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A formation Model for supply Networks: a Fundament for Investigations of Complex supply Networks

Companies today are sourcing products from complex networks. Managing and overseeing these networks is challenging and requires methods including network theoretical considerations. Developing these methods demands an underlying model that describes the supply network structure and structural data, ideally representative samples. However, large-scale data of real supply network structures is rare, which restricts research in this field. This paper presents a formation model that generates supply networks from a focal company’s perspective. By conducting this formation process, exemplary networks are derived and compared to the structural patterns revealed by rare studies investigating real supply networks. The generated networks close the gap of non-available empirical data of large-scale supply networks. The formation is based upon a widely accepted concept of supplier selection. Necessary input parameters are a structured bill of materials. Further details, like the number of competitors, are modelled using a probability distribution. This approach makes it possible for further research to investigate more advanced methods for supporting the management of supply processes. Additionally, using this framework for generating large-scale supply networks makes it possible to acquire a more detailed insight into supply network structure.