Multi-Tier Supply Chain Learning Networks: A Simulation Study Based on the Experience-Weighted Attraction (EWA) Model

Abstract

Supply chain learning (SCL), which is reflected in organizational learning, referring to the learning between organizations in the supply chain, carries the promise to enable sustainable competitive advantages. Many large multinational companies, such as IKEA, Nestle, and Microsoft, have therefore integrated supply chain knowledge management and continuous learning into their corporate strategies. While there is evidence in extant research about a positive correlation between both the subjective attitude and learning ability of supply chain members and their performance improvement, areas where insight is still missing pertain to the relationship between supply chain members’ subjective psychological factors, and their relationship network structures. This is a serious omission, since these dimensions likely play a key role in the dynamics underlying SCL. In order to alleviate this void, we consider a multi-tier SCL network and develop a model in which a supply chain member’s attraction is weighted based on its previous learning experience. The game mechanism underlying SCL captured in this experience-weighted attraction (EWA) model is then tested using a simulation study of IKEA China’s multi-tier supply chain network for its sustainable cotton initiative. The results suggest that learning costs can be reduced and learning spillover befits can be increased by the provision of rewards to network member companies and better communication. In addition, the perception of and preference for SCL by suppliers can be influenced by initiating sustainable advocacy and providing knowledge and technology training, as well as fostering a range of subjective factors we investigate in our study, such as the strategic attractiveness the decline ratio due to forgetting, the attractiveness improvement ratio due to preferences, and the response sensitivity to strategies. The findings offer insight into the influence mechanisms of the supply chain network structure and subjective attitude about SCL, which are especially applicable to large, multinational enterprises.