Omnichannel consignment supply chain cooperation: a comparative analysis of game-theoretical models

Abstract

ABSTRACT This paper explores the cooperation issue in a consignment supply chain under an omnichannel business mode. Six game-theoretical decision models (including centralized, decentralized, and cooperative decision models) for a generic consignment supply chain are developed, analyzed, and compared under an omnichannel mode and pure online-/offline-channel modes. Using a representative electronic product case, the numerical and sensitivity analyses for all developed models are conducted and their results are compared and validated by current industry practices to derive managerial insights. It is found that the cooperation strategy always outperforms the equilibrium strategy regarding the operational performance under omnichannel, pure-online or pure-offline channel mode. The omnichannel mode with its powerful mutual fusion effects outperforms dramatically the pure channel modes regarding the operational performance. Furthermore, the best operational strategy for the consignment supply chain is identified as the cooperation strategy under omnichannel mode. The mutual fusion effect between online- and offline-channels can cultivate a tighter retailer–supplier partnership relationship, create faster inventory turns, reduce tied-up capitals, and deliver better financial outcomes for the consignment supply chain under omnichannel mode. This study has proposed a novel game-theoretical approach considering mutual fusion effects to explore the operational strategies and decisions in an omnichannel consignment supply chain and the findings derived from comparative analysis have provided an extended knowledge to the current omnichannel supply chain literature.