Why Slowing Down Your Response Can Actually Stabilize Complex Systems
Systems and Delays
I explored Donella Meadows' Thinking in Systems while on vacation, focusing on how delays impact inventory management. Using a car dealership simulation, I discovered that minimizing response delays often causes dangerous oscillations. Counterintuitively, introducing a longer response delay helped the system stabilize, proving that intuition about speed can be misleading in complex feedback loops.
Many managers and leaders take the lever that the researchers provide, and crank it full speed, wrong direction.
- dognotdog
In terms of control theory, the order "delay" is actually a simple filter. What leads to bad outcomes is exactly the described scenario, when the control response too fast for the system, overcorrecting and oscillating. Increasing the order filtering dampens the control response.
- aryehof
It strikes me that a problem with this analysis is with the modeled example system itself. The assumption that stock should follow immediately preceding demand is valid but typically wrong.
Pursuing the intellectual mechanics of a system is obscuring the error of the wrong system!
Instead stock levels should take into account lead time, historical seasonal demand, and a subjective value. The observation and order frequency should be in months not days.
While computing allows near “real time” everything, that doesn’t mean it should necessarily be applied.
Just-in-time thinking needs to take the reality of the system (in this case the supply chain) and other factors like hedging opportunities?
- milanhbs
For people interested in the related math, "Nonlinear Dynamics and Chaos" by Steven Strogatz is a great book! Pdfs abound online.