The co-evolution of product, production and supply chain decisions, and the emergence of manufacturing strategy

Abstract

In this paper, adopting the necessary evolutionary economics perspective, we investigate how manufacturing strategy emerges as a result of a coordinated search in the three correlated fitness landscapes of product, production and supply chain decisions. In a complex evolving systems view, product, production system and supply chain requirements, which are used to define manufacturing strategy performance objectives, are also thought to constitute, in a dialectic fashion, decision variables for achieving these objectives. Using a system dynamics simulation model of a resource-based view of operations-driven competition, we have investigated the effect of two contextual variables (underlying pattern of interaction among tasks/decisions, and limits of managerial ability), and three organisational structure ones (tasks/decision decomposition, incentives system, and degree of vertical hierarchy) on the efficiency and effectives of the overall manufacturing strategy process. The contribution of the paper is twofold: first, simulation results justify empirical views and provide new insights on the effect of organisation in the manufacturing strategy as an evolutionary process, and secondly, by combining complex systems science with the resource-based view of strategic management, it presents a novel methodological stance for investigating complex issues involved in this area.