A win-win collaboration approach for a two-echelon supply chain: a case study in the pulp and paper industry

Abstract

Because of international competition, the development of new technologies and the increase of production and energy costs, enterprises must improve their supply chains and change their ways of doing business. They also have to collaborate with their suppliers, distributors and retailers in order to better respond to market demand. This kind of relationship can be based on well-known collaboration models like collaborative, planning, forecasting and replenishment (CPFR) or vendor managed inventory (VMI), so as to correctly exchange products and information. However, it is necessary to choose the right collaboration approach that will be profitable for all partners. In this article, we study different collaboration strategies between a pulp and paper producer and its retailer. For this particular context, we identify the collaboration mode that is the most profitable for each actor, based on real costs and parameters obtained from the industrial case. We also develop a method to better share collaboration benefits and ensure a relationship advantageous for everyone. We demonstrate that if the producer shares a part of the transportation or inventory savings with its partner, the CPFR method can be profitable for both partners and generate the greatest total system profit. [Received 3 October 2008; Revised 6 April 2009; Accepted 23 November 2009]