System dynamics—background, methodology, and applications. Part 1: Background and methodology

Abstract

System dynamics is a methodology for modelling and redesign manufacturing, business, and similar systems which are part man, part machine. It has been around for over 30 years. Some management consultants make extensive use of system dynamics, whilst others do not. Why is this so, and is it primarily an educational problem? In this two-part article we describe the methodology, trace its history, and show how it fits into a problem-solving spectrum in between, but overlapping with, system theory and system thinking.In Part 1 we show how both servotheory and cybernetics have influenced system dynamics and examine the linguistic, investigative and numerical information souces which can be used for model building. Central to this exercise is the use of input-output analyses which are the system dynamics equivalent of writing down balance equations for hardware systems. We also comment on the important role of system dynamics ‘user friendly’ software in business games, and the relevance of the method as perceived by a very experienced management consultant.In Part 2 we consider what can be done to better exploit system dynamics in the area of improving business competitiveness. The solution proposed here is to integrate the use of servotheory within the system dynamics framework. The illustrative example chosen requires the smoothing of material flow within a supply chain via the effective use of all available marketplace information in contrast to acting only on distorted orders passed on by the adjacent echelon. It is concluded that the ideal background for a successful system dynamicist is good experience in both control and industrial engineering.