Abstract
As a new management mode, great attention has been paid to virtual enterprise (VE). While there is much research material on risk management of VE, a relationship perspective on owner and partner performance assessment and management can bring an added dimension. The coordination of risk management in fashion and textiles (FTs) supply chain organized as a VE is studied in this paper. The aim of this study is to find proper decision mechanisms that can improve the overall performance of risk management for the whole VE as well as each member. For the risk management problem in VE, a centralized mechanism is given as the base case, and then a distributed decision-making (DDM) mechanism with incentive scheme is introduced to establish a practicable strategic partnership. Under the DDM mechanism, a relationship performance definition that incorporates the financial dimension is investigated. For the two resulting optimization problems, a particle swarm optimization (PSO) algorithm is designed. In the numerical examples, the study shows that the DDM mechanism with incentive scheme can improve the overall benefit of risk management beyond the centralized one. Additionally, sensitivity analysis is conducted with respect to the bonus parameter, and suggestions are made for further research.
Highlights
In the past decade, fashion and textiles (FTs) industry become one of the most rapidly developed industries
The aim of this study is to find proper decision mechanisms that can improve the overall performance of risk management for the whole Virtual enterprise (VE) as well as each member
The strategic partnerships among the members in an FTs supply chain, which is organized as a VE, are essential for improving the performance and responsiveness of the VE
Summary
Fashion and textiles (FTs) industry become one of the most rapidly developed industries. Virtual enterprise (VE) is becoming the important organized pattern of FTs supply chain. VE is defined as an organization that brings complementary individuals and interest groups together in an association in order to meet short-term objectives and exploit fast changing market trends. The virtual nature of this kind of organization results from the fact that these enterprises do not really have any actual physical existence but exist through the pooling of resources belonging to each of the partners. As a VE is a complex system temporarily composed of many stand-alone enterprises due to market opportunities, many factors, such as changing of price and demand, insufficient knowledge sharing, lack of cooperation among members, and weaknesses in resources, can cause risks [2]. Risk management is the key problem to overcome in a VE to ensure success
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