Effects of Trust Mechanisms on Supply Chain Performance Using Multi-agent Simulation and Analysis

In this study, we seek to understand the effect of trust on supply chain performance under different market environments. We project design of the trust mechanisms suitable for network enabled organizations to evaluate partners’ trustworthiness as suppliers. Increasingly sophisticated agent technologies in the future will have capabilities to execute such supply chain negotiation based on the developed trust mechanisms. In this research, we use the multi-agent simulation system, Swarm, for simulating trust mechanisms and analyzing the supply chain performance in four different market environments. Supply chain performance is evaluated by comparing the order fulfillment process of a mold industry both with and without trust mechanisms. Sensitivity analysis is used for examining the properties of the proposed trust mechanisms. From the experimental results, we found that the trust mechanism reduced the average cycle time rate and raised the in-time order fulfillment rate at the expense of the unit cost of materials. The raised costs are controlled within acceptable range as the premium paying for better quality and shorter cycle time. Higher trustor's propensity to trust results in higher in-time order fulfillment rate. Understanding the effects of trust mechanisms on supply chain performance can help management rationalize the development of software agents for supply chain management.