The incentives for supply chain collaboration to improve material efficiency in the use of steel: An analysis using input output techniques

In the face of increasing demand and limited emission reduction opportunities, the steel industry will have to look beyond its process emissions to bear its share of emission reduction targets. One option is to improve material efficiency - reducing the amount of metal required to meet services. In this context, the purpose of this paper is to explore why opportunities to improve material efficiency through upstream measures such as yield improvement and lightweighting might remain underexploited by industry. Established input-output techniques are applied to the GTAP 7 multi-regional input-output model to quantify the incentives for companies in key steel-using sectors (such as property developers and automotive companies) to seek opportunities to improve material efficiency in their upstream supply chains under different short-run carbon price scenarios. Because of the underlying assumptions, the incentives are interpreted as overestimates. The principal result of the paper is that these generous estimates of the incentives for material efficiency caused by a carbon price are offset by the disincentives to material efficiency caused by labour taxes. Reliance on a carbon price alone to deliver material efficiency would therefore be misguided and additional policy interventions to support material efficiency should be considered. © 2013 Elsevier B.V.

The design of an agent for modelling supply chain network dynamics

A useful insight into managerial decision making can be found from simulation of business systems, but existing work on simulation of supply chain behaviour has largely considered non-competitive chains. Where competitive agents have been examined, they have generally had a simple structure and been used for fundamental examination of stability and equilibria rather than providing practical guidance to managers. In this paper, a new agent for the study of competitive supply chain network dynamics is proposed. The novel features of the agent include the ability to select between competing vendors, distribute orders preferentially among many customers, manage production and inventory, and determine price based on competitive behaviour. The structure of the agent is related to existing business models and sufficient details are provided to allow implementation. The agent is tested to demonstrate that it recreates the main results of the existing modelling and management literature on supply chain dynamics. A brief exploration of competitive dynamics is given to confirm that the proposed agent can respond to competition. The results demonstrate that overall profitability for a supply chain network is maximised when businesses operate collectively. It is possible for an individual business to achieve higher profits by adopting a more competitive stance, but the consequence of this is that the overall profitability of the network is reduced. The agent will be of use for a broad range of studies on the long-run effect of management decisions on their network of suppliers and customers.