is applied to three supplier-customer systems, internally within each organisation and at their supplier-customer interface. The results are compared and integrated to provide cross-case analyses and insights. Although CT has been acknowledged in the literature to occur towards upstream supply chain (SC) partners, e.g. in the context of the bullwhip effect, this paper provides evidence that CT may also occur towards downstream SC partners. This study also highlights that complexity can be managed through significant and sustained operational interventions. Our new empirically-tested model of CT identifies four organisational types: Sink, Source, Equilibrium, and Boom or Bust, according to their transfer of internally-generated and externally-accepted complexity. This new model enables an in-depth representation of the transfer of complexity and of its impact on SC partnerships. Managers may use this CT model to develop complexity management insights and to identify structural and operational changes – at organisational level, and systemic SC changes that may reduce the costs associated with complexity.