An Ecological Perspective on Supply Networks


Published on

Published in: Business, Technology
  • Be the first to comment

  • Be the first to like this

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

An Ecological Perspective on Supply Networks

  1. 1. Organization Studies Workshop, Cyprus, June 5-7th 2008 An Ecological Perspective on Supply Networks L. Varga1, P.M. Allen1, M. Strathern1, C. Rose-Anderssen2, J. Baldwin2 and K. Ridgway2 (1) School of Management, Cranfield University, Beds MK43 0AL, (2) AMRC, Department of Mechanical Engineering, University of Sheffield, Mappin Street, Sheffield S1 3JD Abstract The notion of supply network management has evolved considerably over the last 50 years to reach a point today where we need a post-normal science to describe the inter- related nature of physical, informational and people networks that transform raw materials into products. Bi-lateral, local arrangements for the creation of relatively simple products are largely superseded by multi-tier, global sourcing regimes for highly integrated, sophisticated products and services. And organizations are concerned not only with intra- and inter-organizational supply chain efficiencies, but also with their future roles within operational and developing supply chains of their customers and other organizations. By examining supply networks from an ecological perspective we provide a description which is grounded in environmental context, path-dependency and coevolutionary processes. A case study of the supply networks within the commercial aerospace sector describes how the structure, behaviour and knowledge of these complex economic systems have coevolved with their environmental contexts and thus how supply network ecology has matured. Key words Complex Economic System, Supply Network, Coevolution, Aerospace, Structure, Environment An ecological perspective on supply networks 1 Varga et al
  2. 2. Introduction Our theoretical knowledge of the nature of the supply network has matured considerably in the last 10 years helping practitioners to understand how decisions, resources and behaviours might be deployed to improve survival and performance. This new knowledge makes the assumption that the supply network is a complex adaptive system located in an ecology with which it coevolves. The emergent structures which persist within the system, together with their associated behaviours, reveal the structural attractors of the system. These structural attractors are the outcome of coevolutionary processes between multi-layer complex economic systems and the environment. An ecological perspective is primarily concerned with organisms or human systems interacting with their environments. In the context of supply networks such organisms or human systems are the structures, including associated behaviours, which are hierarchical, nested within multiple other organisms or human systems, open to influence from the environment and adaptive to change. In complex systems terms, the environment is merely another layer in a nested system “every system takes all other systems as its environment; systems co-evolve as they complexly adapt to their environment” and which coevolves with the systems that constitute the environment “the environment or landscape that each system faces is changed as a result of changes in the systems that constitute the landscape” (Kauffman, 1993) An ecological perspective further seeks to explain the spatial distribution of systems in their environment, their patterns of abundance in time and the functional interactions between co-existent systems. Factors that determine the range of environments that are occupied and that determine how abundant systems are within those ranges are a key component of investigations within ecology. Ecological studies explore how the system interacts with the environment to influence evolutionary mechanisms of survival, growth, development, and reproduction. An ecological perspective on supply networks 2 Varga et al
  3. 3. These evolutionary processes must necessarily produce qualitative change in the system. Qualitative change may be triggered within the system, the environment or the interaction between them. We find that the environment of commercial supply networks is changing rapidly. Through continued globalisation and the availability of transport infrastructure and electronic communications, the reach of even modest sized firms is extended into markets and resources not previously available, thus opening up greater possibilities of change from the environment. Given that organizations and the networks to which they belong are dynamic, and need to adapt, it is relevant to consider the processes of evolution. Aldrich’s evolutionary theory (Aldrich, 1999) recognises and incorporates relevant organizational theories such as institutionalism, resource dependence and transaction cost economics amongst others. Processes of evolution, namely variation, selection, retention, and struggle are developed from Donald Campbell’s work, based originally on Darwin (1859). The importance of organizations as innately dynamic and responsive to the environment and networks is examined in his evolutionary biology approach in which change is stochastic not teleological. Coevolutionary theory extends evolutionary theory further and focuses on competitive leadership positions, and how they are lost and gained over time (Murmann, 2003). An observed supply network form may be a variation which is favoured (selected) in some environments thus retained and diffused within the population. The processes of evolution continue their search for new variations thus species co-evolve with the environment. Small differences in market share can be amplified and develop into much larger differences (Arthur, 1994) so long as self- reinforcing processes, that is positive feedback, dominates self limiting processes or negative feedback which act as a self-regulatory mechanism and the key to equilibrium (Capra, 1996). One action may have varying effects on different parts of the complex system and may result in varying degrees of feedback, driving virtuous or vicious cycles (Holland, 1998). An ecological perspective on supply networks 3 Varga et al
  4. 4. And the firm does not exist in isolation. It is nested within other bodies, including partnerships, regional economies, nationalities; and a firm itself has multiple nested sub- systems, including functions, divisions, teams, projects, individuals; and individuals belong to multiple systems, professional bodies, academic associations, social and leisure groups, etc. No single complex system acts in isolation: “Nothing happens in isolation” (Barabási, 2002). The Resource Based View (RBV) of the firm provides an explanation of sustainable competitive advantage, which is defined as a “value creating strategy not simultaneously being implemented by any current or potential competitors and when these other firms are unable to duplicate the benefits of this strategy” (Barney, 1991). This implies the identification of a market niche that an organization can either create or exploit in a way which gives it advantage over its competition. In evolutionary terms this equilibrium is an ideal state. Competitors find ways to imitate the firm or re-shape the niche to their own advantage. In a changing environment, sustainable competitive advantage needs to reflect the rate at which the firm can identify new niches, exploit them and then adapt to the next niche, and so on as the environment continues to change. This means that experimentation is important (Allen, 1988) and that innovations and evolutions fit within the wider milieu of the social, cultural, environmental and technological of their own history: the “eco-historical regime” (Garnsey and McGlade, 2006). The importance of an ecological perspective is that it recognises systems (surviving abundant structures) and the environment as an evolving dynamic. Other lenses with which to observe supply networks tend to take a partial view giving prominence to organizations (using neo-classical environmental economics to extrapolate the past using assumptions that do not apply to modern evolving economic systems (Ramos-Martin, 2003)); the environment (e.g. population ecology (Hannan and Freeman, 1977)), or to equilibrium and so a lack of novelty (e.g. RBV). Such lenses treat environmental change as an exogenous variable (Baum and Singh, 1994). Exogenous variables are economic variables independent of the relationships that determine the levels of equilibrium. An ecological perspective on supply networks 4 Varga et al
  5. 5. However, the environment has significant effects on organizations; arguably organizations are determined largely by their environments. And each organization may interpret its environment differently. The assumption that all organizations within one industry interpret the environment in a single way is false (Aldrich and Pfeffer, 1976; Daft and Weick, 1984) as managers can manipulate environmental features, for example, by political action (Child, 1972) and can change organizational designs (Goold and Campbell, 2002). Industry events can also reinforce or loosen network structures (Madhavan, Koka and Prescott, 1998). Without the explicit inclusion of how the environment of an organization influences the organization and vice-versa, a single-lens view by definition can provide only a partial view of the evolution of the organization. Having established the case for an ecological perspective, the rest of this paper charts the history of supply network perspectives and supply network structures to arrive at current day thinking in the supply network literature. The environmental context of the civil aerospace industry is then considered and propositions are suggested for the key ecological variables influencing supply network structures, behaviours and knowledge. A case study of the UK aerospace industry over the period 2005 to 2008 then takes a critical look at these propositions. The paper concludes proposals for further research. Supply Network Perspectives The concept of the supply network has matured through a number of observable stages (see Figure 1): from connecting intra-organizational components of inbound materials and outbound products; to dyadic (two-sided) supplier relationships in which each organization attempts to manage immediate suppliers; to dyadic chains which extend the relationships of the organization to both to customers’ customers and suppliers’ suppliers; to supply chain management in which all organizational supply chains are managed holistically; to integrated business networks which manage multiple businesses that create products and service packages; to demand chain communities, which manage multiple enterprises practicing agility to customer demand. An ecological perspective on supply networks 5 Varga et al
  6. 6. Stage of Type of trading relationship References development Intra-business chain Internal supply chain integrates business (Harland, 1996) functions involved in the flow of materials and information from inbound to outbound ends of the business Dyadic relationship The management of dyadic or two party (Harland, 1996) relationships with immediate suppliers; Extended to downstream distribution channels and upstream production chains; (Davis, 1993) Structure and scope of supply chain consists of material and information processing units: demand, value-adding transformation and supply Dyadic chain The management of a chain of businesses (Harland, 1996) including a supplier, a supplier’s suppliers, a customer and a customer’s customer, and so on Supply chain Management of multiple company (Lambert, Cooper and Pagh, relationships (SCM); Managing and 1998) coordinating multiple business activities (Mentzer, DeWitt, Keebler, across functions and firms, and viewing Min, Nix and Zach, 2001) the supply chain as a single entity, rather (Larson and Rogers, 1998) than as a set of separate functions. (Christopher , 2005; Christopher, 1992) Integrated business The management of a network of inter- (Harland, 1996) network connected businesses involved in the ultimate provision of product and service packages required by end customers Demand chain Demand driven, agile, multi-enterprise (Hewitt, 2000) communities organizations, increasingly complex with (Lummus and Vokurka, 1999) various inter-relationships between (Bowersox, Closs, Stank, companies, growing number of 2000) participants which does not remain constant throughout product life cycles; unlike old models where customer orders were delivered from on-hand inventories. Figure 1.0 Supply Network Maturity The evolution of the supply chain discipline has however been fragmented (Harland 1994 & others), with differing and even disparate themes emerging in the field, crossing many traditional research boundaries (OM, logistics, strategic management, etc). Multiple definitions of the Supply Chain and Supply Chain Management are to be found in the literature. Mentzer et al (2001) provide a helpful classification of the literature into three categories: 1) a management philosophy, 2) the implementation of a management philosophy and 3) a set of management processes. The most advanced management philosophy of the supply chain is that of system or single entity, optimizing the entire An ecological perspective on supply networks 6 Varga et al
  7. 7. chain (Bechtel and Jayaram, 1997) and managing the flow of a distribution channel through multi-firm effort, from the supplier to the end user (Ellram and Cooper, 1990). This philosophy is consistent with Harland’s (1996) network, the most mature form of supply chain conceptualisation, shown in Figure 2.0. Figure 2.0 Supply Chain Evolution (Harland, 1996) The initial focus of supply chain management was on the internal chain as the method of internal management was known to impact local firm performance (Mintzberg, 1979) as the firm was perceived as having control over these inputs and outputs. Indeed, a supply chain philosophy today includes intra firm capability: “achieve synchronization and convergence of intrafirm and interfirm operational and strategic capabilities into a unified, compelling marketplace force where supply chains rather than firms compete” (Christopher, 1992). This definition raises the importance of the systemic, strategic orientation to the whole chain which is necessarily required of every partner in the supply chain. This systems perspective requires the analysis and management of the entire network to achieve the best outcome for the whole system (Cooper and Ellram, 1993). The philosophy is also consistent with the logistics paradigm that integrated performance produces superior results to that of loosely managed functions (Bowersox, 1996). Thus each firm in the supply chain directly and indirectly affects the performance of all other supply chain members as well as ultimate supply chain performance (Cooper, Lambert and Pagh, 1997). But each organization’s networks are idiosyncratic and have followed a An ecological perspective on supply networks 7 Varga et al
  8. 8. path dependent process (Gulati and Gargiulo, 1999) conferring competitive advantage as they are not easily imitated or substituted. As a result of these relationships, dynamic network constraints and benefits occur (Gulati, Nohria and Zaheer, 2000), e.g. benefits of lock-in to a profitable network or lock-out of a failing network. Conversely, the constraints can act disadvantageously, e.g. lock-out of profits and lock-in to a failing network. Conceptual models such as dyadic relationships and supply chains simplify the organization in three major respects. Firstly, organizations are treated as having static relationships but in practice individuals within each organization have relationships with individuals in other organizations, dispersed across the organization and working at different points in the product life cycle, e.g. at design, manufacture, operation, etc. This occurs because of the functional specialisms of staff. As a consequence there is a probability of loss of information, which also occurs due to the turnover of staff. The body of individuals that constitutes the organization does not remain static; people retire, move to other firms or locations and also pass away. Each person has a potentially unique perspective, or a ‘virtual’ view of the supply chain (Mouritsen, Skjott-Larsen and Kotzab, 2003). Furthermore, we can say that each view is partial, with no one person having a complete and full view of the supply chain. Inter-organizational relationships are thus dynamic as well as path-dependent. Secondly, an organization is likely to operate multiple supply chains concurrently, whilst others will be in a state of development or demise. Even in a simple case, where an organization produces only one product, it will still require multiple suppliers for electrical parts, mechanical parts, raw materials, etc. The organization that produces many similar products may be able to source common parts from a single supplier but this may cause prioritization conflicts for the firm at times of short supply. The organization that produces many different products will need to operate concurrent relationships with many sets of suppliers. This process of supply chain management, i.e. the management of a variety of supply chains within one organization, creates opportunities for and constraints upon organizational performance. An ecological perspective on supply networks 8 Varga et al
  9. 9. Thirdly, an organization is likely to have many customers. Some of these customers will be transactional, whilst others will be long-term relationships perhaps with increasing demand. In a simple scenario, the organization has one customer. However, this customer may require multiple products with different delivery times and priorities. In the 21st century, mass customization has been the trend so significant variety in terms of product look and feel must be created in addition to delivery to various locations, with fluctuating demand over time. Thus there are three types of potential organizational arrangement: • simple – 1 supplier to 1 customer • one-sided – n suppliers to 1 customer; 1 supplier to n customers • complex – n suppliers to n customers Regardless of the number and type of supply chains in operation, an organization’s infrastructure services, such as Human Resources Management, ICT services, facilities management, commercial services, strategic marketing and procurement, etc are finite resources, providing services to staff engaged in multiple supply chains. The effect on the organization is that concurrent supply chains vie for organizational resources. And these organizational arrangements may be different in each organization within the network. Ultimately, the network structures and behaviours needed to effect inter- organizational cooperation and coordination are paramount to achieving successful performance. The structure or phenotype of a supply network reflects the underlying genetic code or internal diversity of the system. This genetic code is located within the resources of the organizations – people, buildings, machinery and so on. Emergent structures are limited by the genetic code which changes with more or less frequency. Existing structures are the consequence of the irreversibility and path-dependency of the supply network and of the organizations, past and present, within the supply network. An ecological perspective on supply networks 9 Varga et al
  10. 10. The genetic code of the system creates emergent properties at many layers, for example, quality emerges from a particular set of practices, which are directed to optimise desirable features. But the same emergent property may be produced from a different set of practices, that is, the outcome may be produced in more than one way. The property however will not emerge if all requisite practices are not present. The process requires the effort of a combination of many resources: physical, human, informational, technological. Emergence occurs at different layers in the supply network, enabling and constraining the potential for new emergent properties at the next layer (Fuller and Warren, 2006), for example: quality and cost combine to create increased sales in the market place, dyadic relationships contribute to overall supply network relationships. The organizational perspective in traditional supply chain philosophy creates two limiting factors to the evolution of the organization: the boundary to evolution is limited to the organization, which has to demonstrate qualitative change for it to have evolved; and the methods for evolution are inwardly focussed, denying the ecology in which the organization persists by treating it exogenously. These limiting factors create paucity in our understanding of complex economic systems in all but a handful of relatively isolated, static organizations. Organizations exist within a wider ecology encompassing land and air space, professional institutions, infrastructure (physical and informational), assets (physical, human and knowledge) and so on. The networks which join together such various components within and across the ecology exist at multiple, cross-cutting layers. Giannakis, Croom et al (2004) mapped the theoretical developments that influenced supply chain management over 4 eras: the post-war, computerization, globalization and the current internet era. They chart the political, economical and technological developments and so contextualise the evolution of supply chain theories. The major institutions which contributed to the development of supply chain theory are also introduced, including the International Motor Vehicle Programme (IMVP) which spawned key contributions on lean supply chains, such as The Machine that Changed the World and value streams (Hines, Lamming, Jones, Cousins, and Rich, 2000). Each era An ecological perspective on supply networks 10 Varga et al
  11. 11. appears to span 15-20 years and so we may be on the threshold of a new era. Ma (2006) mapped supply chain activities over the decades from the 1950s, demonstrating the increasing integration of firms and logistics capabilities as shown in Figure 4.0. Since the late 1990s, the evolution of supply chain management has shifted to IT (Ho, Au and Newton, 2003), management (Chapman, Soosay and Kandampully, 2002), and lean, JIT and agile (Womack, 2002; Gunasekaran, 1998). Date Key activities (Ma, 2006) Era (Giannakis, Croom et al, 2004) 1950s and Separate activities in SC; Post-war early 1960s No real liaison between distribution related functions 1960s and Fragmentation of distribution; Computerization early 1970s Inter-related activities could be linked together and managed more effectively; Relationships between functions recognised, enabled a systems approach and total cost perspective 1970s Centralisation of logistics; Change in structure and control of distribution chain; Total cost management 1980s Clear definition of true costs contributed to Globalization professionalism within distribution; Longer term planning, including centralized distribution , severe reductions in stock-holding, use of computers for information and control; Growth of third party distribution services 1980s early IT and emphasis on information aspects; 1990 Integration of Logistics and cost control 1990s Process integration beyond organization boundaries – Internet SCM; Partnerships and alliances, plus intermediaries; Gulf War gave rise to aspects of modern logistics channeling 2000 Fierce competition, redefinition of business goals and re- onwards engineering of entire systems; Business importance and added value of logistics recognised Figure 4.0: Supply Chain Evolution The next section discusses supply network structures and their related behaviour, which itself is embedded with the governance arrangements of the supply network structure. An ecological perspective on supply networks 11 Varga et al
  12. 12. Supply Network Structures and Behaviours In this section consideration is given to the network structures and behaviours which supply components and services to meet customer demand. Components including, materials, labour, intellectual wherewithal, information and so on, are supplied in order to design, manufacture, maintain, service and decommission a specific product model, such as the Boeing 737 or the Airbus A320. Demand is global and dispersed across many airlines and other types of customer including the government and private sectors. Network terminology is used as a more accurate way to describe the varying concurrent roles undertaken by organizations including leadership, coordination, sub-system design, commodity manufacture, and so on. Nassimbeni (2004) describes an inter-organizational network as “two or more agents, at least in part autonomous, which gives rise to an exchange relationship, according to certain modalities and forms”. The structure of such a network depends on the overall architecture of these systemic relationships. The content describes what is exchanged and the modalities and forms define the governance of the relationship and how it may adapt, coordinate and safeguard exchanges. The first part of this section takes a look at inter-organizational networks and the methods of governance relating to different types of network. We identify 5 different types of supply network each with a distinct structure and related behaviours relating to governance. The 5 ideal types are: market, hierarchy, heterarchy, 4PLTM and Keiretsu. The rationale for managing, co-ordinating and focussing the value creation network (Supply Chain Orchestration) is that there needs to be a “common agreed agenda driving the achievement of the supply chain goals and a supply chain strategy that is subscribed to by the entities in the chain”. Usually the Orchestrator is the most powerful member of the network which is the prime, however the logistics firm has a key role in synchronizing partner activity, such as the use of information technologies, throughout the supply chain (Chapman, Soosay et al, 2002). Croom et al (2000) also demonstrate the dependence on the element being exchanged: assets, information, knowledge or relationships. The role of the logistics firm in facilitating the exchange is to synchronize An ecological perspective on supply networks 12 Varga et al
  13. 13. activities among the partners in the supply chain with the aim of gaining and integrating knowledge. In the case where suppliers are wholly owned, vertically integrated or where the organization owns a significant part of the supplier, governance and control act as a hierarchy. Hierarchical control indicates the ability of the organization to control and mandate the action of each member to be directed to the needs of the organization. The structure of an inter-organizational supply network with complicated interactions among the players fits neither "market" nor "hierarchy" categories (Powell, 1990). When relationships are missing ex-ante, the supply network acts more as a market in which prices determine the selection of the supplier. Markets can be more efficient than hierarchies. In a study of the corporate cultures of Japanese companies, those which stressed competitiveness (markets) and entrepreneurship (adhocracies), outperformed companies dominated by internal cohesiveness (clans) and by rules (hierarchies) (Deshpandé, Farley and Webster Jr, 1993). When prior relationships exist, the supply network acts as a heterarchy. Various forms of heterarchies have been described in the literature, such as strategic networks (Jarillo, 1993), however, all networks are similar in that governance is heterarchical and there is a requirement for coordination. A supply network can be defined as "a group of semi- independent organizations, each with their capabilities, which collaborate in ever- changing constellations to serve one or more markets in order to achieve some business goal specific to that collaboration" (Akkermans, 2001). Markets and networks are similar in that they have unconnected ownership structures but, for networks, governance is implemented with informal coordination methods in which relationship continuity incentivizes collaboration (Nassimbeni, 2004). Contemporary thinking believes that in an heterarchical environment, relationships are key to influencing decision-making. Where relationships exist between organizations, that is, where an individual or group in one organization can influence the decision An ecological perspective on supply networks 13 Varga et al
  14. 14. making of an individual or group in another organization, the supply network acts synergetically. These organizational relationships tie firms to each other and to the success of the entire supply chain, which may then function as a firm in its own right with its own identity (Cooper, Lambert et al, 1997). The introduction of hierarchical structures attempt to improve coordination and reduce costs by minimising relationships between the parts of the substructure. The consequence of creating a hierarchy means a reduction of information accuracy and timeliness because of the need to pass on information. A hierarchy also creates issues of resilience as the parts become minimally connected (Lewis and Talalayevsky, 2004) and the strength of the supply chain depends on the integrity of the links (Davis, 1993). Influencing independently owned firms within a heterarchy requires coordination mechanisms. Mulford and Rogers (1982) define coordination as “the process whereby two organisations create and/or use existing decision rules that have been established to deal collectively with their shared task environment”. The need to coordinate assumes that cooperation is needed between firms. Cooperation heightens the need for communication, and for information technologies and associated software to support that communication (Castells, 1996). The need to cooperate and leverage complementary competencies within the network becomes essential (Yusuf, Gunasekaran, Adeleye and Sivayoganathan, 2004). Coordination ultimately becomes a formalised way of cooperating (Beerkens, 2004), where cooperation is defined as a voluntary cooperative agreement. Beerkens suggests that after coordination, comes amalgamation, that is, merger or acquisition, and thus the creation of a hierarchy with a loss of autonomy. It follows that formal coordination potentially leads to ownership. Other than the heterarchy, and vertical integration (ownership) and the market, two other forms of supply network exist: the 4PL™ and the Keiretsu. The 4PL™ (fourth-party logistics service provider) business model to manage the modern supply network was originally copyrighted by Accenture. The 4PL, or sometimes referred to as the lead logistics provider, provides systems architecture and integration skills, houses a control An ecological perspective on supply networks 14 Varga et al
  15. 15. room for decision-makers, acts as supply chain infomediary using its own information systems and manages access to the best of breed asset providers. The 4PL is thus a hybrid organization typically formed from parts of other organizations as a joint venture or long-term contract. The Orchestrator, previously the airframe prime, passes control to the 4PL who then exerts control over the supply chain. Orchestration is usually driven by the prime (Chapman et al, 2002) who carries out the management and coordination of multiple business activities across functions and firms (Lambert et al, 1998, Mentzer et al, 2001) guided from a hub where key functions are managed (Webster Jr, 1992). Keiretsu, originally from Japan, is a form of network governance in which a central bank acts to bind the network. Partner firms belong to only one Keiretsu and in that way control is maintained over member firms. Ellram and Cooper (1993) identify similarities and differences between the Keiretsu and the Supply Chain Management approach. Similarities include a long-term approach, sharing risks and rewards, speed of operations and a reduced supplier base. Differences in control, dependence and strategic coordination amongst others (see Figure 3.0) make this a fundamentally different structure for supply network management. Figure 3.0: Differences between Supply Chain Management and Keiretsu (Ellram and Cooper, 1993) The legacy of western management attitudes and anti-trust laws which focus on competition and independence have largely prevented the implementation of a supply An ecological perspective on supply networks 15 Varga et al
  16. 16. chain philosophy unlike the Keiretsu approach (Ellram and Cooper, 1993) which has created some very competitive channels. Inter-organizational network relationships although often established by firms as formal contractual relationships with bureaucratic structures, will develop on a dynamic, organic basis of continuity, reciprocity, co-operation, informality and social embeddedness (Sydow and Windeler, 1998). As the inter-organizational relationship develops, a structure is exposed but governance of the structure becomes more problematic to implement as the structure is ‘owned’ by multiple organizations with only partial control. Compared with organizational hierarchical relations, the network is more loosely coupled, relies more on self-organizing processes and has greater competitive pressures (Ring and Van de Van, 1994). However, strong ties may improve the probability of oligopolistic coordination more than weak ties (Galaskiewicz and Zaheer, 1999). This emphasis on longer term relationships reduces market focus and which would otherwise exist in a supply networks (Cohen and Agrawal, 1999) but this is mitigated somewhat by unequal distribution of costs and benefits between the supply chain partners making inter- company cooperation difficult (Kärkkäinen, Holmström, Främling and Artto, 2003). In a supply network there are many dyadic relationships, some of which are commensalistic and others symbiotic. This is one of the complicating factors of supply networks which leads to complex governance and structural forms. In coevolutionary terms, three types of relationship are identified: predator-prey, symbiotic and parasitic (NECSI, 2007). The prey is part of the predator's environment. Each evolves characteristics (speed, stealth, camouflage etc) in order to consume or avoid the other as applicable. Organisms in a symbiotic relationship evolve together; each is part of the other's environment, adapting to their environment and benefiting from each other. In a parasitic relationship the parasite lives off the host, harming it and possibly causing its death. There is close proximity between host and parasite. Symbiotic relationships can help remove parasites, however, they may become predator-prey or parasitic relationships over time. But these relationships are not linear. The use of linear constructs in the supply chain depict a simple topology of aligned goals, when the arrangement is more An ecological perspective on supply networks 16 Varga et al
  17. 17. similar to “a supply web in which predators and prey have many and various relationships in a complex non-linear structure” (Brown, Lamming, Bessant, and Jones, 2005), The dynamic network view considers the firm’s position in the network, how the network evolves and how new networks are created (Mills, Schmitz and Frizelle, 2004). The evolution of networks occurs in a number of ways: by consolidation into fewer suppliers; new entrants; increased outsourcing (buy as opposed to make) of non-core competences (Prahalad and Hamel, 1990), particularly to specialists (Snow and Miles, 1992), during times of rapid market growth. Where the organization is loosely connected (Webster Jr, 1992) it can leave supply network or can be replaced easily. Once a product/model is established, the organization is locked in, or vertically integrated, to a supply network (Gulati et al, 2000). Whilst the initial conditions at the time of creation of an alliance have an influence on the development of the alliance (e.g. Hamel 1991), some alliances evolve in a punctuated equilibrium manner due to changes in the environment (Gulati, 1998) and other exogenous factors such as industry competition. Organizations and the networks to which they belong are dynamic and need to adapt and combat non-linearities such as the bull-whip effect which spirals between tiers in the supply network. The self-reinforcing processes of organizations will allow small differences in market share to be amplified (Arthur, 1994) so long as they dominate negative feedback which acts as a self-regulatory mechanism and the key to equilibrium (Capra, 1996). An action may have varying effects on different parts of the complex system resulting in varying degrees of feedback, driving virtuous or vicious cycles (Holland, 1998). Thus each firm in the supply chain directly and indirectly affects the performance of all other supply chain members as well as ultimate supply chain performance (Cooper, Lambert et al, 1997) in a non-equilibrium manner. Learning races can occur where one partner benefits from information contained within the network (Gulati, Nohria et al, 2000). An ecological perspective on supply networks 17 Varga et al
  18. 18. In summary, supply network structures include: the hierarchy, the heterarchy, the market, the 4PL™, the Keiretsu (in the Far East). Each of these network forms has appeared as a consequence of adapting to boundary conditions, consciously changing them to enable the teleological nature of the supply network. This section has taken a broad look at dynamic, evolving supply networks considering the many factors relating to the types of structure and governance which might evolve. The next section investigates the context of the civil aerospace industry and formulates propositions relating environmental trends to supply network structures and behaviours, and to effects upon demand and the environment. Civil Aerospace Context The context of the environment, locating the supply network within a particular space- time, is a fundamental ecological perspective. Global techno-economic paradigms, latterly in the 3rd globalisation, have created new opportunities for organizations, such as broadband for volume information flow and the global division of labour. And just as the environment enables the evolution of the supply network, so to does the growth of aircraft manufacturing and air-traffic affect the environment negatively with its attendant infrastructure and CO2 emissions, but also positively by enabling international cooperation and social mobility. At the start of the 21st century, the severe knocks to the global civil aerospace industry following 9/11, SARS and the Iraq war caused industry lay-offs and consolidation. The industry was expected to recover in 2005 back to historic rates of demand, and indeed to grow at a rate of 4.7% per annum to 2022 (Aerospace Innovation and Growth Team, 2003), valuing the global industry at $1,860 billion over 20 years relating to some 32,500 new aircraft. This anticipated growth was expected to contribute to a set of key characteristics what would define the global civil market by 2022. These key characteristics (Aerospace Innovation and Growth Team, 2003) are expected to be: a) airline industry restructuring; b) improved environmental performance and highly efficient aircraft structures and fuel consumption; c) sophisticated security measures; d) An ecological perspective on supply networks 18 Varga et al
  19. 19. improved business models for manufacturers and service providers; e) serviced-based, total life cycles packages to civil customers. In addition, aerospace primes and systems integrators are expected to achieve better rewards attracting more private capital. Overall trends for the aerospace industry (Aerospace Innovation and Growth Team, 2003) are i) the fusion of manufacturing, service provision and MRO (maintenance, repair and overall); ii) a change to the concept of ‘prime contractor’ being the aircraft manufacturer to it being an aerospace service provider, whose capability may be solely the “conception and management of large scale systems”; iii) greater technology sharing with military products and other sectors; iv) growth in the systems concept of civil aerospace as a global, integrated air transport system; globalisation and less nationalism. Future shocks of the magnitude of those seen at in the early millennium may recur. Industry consolidation and tiering (reduction in direct suppliers) is likely to take place in the UK and increased sourcing from low cost economies is predicted (DTI Aerospace and Defence Directorate, 2003). Industry analysts Forrester suggest that no top-down planning, however collaborative, can deliver results in this environment (Forrester, 2003); brittle supply chains risk collapsing like a house of cards under the disruptive influence of business drivers like accelerated global outsourcing, punishing competitors and supply/demand mismatches (Forrester, 2002). The effects of aerospace use continue to influence in the industry. The need to reduce CO2 emissions and its effects on global warning have become political issues but remedies to reduce emissions appear to have a negative effect as world-wide demand for air service including freight transport which is expected to double by 2010 ( Political interventions include carbon-offsetting; proposed restrictions on airport growth and routes, and rising air passenger duty. Other environmental concerns range from aircraft noise, to fuel consumption and the need for energy efficiency, improved infrastructure and land use. The increasing use of information communication technologies (ICT) is uniting global networks across different time periods, enabling the sharing of information and the use of previously untapped resources in the development, production and servicing of aircraft An ecological perspective on supply networks 19 Varga et al
  20. 20. (Ho, Au et al, 2003). ICT is also providing a substitute to some forms of travel, e.g. by enabling multi-media conferencing over IP (internet protocol). Social and economic benefits of air transport, including improved international cooperation and increased consumer choice are persistent drivers increasing demand. Yet other social changes, such as the growth in obesity due to energy dense food, motorised transport and sedentary lifestyles ( will impact the design of future aircraft, as will the use of modern materials such as composites and technologies such as fly-by-wire, for example, Boeing’s 787 and Airbus’s A320 respectively. Also, the location of developing skills and knowledge, particularly in great numbers in China and Russia will be a source of competition for the west. Terrorism acts such as 9/11 create incredible shocks to aircraft orders and if supply chains are unable to adapt, e.g. from commercial to defence production, then supply chains will not be able to compete or survive. The aerospace industry does not exist in isolation; the wider techno-economic environment also prevails. Three generations of globalization describe the economic progress towards our current environment. Described variously as ‘dominant logics of production/techno-economic paradigms (Tuomi, 2007) or Schumpeter’s waves (Schumpeter, 1942), based on Kondratiev’s macroeconomic cycles, we are now in the 3rd globalization or Schumpeter’s Vth wave, defined by broadband communications networks, global division of labour, internet-based business models and real-time virtual service. Continued miniaturization is enabling the end-customer to perceive an increasing value during flights with the accessibility of increased multi-media technologies. These eras or waves of new all-purpose technologies drive investment in the development of new infrastructure leading to new economic models through waves of creative destruction. Within the last 10 years as a consequence of globalization and proliferation of multi- national companies, strategic alliances, joint ventures and other forms of partnerships, have been found to contribute to the success of supply chains, just as Just-in-Time, Lean, An ecological perspective on supply networks 20 Varga et al
  21. 21. Agile and similar manufacturing practices (e.g. (Womack, 2002; Gunasekaran, 1998) have contributed positively to performance. The rise of the information age and greatly reduced information communication costs is changing coordination mechanisms among partners in the supply network (Coase, 1998), increasing collaborative work within teams on high capacity networks (Tapscott, 1996), enabling continuous information flow in an integrated supply network (Lambert and Cooper, 2000) and providing new opportunities for customers to connect to supplier and to reduce transaction costs and risks (Lewis and Talalayevsky, 2004). Supply chain integration of legally and spationally separated firms is shown as a vital tool for competitive advantage (Yusuf, Gunasekaran et al, 2004). However, the relationship between supply chain performance and integrated supply chains is not linear. In a study of dyadic relationships it was found that performance is not symmetrical upon the partners and indeed can be opposing, with one realising its objectives and the other not (Gulati, 1998). In summary, we have considered a number of environmental trends which appear to have an impact on supply network structure and behaviour, performance and on the environment and future demand. Propositions from an ecological perspective From a review of the literature above, a number of propositions are put forward. Each proposition is based on change to the current ecological position, thus it is defined as a trend and so underlies the path dependent nature of the ecological perspective. P1: Greater access to Low Cost Economies (LCEs) increases the geographical distribution of supply networks (S); increases coordination requirements (B) P2: Increasing broadband communications technology deployment increases the geographical distribution of supply networks (S); improves design and development collaboration and so increases the potential for innovation (B) An ecological perspective on supply networks 21 Varga et al
  22. 22. P3: Growth in customer volume demand increases the number of suppliers needed and/ or resources within existing suppliers (S); increases competition within the industry and so drives the need to innovate and improve production efficiency (B) P4: Increasing demand for agility from customers increases the need for easily formed (and disbanded) supply network structures (S); drives small-scale production plants (to avoid lock-in); increases requirements for coordination (B) P5: Growth in demand for whole-of-life aerospace service solutions increases consolidation/integration within the industry (S); increases cooperation and so the potential to innovate (K) P6: Increasing global warming and CO2 levels drives clustering of local/national organizations (S); drives product and process efficiency requirements and so the demand for technological innovation (B) P7: Increased terrorism activity increases industry consolidation and reduces numbers of suppliers (S) P8: Growth in technological product innovation drives the use of specialist/visionary suppliers in the supply network (S); reduces the scope of knowledge within the top tiers of the industry (K) P9: Growth in indigenous skills and knowledge drives the use of national aerospace services (S); decreases global collaboration (B) Research Approach A case study approach was taken. Eighteen open ended interviews were held with key individuals in commercial aerospace primes and first tier suppliers. Individual transcripts extending to 8,000 words were recorded. The approach allowed interviewees to express important aspects of the nature and management of supply chains without interviewer An ecological perspective on supply networks 22 Varga et al
  23. 23. prompting. Coding was carried out in Mind Manager, a mind-mapping software tool, and captured examples of the key words used in the propositions. Care was taken to record the supply network tier at which the interviewee worked to look for similarities and differences across tiers. The authors also used two further sources of primary data. First, were questionnaire results which evaluated the importance of supply network principles to 5 criteria for performance success. This novel approach, extended from organizational systematics (McKelvey, 1978) to consider the second order effects resulting from the adoption of multiple network principles, demonstrated how the anticipated performance outcomes of supply networks can be significantly different from reality. The full analysis of the questionnaire results are available (Allen, Varga, Strathern, Rose-Anderssen, Baldwin and Ridgway, 2008). Second, structured interviews were held in aerospace organizations in which significant changes were occurring. Details of these studies are also available (Varga, Allen, Strathern, Rose-Anderssen, Baldwin and Ridgway, 2008). The next section presents the results of this case study undertaken between 2005 and 2008. CASE STUDY AND DISCUSSION This section considers the environmental trends and propositions, developed from the literature above and matches them to the results of our empirical investigations. There are two categories of results: first, the results which affirm the propositions presented; second, novel results which appear to have significance for the ecology of the civil aerospace industry. Discussion takes place throughout using quotations from interviews. Where results appear to be different depending on the tier of the respondent this is identified. Results affirming the Propositions Across the civil aerospace supply network, there is evidence of reduced numbers of suppliers to organizations on a major scale down to around 20%, for example, Boeing had over 30,000 suppliers in 1999 reduced to over 6,000 in 2007; Rolls Royce had over 900 in 2002 targeting to less than 200. There is evidence of both industry consolidation An ecological perspective on supply networks 23 Varga et al
  24. 24. and more supply network tiers as a result. Organizations who want to move up the value chain appear to have reduced or eliminated their manufacturing plants, by either outsourcing to local organizations specializing in manufacturing or to low-cost economies. Where the outsourcing has been local, existing suppliers to the manufacturing operations have moved to the new manufacturer; these suppliers are usually held under review and growth in the manufacturing operations are being curtailed or outsourced over time as local manufacturers themselves seek to reduce costs. “In the 90s watching the Japanese companies, we recognised how important it was to understand the production system or the strength of your supply chain, and looking for ways to make it more efficient. And so we really started to talk about lean manufacturing and increasing all our awareness to the point now I think most people are pretty well grounded in.” Both Boeing and Airbus recognise the need to sub-contract whole systems and sections to improve quality and cost. 1st tier suppliers to the primes put the need for high levels of integration in the supply chain as a priority for cost efficiency. There is less evidence that the primes are as highly integrated with 1st tier. The outsourcing of competitive advantage in the creation of new products and systems is an important factor for primes. As product and service offerings have become more complex, networks have broadened. This broadening has driven the recognition that “there are really smart people and great resources in other parts of the world”. 1st tier supplier selection is motivated by expectations of increased quality and timeliness performance, and “We are more likely to do business with a supplier delivering an integrated set of values: design, integration of manufacturing, delivery and post delivery follow up. Suppliers that want to be world class are continuously reinventing themselves. And if you are going to have innovation you’ve got to have skills and training. Global relationships with 787 suppliers are risk- sharing partnerships in which they take on the design, certification and full integration for key elements of the aeroplane. These global relationships require a high-level of collaboration.” Boeing appear to invest more time with suppliers than Airbus. This appears to be driven by politics and government regulations, in particular, anti-trust and independence requirements which have constrained partnership development. An ecological perspective on supply networks 24 Varga et al
  25. 25. The desire for reduced cost is enabled by greater access to Low Cost Economies which increases the geographical distribution of supply networks but increases coordination requirements, confirming Proposition 1. Innovation comes through globalisation. “The 787 is an extraordinarily high technology aircraft. Boeing have stretched the boundaries of technology; offered a unique solution that have never been offered to the industry before. Sharing knowledge is perceived as an importance performance characteristic for product quality, technological innovation and supplier vision”. Within operational supply chains, the need to avoid interruption is driving the sharing of knowledge and learning together; “You want to reduce inventory but not to the point tipping the apple cart”. Primes have developed portals in their design and engineering system that enables them to work with suppliers, researchers and partners on a integrated basis, enabling high- speed data transfer of high-level digital information supporting virtual working on fairly complex environment of 3D CAD. Computing tools are incredibly powerful and driving significantly changing relationships with suppliers. “Suppliers need to be organized for efficiency of manufacturing but also for information and collaboration”. The availability and reach of broadband communications technology has enabled the geographical spread of supply networks, enabling design and development collaboration and so, the potential to innovate, confirming Proposition 2. Restructuring in the civil aerospace industry has been a consequence of a number of environmental factors. First, increased competition, for example, Airbus having 50% of the commercial aerospace market of airplanes with more than 80 seats, has fuelled innovation, for example, design of the Boeing 787, which has been possible because of technological advances in composite materials. These technological advances are contained by specialist suppliers who are spread globally, driving wide distribution of the An ecological perspective on supply networks 25 Varga et al
  26. 26. supply network. Second, terrorism activity in the early 21st century significantly reduced demand for civil aerospace travel. Increased competition within the industry and so drives the need to innovate and improve production efficiency, confirming Proposition 3. Environmental impacts have driven product and process efficiency requirements and so the demand for technological innovation, confirming Proposition 6. Terrorism caused industry consolidation and reduces numbers of suppliers, confirming Proposition 7. Understanding customer and passenger needs continues to be important to match products to demand. “Getting closer to customers, such as airlines, is important to understand how to make them more efficient so that passengers are happier.” Airlines want a high quality product and are not mindful of where parts are sourced. This means that there are opportunities to remain competitive. “Getting closer to airline customers is important in figuring out how to make the whole passenger experience more rewarding and how to make our products operate within the aerospace around the world”. Agility and responsiveness to customers is needed in order to meet global competition, choice and customisation. Being agile is not just concerned with the product but how easily you can adapt to change in your process. “The more flexible you are the more flexible you have, the more efficient and beneficial it is”. “Agility in be able to something completely different on the other hand can be very expensive because you don’t get the asset specificity.” Infrastructure or machine costs can be expensive and a supplier will not invest unless they have the confidence in the type and volumes of work. Customisation and shorter delivery requirements are causing new methods of agility to be devised requiring increases in coordination, confirming Proposition 4. The issue of coordinating behaviour and integrating across the supply network is perceived as the potential next wave of evolution in the supply network. “Coordination and integration is maybe one of the key characteristics that makes successful companies. Because as the aerospace supply chain gets broader, you get more people, more An ecological perspective on supply networks 26 Varga et al
  27. 27. companies involved. Our ability (or the) company’s ability to coordinate those activities that are happening around the world, integrated seamlessly is huge. So that is something that really makes it different. Yet 6 people in one room is pretty easy to coordinate…I think that may be the next wave of evolution. I think to some extent it goes hand in hand. To some extent it may follow the evolution of the supply chain. How do you do the coordination- or information-management? And how do you do that better than your competitor. How do you orchestrate, those actions, you know, get that weak point you are talking about on the platform?” The future of supply network organization as local clusters of firms is already being conceived. The Orchestrator will need to modules of the airplane built in a local environment. “All the supporting processes that are needed to do that are there. But you can connect, you can take a machine house, and that machine house can have a processing house, and you combine that with a bearing source, now you can take advantage of that in a country at low cost. Most of our suppliers operate at lower tiers won’t have the sophistication of operating and do that. The prime can have those capabilities.” A growth in demand for whole-of-life aerospace service solutions has increased the need for consolidation and integration within the supply network, permitting more innovative customer offerings, confirming Proposition 5. The number of aircraft produced each year has grown in response to pressure to produce more and as a consequence of manufacturing and production efficiencies. For the 777 there is one roll-out every 11 days. The goal for the 787 is 3 days. “The 737 has changed from static line to full moving line lean production; supplier relationships are increasingly important to maintain this type of production”. The long cycle time between product introductions, around 10 – 15 years, is difficult to shorten. It takes time to bring suppliers on board, both new ones and existing suppliers on other programmes. The supply network literature also found that once an organization An ecological perspective on supply networks 27 Varga et al
  28. 28. is locked into a supply network, it will stay in the supply network through the life-time of the product model. Supplier selection models are different at different levels of the supply chain. At the lower part of the supply chain at the commodity level it is much more competitive. Short relationships come under more evaluation. As a large partner, “When you choose that supplier you pretty much marry to him on that programme. So the supplier selection has evolved, and is almost all upfront. We essentially take into account market access. We take into account access to capital market, access to technology…” The creation of aircraft sub-systems appears to have been driven by the large and increasing numbers of components within the final aerospace products. Airframe primes have responded by reducing the numbers of 1st tier supplier; thus, landing sub-systems, flight sub-systems and so on have been created and strategic suppliers have taken on the management of previously first tier suppliers. Whilst not fully decomposable (Simon, 2002), coordination within the supply network has been reduced and we see this activity reflecting the nature of the supply network as a complex adaptive system. Technological product innovation has motivated the emergence of specialist/visionary suppliers which has moved the loci of knowledge away from the top tiers of the industry, confirming Proposition 8. Technological innovation leadership is especially relevant to new products. The selection of partners is based on specialist capability and skills; these also help to meet environmental efficiency demands. There are costs to mitigate environmental effects and/or search for new solutions with good environmental performance of products and supply chain. Global capabilities and specialisms have become accessible and are growing in BRIC (Brazil, Russia, India and China) countries. Functional complementarity of network partners can be achieved in which specialist skills and capabilities are provided by relevant network members (Parkhe 1991). An ecological perspective on supply networks 28 Varga et al
  29. 29. A growth in indigenous skills and knowledge has reduced demand from current primes and accelerated the requirement for innovation and product efficiency, confirming Proposition 9. Novel results A major change over the last 30 years is the reduction in vertical integration. “We used to be our own supplier in a lot of ways. Primes owned many more manufacturing facilities then and do much less manufacturing now. Nowadays, primes prefer their suppliers to have other customers to help spread the long term involvement in business risk. R1: Increased business risk increases the numbers of customers sought by an organization (S) Airplane ownership has changed from airline operators to finance/leasing companies. “The supply network for MRO has changed similarly, for example, for the 747 the airlines owned all maintenance and repair operations themselves. The majority of planes are now owned by leasing companies, so subcontracting and the sub elements of support and continual service arrangements have changed.” R2: Organizations are becoming functional specialists and increasingly buy services which are not their core competences (S) Innovation in existing product models is very limited. “The manufacturing of a particular airplane stays pretty static. This is a result of the certification and approval problem. It is much easier to take new technology, get in on a new airplane model than to retrofit new technologies back on to an existing model. So suppliers have to get new technologies on a new airplane.” But new airplane products are not frequent and technological innovations occur very frequently. The process of new product development is different from building a different model of a product in a sustaining An ecological perspective on supply networks 29 Varga et al
  30. 30. mode. When new models are introduced at the same time as a new product it puts a dual requirement on the supply base. R3: The concurrent introduction of a new product model and the creation of a new model of an existing product increases the supply network strain (S) Relationships in BRIC countries were started many years ago knowing that they would have substantial growth in the business in the future. Primes started working with closely with the industry, for example, software engineers, developing skills because Boeing knew that when commercial aircraft were introduced into a commercial market those airlines would need engineers to help them maintain those airplanes. Global relationships and strategic partnerships was the model for these countries, including Japan. R4: Increasing local skills and capacity for operations and maintenance improves the global distribution of product models. The average age of the aerospace engineer is in the 50s. This is a big issue for the industry. New recruits are not attracted in sufficient numbers and resources need to be sourced globally. R5: Decreasing numbers of aerospace engineers in US/UK will reduce engineering knowledge in these nations and increase dependence on global specialists and resources. Supporting the learning and development in ‘low cost economies’ takes resources and commitment. “So for instance with the Chinese we had to teach them a lot about quality. But with the Russians we are teaching about schedules. Depending on which part of the world you have got into or what maturity of the supplier you are dealing with depends on how much you have to teach them to be able to be an important supplier… Some of that is a long time commitment. It takes a lot of resources and energy.” An ecological perspective on supply networks 30 Varga et al
  31. 31. R6: Investment in low-cost-economy supplier development is long term, country- specific and demands resources and energy; decreases over time and improves knowledge of both the supplier and the prime Conclusions By examining supply networks from an ecological perspective we provide a description which is grounded in environmental context, path-dependency and coevolutionary processes. An ecological perspective aims to not only establish the evolution of a system within a specific context and historical background (space and time, respectively) but aspires to foster an understanding of the interactions between the system and their environment. The abundance of specific types of system reflects the structures and behaviours which persist within an environmental context, i.e. those which are currently sustained. The structures and behaviours of inter-organizational networks connect physical, information and people components in the process of managing the life cycle of the product. The performance of specific structures and behaviours is context dependent and the context will favour specific structures and behaviours. Inter-organizational networks can influence the context, that is, the environment, just as the context influences the networks. We have demonstrated this in the propositions put forward in the civil aerospace case study. Evaluation of networks as complex adaptive systems which emerge, change and innovate, not only reflects a real-world dynamical view of changing components, structure and behaviour, but more importantly an evolutionary view. This evolutionary view seeks to explain how novelty occurs within the complex adaptive system, drawing upon the diversity within the system and upon the structures and behaviours which act as building blocks for the whole network. The case study has demonstrated the evolutionary path of civil aerospace structures and suggests that these structures may evolve such at sub-systems are created locally, materials are sourced locally and only the final assembly of the product brings these together. This potential new structure responds to feedback from the environment for a reduced footprint in the manufacture of the airplane, and to the specialisms, skills and resources available to local clusters of firms. The new An ecological perspective on supply networks 31 Varga et al
  32. 32. structure reflects an underlying structural attractor perhaps driven by the availability and ecological goodness of local organizations. We can also say that the performance of such a new structure will not be predictable. If it grows in abundance it will replace existing structures in a process of creative destruction, replacing less well performing structures. Whilst shedding some light on structure, performance and emergence in aerospace supply networks, we modestly accept that we live in an “ecology of ignorance” (Luhmann, 1998) creating complexity in trying to deal with complexity and new ignorance in trying to know (Medd, 2001). We conclude with suggestions for further research. Environmental factors which have a coevolutionary influence on the civil aerospace industry will not remain static and in any case new environmental factors will inevitably arise in the future. There may be specific gaps our research has not uncovered. In contrast, the planned methods of structuring and behaviours devised by organizational network members, will also seek to change the network performance. There may be as yet unknown forms of structuring and behaviour which if permitted by national legislation and regulation may positively influence network performance and the ecology. Further, we are interested in similarities and differences between the civil aerospace supply network and the defence aerospace supply network. Many of the organizations who belong to the civil aerospace supply network also have customers from and products used in the defence industry. What environmental influences are relevant for the defence industry and how is the defence aerospace supply network structured? Following our previous research of organizational forms in the automotive manufacturing industry (Rose-Anderssen et al, 2008), there is potential to compare this with network forms in the civil aerospace industry. There may be interesting parallels, lessons for large product manufacturing generally and also a contribution to product service systems which have a manufacturing component. Our own further research will extend our notions of complex economic systems by further modelling of coevolutionary factors within a dynamic ecology which is continually being shaped and is shaping our futures. An ecological perspective on supply networks 32 Varga et al
  33. 33. Miles and Snow (2007) identify a research gap for new models of inter-firm organization and collaboration which can exploit knowledge. As a complex adaptive system, we need to be aware of the limits of knowledge (Allen, 2001b) and predictability within the supply network. Knowledge within the ecological perspective is co-evolutionary, stochastic and becoming; it is difficult to measure, based in value judgments thus subjective, and certainly not neo-classical, mechanical nor predictive. Acknowledgements This work was supported by the ESRC grant RES-000-23-0845 “Modelling the Evolution of the Aerospace Supply Chain” 2005-2008 with Sheffield University. References Allen, P.M. (2001b), 'What Is Complexity Aerospace Innovation and Growth Team (2003), Science? Knowledge of the Limits to Knowledge An Independent Report on the Future of the UK ', Emergence, Vol. 3, No. 1, pp. 24-42. Aerospace Industry, DTI, Arthur, W.B. (1994), Increasing Returns and Akkermans, H. (2001), 'Emergent Supply Path Dependence in the Economy, University of Networks: System Dynamics Simulation of Michigan Press, Ann Arbor. Adaptive Supply Agents', in Proceedings of the 34th Hawaii International Conference on System Barabasi, A.-L. (2002), Linked: The New Sciences Hawii, Science of Networks (1st edition), Perseus Books Group, New York. Aldrich, H. (1999), Organizations Evolving, Sage, England. Barney, J.B. (1991), 'Firm Resources and Sustained Competitive Advantage', Journal of Aldrich, H. and Pfeffer, J. (1976), 'Environments Management, Vol. 17, No. 1, pp. 99-120. of Organizations', Annual Review Sociology, Vol. 2, pp. 79-105. Baum, J.A.C. and Singh, J.V. (eds) (1994), Evolutionary Dynamics of Organizations , Allen, P., Varga, L., Strathern, M., Rose- Oxford University Press Inc, USA. Anderssen, C., Baldwin, J. and Ridgway, K. (2008), 'Complexity, Evolution and Bechtel, C. and Jayaram, J. (1997), 'Supply Organizational Science', in Embracing Chain Management: A Strategic Perspective', Complexity: Advancing Ecological International Journal of Logistics Management, Understanding in Organization Studies Pissouri, Vol. 8, No. 1, pp. 15-34. Cyprus, Beerkens, H.J.J.G. (2004), Global Opportunities Allen, P.M. (1988), 'Evolution, Innovation and And Institutional Embeddedness: Higher Economics', in Dosi, G., Freeman, C., Nelson, Education Consortia in Europe and Southeast C., Silverberg, G. and Soete, L.Technical Asia (unpublished Doctorate thesis), University of Change and Economic Theory, Pinter, London, Twente, the Netherlands. pp. 95-119. An ecological perspective on supply networks 33 Varga et al
  34. 34. Bowersox, D.J. (1996), Logistical Management: Croom, S.R., Romano, P. and Giannakis, M. The Integrated Supply Chain Process, McGraw- (2000), 'Supply Chain Management: An Hill, Singapore. Analytical Framework for Critical Literature Review', European Journal of Purchasing and Brown, S., Lamming, R., Bessant, J. and Jones, Supply Management, Vol. 6, No. 1, pp. 67-83. P. (2005), Strategic Operations Management (2nd edition), Butterworth-Heinemann Ltd, Daft, R.L. and Weick, K.E. (1984), 'Toward a Oxford. Model of Organizations As Interpretation Systems', Academy of Management Review, Vol. Capra, F. (1996), The Web of Life: A New 9, No. 2, pp. 284-295. Scientific Understanding of Living Systems, Anchor Books, New York, NY. Davis, T. (1993), 'Effective Supply Chain Management', Sloan Management Review, Vol. Castells, M. (1996), The Rise of the Network 34, No. 4, pp. 35-46. Society, Blackwell Publishers, Oxford. Deshpandé, R., Farley, J.U. and Webster Jr, F.E. Chapman, R.L., Soosay, C. and Kandampully, J. (1993), 'Corporate Culture, Customer Orientation (2002), 'Innovation in Logistics Services and the and Innovativeness', Journal of Marketing, Vol. New Business Model: A Conceptual 57, No. 1, Jan, pp. 23-37. Framework', Managing Service Quality, Vol. 12, No. 6, pp. 358-371. DTI Aerospace and Defence Directorate (2003), Aerospace and Defence Technology Report Child, J. (1972), 'Organizational Structure, 2002/3, DTI, Environment and Performance: The Role of Strategic Choice ', Sociology, Vol. 6, No. 1, pp. Ellram, L.M. and Cooper, M.C. (1990), 'Supply 1-22. Chain Management, Partnerships, and the Shipper-Third Party Relationship', The Christopher, M. (1992), Logistics and Supply International Journal of Logistics Management, Chain Management, Pitman Publishing, London Vol. 1, No. 2, pp. 1-10. Christopher , M. (2005), Logistics and Supply Ellram, L.M. and Cooper, M.C. (1993), 'The Chain Management: Creating Value-Adding Relationship Between Supply Chain Networks (3rd edition), Pearson Education Ltd, Management and Keiretsu', The International Dorchester, England. Journal of Logistics Management, Vol. 4, No. 1, pp. 1-12. Coase, R. (1998), 'The New Institutional Economics', American Economic Review Papers Fuller, T. and Warren, L. (2006), and Proceedings, Vol. 88, No. 2, pp. 72-74. 'Entrepreneurship As Foresight: A Complex Social Network Perspective on Organisational Cohen, M.A. and Agrawal, N. (1999), 'An Foresight', Futures, Vol. 38, pp. 956-971. Analytical Comparison of Long and Short Term Contracts', IIE Transactions, Vol. 31, No. 8, pp. Galaskiewicz, J. and Zaheer, A. (1999), 783-96. 'Networks of Competitive Advantage', in Andrews, S. and Knoke, D.Research in the Cooper, M.C., Lambert, D. and Pagh, J.D. Sociology of Organizations, JAI Press, Stamford, (1997), 'Supply Chain Management More Than a CT, pp. 237-261. New Name for Logistics', The International Journal of Logistics Management, Vol. 8, No. 1, Garnsey, E. and McGlade, J. (Eds) (2006), pp. 1-13. Complexity and Co-Evolution, Edward Elgar Publishing, Cheltenham, UK. Cooper, M.C. and Ellram, L.M. (1993), 'Characteristics of Supply Chain Management Giannakis, M., Croom, S. and Slack, N. (2004), and the Implications for Purchasing and 'Supply Chain Paradigms', in New, S. and Logistics Strategy', The International Journal of Westbrook, R. (eds), Understanding Supply Logistics Management, Vol. 4, No. 2, pp. 13-24. Chains, Oxford University Press Inc, New York, An ecological perspective on supply networks 34 Varga et al
  35. 35. pp. 1-21. Kauffman, S.A. (1993), The Origins of Order, Oxford Univesity Press, New York. Goold, A. and Campbell, A. (2002), 'Do You Have a Well-Designed Organization?', Harvard Kärkkäinen, M., Holmström, J., Främling, K. Business Review, Mar 1, and Artto, K. (2003), 'Intelligent Products - a Step Towards a More Effective Project Delivery Gulati, R. and Gargiulo, M. (1999), 'Where Do Chain', Computers in Industry, Vol. 50, No. 2, Interorganizational Networks Come From?', Jan, American Journal of Sociology, Vol. 104, pp. 1439-1493. Lambert, D. and Cooper, M. (2000), 'Issues in Supply Chain Management', Industrial Gulati, R. (1998), 'Alliances and Networks', Marketing Management, Vol. 29, No. 1, pp. Strategic Management Journal, Vol. 19, No. 4, 65-83. pp. 293-317. Lambert, D.M., Cooper, M.C. and Pagh, J.D. Gulati, R., Nohria, N. and Zaheer, A. (2000), (1998), 'Supply Chain Management: 'Strategic Networks', Strategic Management Implementation Issues and Research Journal, Vol. 21, No. 3, Mar, pp. 203-215. Opportunities', International Journal of Logistics Management, Vol. 9, No. 2, pp. 1-16. Gunasekaran, A. (1998), 'Agile Manufacturing: Enablers and an Implementation Framework', Larson, P.D. and Rogers, D.S. (1998), 'Supply International Journal of Production Research, Chain Management: Definition, Growth and Vol. 36, No. 5, pp. 1223-1247. Approaches', Journal of Marketing Theory and Practice, Vol. 6, No. 4, pp. 1-5. Hannan, M.T. and Freeman, J. (1977), 'The Population Ecology of Organizations', American Lewis, I. and Talalayevsky, A. (2004), Journal of Sociology, Vol. 82, pp. 929-964. 'Improving the Interorganizational Supply Chain Through Optimization of Information Flows ', Harland, C.M. (1996), 'Supply Chain The Journal of Enterprise Information Management Relationships, Chains and Management, Vol. 17, No. 3, pp. 229-237. Networks', British Journal of Management, Vol. 7, No. Special Issue, pp. S63-80. Luhmann, N. (1998), Observations on Modernity, Stanford University Press., Stanford, Hewitt, F. (2000), 'Demand Satisfaction CA. Communities: New Operational Relationships in the Information Age', International Journal of Lummus, R. and Vokurka, R. (1999), 'Defining Logistics Management, Vol. 11, No. 2, pp. 9-20. Supply Chain Management: A Historical Perspective and Practical Guidelines', Industrial Hines, P., Lamming, R.C., Jones, D., Cousins, P. Management & Data Systems, Vol. 99, No. 1, and Rich, N. (2000), Value Stream Management, January , Strategy and Excellence in the Supply Chain, Prentice Hall, New York. Ma, M. (2006), The Evolution of Supply Chain Management (unpublished MSc thesis), Ho, D.C.K., Au, K.F. and Newton, E. (2003), Cranfield, Bedford. 'The Process and Consequences of Supply Side Virtualization', Industrial Management + Data Madhavan, R., Koka, B.R. and Prescott, J.E. Systems, Vol. 103, No. 5/6, pp. 423-433. (1998), 'Networks in Transition: How Industry Events (Re) Shape Interfirm Relationships', Holland, J. (1998), Emergence: From Chaos to Strategic Management Journal, Vol. 19, No. 5, Order, Perseus Books, Cambridge, MA. May, pp. 439-459. Jarillo, C.J. (1993), Strategic Networks: McKelvey, B. (1978), 'Organizational Creating Borderless Organization, Butterworth Systematics: Taxonomic Lessons From Biology', & Heinemann, Oxford. Management Science, Vol. 24, No. 13, Sep, pp. 1428-1440. An ecological perspective on supply networks 35 Varga et al
  36. 36. Medd, W. (2001), 'What Is Complexity Science? Prahalad, C.K. and Hamel, G. (1990), 'The Core Toward an "Ecology of Ignorance"', Emergence , Competence of the Corporation', Harvard Vol. 3, No. 1, pp. 43-60. Business Review, May-June, Mentzer, J.T., DeWitt, W., Keebler, J.S., Min, Ramos-Martin, J. (2003), ‘Empiricism in S., Nix, N.W.S.C.D. and Zach, Z. (2001), Ecological Economics: A Perspective From 'Defining Supply Chain Management', Journal Complex Systems Theory’, Ecological of Business Logistics, Vol. 22, No. 3, pp. 1-26. Economics, Vol 46, pp. 387-398. Miles, R.E. and Snow, C.C. (2007), Ring, P.S. and Van de Van, A.H. (1994), 'Organizational Theory and Supply Chain 'Development Process of Co-Operative Management: An Evolving Research Interorganizational Relationships', Academy of Perspective', Journal of Operations Management Review, Vol. 19, No. 1, pp. Management, Vol. 25, No. 2, March, pp. 90-118. 459-463. Rose-Anderssen, Chris, Baldwin, James S, Mills, J.F., Schmitz, J. and Frizelle, G.D.M. Ridgway, Keith, Allen, Peter M, Varga, Liz, and (2004), 'A Strategic Review of Supply Strathern, Mark (2008) under review, ‘A Networks', International Journal of Operations Classification of Commercial Aerospace Supply and Production Management, Vol. 24, No. 10, Chain Evolution’, Journal of pp. 1012-1036. ManufacturingTechnology Management Mintzberg, H. (1979), The Structuring of Organizations, Prentice-Hall, Englewood Cliffs, Schumpeter, J.A. (1942), Capitalism, Socialism N.J. and Democracy, Routledge, New York . Mouritsen, J., Skjott-Larsen, T. and Kotzab, H. Simon, H.A. (2002), 'Near Decomposability and (2003), 'Exploring the Contours of Supply Chain the Speed of Evolution', Industrial and Management', Integrated Manufacturing Corporate Change, Vol. 11, No. 3, June, pp. Systems, Vol. 14, No. 8, pp. 686-695. 587-599. Mulford, C.L. and Rogers, D.L. (1982), Snow, C.C. and Miles, R.E. (1992), 'Managing 'Definition and Models', in Rogers, D.L. and 21st Century Networks', Organizational Whetten, D.A. (Eds), Interorganizational Dynamics, Winter, Coordination; Theory, Research and Implementation, Iowa State University Press, Sydow, J. and Windeler, A. (1998), 'Organizing Aimes, and Evaluating Interfirm Networks: A Structurationist Perspective on Network Murmann, J.P. (2003), Knowledge and Processes and Effectiveness', Organization Competitive Advantage: The Coevolution of Science, Vol. 9, No. 3, May-Jun, pp. 265-284. Firms, Technology and National Institutions, Cambridge University Press, Cambridge, UK. Tapscott, D. (1996), The Digital Economy, McGraw Hill, New York. Nassimbeni, G. (2004), ' Supply Chains: A Network Perspective', in New, S. and Tuomi, I. (2007), 'Learning in the Age of Westbrook, R. (eds), Understanding Supply Networked Intelligence', European Journal of Chains, Oxford University Press Inc, New York, Education, Vol. 42, No. 2, Jun, pp. 235-254. pp. 43-68. Varga, L., Allen, P., Strathern, M., Rose- NECSI (2007). Coevolution relationships. http:// Anderssen, C., Baldwin, J. and Ridgway, K. . (2008), 'Structural Change in Strategic Networks', Organization Studies, Powell, W.W. (1990), Neither Markets nor Hierarchy: Network Forms of Organization, Vickery, S.K., Jayaram, J., Droge, C. and Kluwer Academic Publishers, USA. Calantone, R. (2003), 'The Effects of an An ecological perspective on supply networks 36 Varga et al
  37. 37. Integrative Supply Chain Strategy on Customer Service and Financial Performance: an Analysis of Direct Versus Indirect Relationships', Journal of Operations Management, Vol. 21, No. 5, Dec, pp. 523–539. Womack, J.P. (2002), 'Lean Thinking: Where Have We Been and Where Are We Going?', Forming and Fabricating, Vol. 9, No. 9, Sep, pp. L2-L6. Womack. James P. and Jones, D. (1990), The Machine That Changed The World, Macmillan Publishing Company, New York, NY. Yusuf, Y.Y., Gunasekaran, A., Adeleye, E.O. and Sivayoganathan, K. (2004), 'Agile Supply Chain Capabilities: Determinants of Competitive Objectives', European Journal of Operational Research, Vol. 159, pp. 379-392. An ecological perspective on supply networks 37 Varga et al