Entropy can only remain constant or increase over time – according to the second law of thermodynamics. Similarly, the laws of physics govern businesses too. This means when you try to reduce complexity within your own company, you will certainly end up increasing complexity for someone else if not for yourself. It is important to pay close attention to where complexity is going, particularly supply chain complexity.

1. - Dr. Martin Lockstrom
The Complexity Paradox
INSIGHTS

2. © 2013 Infosys Limited, Bangalore, India. All Rights Reserved. Infosys believes the information in this document is accurate as of its publication date; such information is subject to change without notice.
Infosys acknowledges the proprietary rights of other companies to the trademarks, product names and such other intellectual property rights mentioned in this document. Except as expressly permitted,
neither this documentation nor any part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, printing, photocopying, recording or
otherwise, without the prior permission of Infosys Limited and/ or any named intellectual property rights holders under this document.
About Infosys
Infosys is a global leader in consulting, technology and outsourcing solutions. As a proven partner
focused on building tomorrow’s enterprise, Infosys enables clients in more than 30 countries to
outperform the competition and stay ahead of the innovation curve. Ranked in the top tier of Forbes’
100 most innovative companies, Infosys – with $7.4B in annual revenues and 155,000+ employees –
provides enterprises with strategic insights on what lies ahead. We help enterprises transform and
thrive in a changing world through strategic consulting, operational leadership and the co-creation
of breakthrough solutions, including those in mobility, sustainability, big data and cloud computing.
Visit www.infosys.com to see how Infosys (NYSE: INFY) is Building Tomorrow’s Enterprise® today.
For more information, contact askus@infosys.com www.infosys.com
Author Profile
Dr. Martin Lockstrom
Principal Consultant, Building Tomorrow’s
Enterprise, Infosys Labs
Martin is a specialist in Supply Chain and
Operations Strategy, Outsourcing/Offshoring
and International Management. During a
six-year stint in China, he established the
research and education activities at the SCM,
Sustainability and Automotive academic centers
at China Europe International Business School,
Shanghai.
He established the first endowed chair
for Purchasing and SCM in China at Tongji
University, Shanghai, and was also responsible
for setting up Supply Chain Management
Institute China, an international network of SCM
research and education hubs.
Martin co-founded Procuris Solutions, an IT
company specializing in SCM-related solutions,
offering consulting services to companies like
Accenture, Ariba, BMW, Clariant, Dell, Dow,
Ernst & Young and Intel, among others.
He has a Ph.D. in Supply Chain Management
from European Business School, Germany, a
bachelor’s and master’s degree in Industrial
Engineering and Management, from Chalmers
University of Technology, Sweden. He speaks
Swedish, English, German and Chinese, has
published over 50 articles and papers and
presented at more than 60 conferences.
There’s an inherent paradox in business
complexity: You’ll never be able to reduce
or eliminate it from an overall perspective.
Why? Read on.
Complexity is a phenomenon, which is
closely related to the concept of entropy
in physics. According to the second law
of thermodynamics, it can only remain
constant or increase over time. Since the
laws of physics govern businesses too,
this essentially means that when you try
to reduce complexity within your own
company, it’s a certainty that you will
increase complexity for someone else if
not for yourself. It’s the same as when you
clean your house. The dust and garbage
don’t disappear altogether, but instead end
up somewhere else – on the street or the
local landfill.
Hence, when reducing complexity, one
has to pay close attention to where the
complexity is going. As we all know,
a supply chain can never be stronger
than its weakest link, so you definitely
don’t want complexity to end up at
your suppliers or distributors as this
will eventually backfire. Take the classic
example of companies that try to
improve their working capital situation
by extending account payable terms
with suppliers, which in turn worsens the
working capital structure of the latter,
which they compensate by raising prices.
To sum up, this means that entropy
cannot be eliminated, but should ideally
be passed on to someone else of less
importance, such as one’s competitors,
if possible!