The interactions

The interaction between the agents is characterised by the link created between different types of agents. Each manufacturer agent creates a connection with one or several suppliers, while the customer agent generates a link with a manufacturer agent. The customers create links with a manufacturer which represents the decision to purchase the manufacturer’s product. However, the customers will only buy a

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product from a manufacturer which has at least one link with supplier agents.

Meanwhile, manufacturers create links with suppliers which represent the decision to collaborate with one or several suppliers. The creation of these links is ruled by each agent’s autonomy.

5.2.1.4 Autonomy

The autonomy of a customer is indicated by its preference and behaviour in selecting a manufacturer within its willingness to compromise. The preference is represented by the agent’s position and its degree of willingness to compromise.

The customers decide which manufacturer is most appropriate for supplying to their preference with a particular degree of willingness to compromise (Figure 5.6). The circular shape of willingness to compromise reflects a simplification of customer’s characteristics in general, where customers will to either reduce or increase their standard on buying preference, for both innovation level (y-axis) and price (x-axis)..

This representation is adopted from the agent-based model of customer-firm interaction introduced by Robertson and Caldart (2009). The customers also have trust/loyalty, which represents the probability of choosing the same manufacturer as previously selected.

The manufacturer’s autonomy is characterised by its behaviour in choosing supplier/s and in changing the strategic position for the competition. Each manufacturer selects one or several suppliers based on its preference presented by its position and its degree of willingness to compromise. They collaborate with suppliers while they compete to attract the closest new customer. This behaviour represents firm’s acquisitiveness in gaining more revenue continuously as most companies are hard to feel satisfied with their current achievements.

The manufacturers’ preference is to select suppliers who are more responsive and efficient than their capability. This enables the manufacturers to supply the customers according to their strategy for efficiency and responsiveness. However,

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if they could not collaborate with the desired suppliers, the manufacturer willingness to compromise feature allows the manufacturers to work with the suppliers who are less responsive and efficient than their capability (Figure 5.5).

The manufacturers who could not manage to find suitable suppliers would die after they have exceeded their lifetime or survivability limit, defined as a number of time units in which the manufacturer can survive without a supplier.

More efficient operations

More responsive operations Less responsive operations

Less efficient operations

Customer

Manufacturer

Supplier

The border of customer preference with a radius of

willingness to compromise

The border of manufacturer preference with a willingness to compromise

The manufacturer’s responsiveness level

The manufacturer’s efficiency level The manufacturer

willingness to compromise

The manufacturer willingness to compromise

The customer creates a link to a manufacturer

The manufacturer creates a collaboration

link to a supplier

Figure 5.5 The abstraction of link direction and border of customer and manufacturer preference, with a degree of willingness to compromise

The mechanism of the manufacturer willingness to compromise is illustrated as follows. The manufacturer’s position in the model represents its preference in selecting supplier/s. For instance, if the manufacturer stays at coordinate (50, 40),

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it will firstly choose a supplier/s which stay in the coordinates between 0 and 50 for the x-axis, and between 0 and 40 for the y-axis. It represents the manufacturer’s rule in choosing suppliers which are more efficient and responsive than the manufacturer, which are reflected by the x-axis and y-axis respectively. However, if the manufacturer cannot manage to find any available supplier inside its preference range, it will consider to working with the suppliers which are less efficient and/or less responsive than the agent. The less efficient suppliers stay in the higher coordinate of x-axis than the manufacturer’s x-axis coordinate, and the less responsive suppliers have larger y-axis coordinate than the manufacturer’s position. If the degree of manufacturer willingness to compromise is 5%, it reflects that the maximum distance of compromise range is:

5%898:ℎ<8=>9?=@=8A?>BC)>D8A?E:>)F<8CG8:ℎ<8E?=@D>:?C)8EH>F<

If the maximum coordinate of both x-axis and y-axis are 67, the maximum diagonal distance of the simulation space will be 67^#+ 67^# = 94.75. Then, the distance of the manufacturer willingness to compromise will be 5% x 94.75 = 4.74, calculated from the manufacturer’s position. Thus, the area of manufacturer willingness to compromise is between 50 and 54.74 for the x-axis (efficiency level), and between 40 and 44.74 for the y-axis (responsiveness level).

The manufacturer determines the relationship between supplier and manufacturer. They set the length of the relationships (duration of collaboration).

When the manufacturer trusts the current supplier, it will continue the partnership with the same supplier when the previous duration of collaboration ends. The probability of the manufacturers working with the same supplier for the next collaboration is represented by the manufacturer trust.

Lastly, supplier autonomy is represented by its movement during the competition. The movement direction is affected by the manufacturers’ position and the supplier’s trust towards the current manufacturer. An illustration of agent’s interactions and movement is presented Figure 5.6.

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Customer Manufacturer Supplier

Two-stage supply chain

: the direction of movement : the direction of link Note

Figure 5.6 Agent’s interactions and movements

5.2.1.5 The schedule

The schedule is characterised by the agent’s movement for the competition, link creation for the relationship between the agents, life (for the manufacturer and supplier), and output measurement. These features of the schedule are the events executed in sequence at the same time; so when all of these events have been performed, the simulation time or time step (known as a tick in ABM) is executed in a discrete time unit.

The tick, hereinafter referred to as time unit, represents a period, which is considered sensible to allow a firm to make a slight adjustment to their strategic position. Regarding the operations in supply chains, the duration of making a slight strategic change can be related to the time bucket used in the sales and operations plan (SOP). This plan (SOP) affects other plans and company strategies, such as the marketing strategy, the workforce or resources plan, the procurement strategy, product development, and the plant expansion plan.

The time bucket commonly used in the SOP is between 3 and 18 months. The duration is mostly affected by the total production lead time. In the computer model, we assume that one time unit represents at least 3 months for making a gradual strategic change. A period of 3 months is also considered as the common time unit representation for the seasonal demand and supply pattern that is likely to be related to the operations along the supply chain of innovative products.

114 5.2.2 Inputs or experimental factors

The key issues examined in this study are competitive and collaborative behaviour.

Collaborative behaviour includes the collaboration strategy, which involves the duration of collaboration between a supplier and a manufacturer, and the number of partnerships for both the manufacturer and supplier. Collaborative behaviour also represents the characteristics of the agents, considering trust and survivability.

Meanwhile, competitive behaviour as represented in this study is the acquisitiveness and the distance of the strategic movement. Acquisitive behaviour reflects the desire to earn more revenue on an ongoing basis, as a representation of competition motives. For instance, manufacturers change their strategy by incrementally moving towards nearby customers that are currently not buying from them. The manufacturers have no way of assessing the effect of moving towards a new customer, but due to acquisitiveness, they would always attempt to gain new customers. In doing so, they may lose some of their current customers to another manufacturer.

In a similar way, suppliers move to try and gain collaborative relationships with new manufacturers by moving towards the closest manufacturer with whom they do not currently collaborate. However, this study does not explore the supplier’s strategic movement as observed for the manufacturers.

Taking the type of agents, the inputs or experimental factors considered in this research can be classified into three categories. The first group is the classification of the manufacturer’s behaviour in competition and collaboration, the second represents the behaviour of the suppliers, and the last category reflects the customer’s behaviour. The inputs regarded in the first group are manufacturers’

strategic movement, the duration of collaboration, the number of partnerships, trust, and survivability to work with undesired supplier/s. The second group consists of the supplier number of partnerships, trust, and survivability. Meanwhile,

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the third category only consists of the customer loyalty. A categorisation of the inputs is summarised in Table 5.2 and also described in the following subsections.

Table 5.2 The inputs or experimental factors

Manufacturer behaviour Supplier behaviour Customer behaviour

!! Duration of collaboration

!! Number of partnerships

!! Manufacturer trust

!! Manufacturer survivability to work with undesired supplier/s

!! Probability of making extreme strategic changes (manufacturer strategic movements)

!! Number of partnerships

!! Supplier trust

!! Supplier survivability

!! Customer loyalty