An evolutionary approach for supply chain management

This paper aims to provide a simple pragmatic approach for supply chain management, departing from the current mainstream chase on supply chain integration. We first summarise two dominant but opposite approaches, the decentralised traditional approach and the centralised supply chain management approach, each of which has its distinct strengths and obvious weaknesses. To take advantage of their strengths and overcome their weaknesses, an evolutionary approach is laid out by applying key insights of the theory of evolution - self-interest, adaptation, and natural cooperation, and of supply chain management - demand and supply evolution. We propose an evolutionary approach that integrates four rudimentary advantages: the organisation fulfils its own interest, the organisation is better adapted to its local environment, natural cooperation is built on direct reciprocity, and demand and supply evolution provides a differential preservation of interrelations between suppliers and buyers. A two-stage newsvendor game illustrates its practical implication, which confirms the evolutionary approach is a legitimate alternative to the current systems integration approach for supply chain management.