Playing with DISASTER: A Blockchain-enabled Supply Chain Simulation Platform for Studying Shortages and the Competition for Scarce Resources
In: Lee, H., Ernst, R., Huchzermeier, A., & Cui, S. (Eds.): Creating Values with Operations & Analytics, Springer Series in Supply Chain Management, Forthcoming
25 Pages Posted: 28 Mar 2022
Date Written: February 26, 2022
This chapter explores the potential of distributed ledger technology (DLT) in addressing supply chain shortages and competition for scarce resources. Specifically, we assess the effect of strategic information sharing on supply chain efficiency and the creation of virtual markets to improve supply chain performance. To facilitate this research, we designed a simulation platform called DISASTER (DLT In Sourcing and Strategic Trading Experimental Research), which hosts web-based, dynamic, and customizable supply chain simulations that leverage concepts of blockchain technology, and permit capturing of information regarding players’ ordering strategies and behavioral traits.
In this chapter we describe the DISASTER platform and discuss two selected DISASTER simulations that probe supply chain retailers’ order behavior: the first investigates the role of information sharing among competing retailers; the second allows for the trading of tokens among competing retailers. In the first simulation, we find that decision makers act more strategically and closer to Nash equilibrium predictions as more information about historical orders of competitors is shared; however, the observed outcome is not invariably an improvement in efficiency as measured by profits across participants. In the second simulation, we observe that initial order quantities remain unchanged as compared to the baseline (non-trading) scenario, despite the possibility to trade on virtual markets; however, over time, more equitable distribution of inventory is achieved, and the supply chain efficiency as measured by profits increases.
Our findings highlight the value of empirical research and management games in shedding light on the role of decision makers’ behavioral characteristics and investigating real-life supply chain challenges and the potential of adopting blockchain-specific capabilities in that space.
Keywords: supply chain shortages, blockchain technology, information sharing, virtual markets, behavioral operations management
JEL Classification: L00, M00, D2, F1
Suggested Citation: Suggested Citation