Abstract
Traditionally, the members of a supply chain compete to reduce their individual costs. However, as collaborative supply chain approach is urged within industries to reduce the overall costs, either full cooperation or partial coopetition is considered by the members. In cooperative approach, members benefit from lower overall costs and lower cost variations. But individually, some seem better off in a competitive approach in a single period considering their local costs. Coopetition, or partial cooperation, may be suggested as a compromise to lower overall supply chain costs, while members choose alliances towards lower average costs and cost variations.A multi-stage, multi-member, multi-product and single period supply chain model is considered with deterministic demand, capacity and cost. Product prices are assumed to be constant. The objective is to minimize total production and distribution costs of the overall chain. Four distinct cases are considered, modeled, simulated and compared. These cases are complete competition, integrated cooperation, two-stage supply chain partition, and partial coopetition. Quantitative conclusions from the cost performance ratios are drawn using the simulation results.
Highlights
Chain management (SCM) or similar terms, such as supply pipeline management, network sourcing and value chain management have become subjects of increasing interest to academics, consultants and business managers in the recent years (Hines, 1995)
In response to this shift, firms seeking competitive advantage are participating in cooperative supply chain arrangements, such as strategic alliances or joint ventures, which combine their individual strengths and unique resources
This paper makes a quantitative examination of the conventional wisdom that cooperation in a supply chain is generally better, while only few individual members may gain benefits from selfish competitive behavior
Summary
Chain management (SCM) or similar terms, such as supply pipeline management, network sourcing and value chain management have become subjects of increasing interest to academics, consultants and business managers in the recent years (Hines, 1995). Many organizations are attempting to gain a competitive advantage by integrating their suppliers more thoroughly into key supply chain processes. This calls for greater strategic and operational cooperation between the buyer and supplier firms, often involving some degree of collaborative planning (Petersen, Ragatz & Monczka, 2005). Petersen et al (2005) surveyed purchasing executives whose firms are involved in collaborative planning with the suppliers. In the cooperation case, all of the supply chain members behave as a whole to optimize the overall SCM cost. After analyzing sample numeric cases using sinulation, sample results are presented before quantitative conclusions are presented in the paper
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