Supply Chain Coordination Research Articles

Loss-Averse Supply Chain Coordination with a Revenue-Sharing Contract

As economic fluctuations and market uncertainty intensify, supply chain members face enormous challenges. To explore the role of revenue-sharing contracts in supply chain members with different risk preferences, we study the risk-averse two-stage supply chain coordination in a revenue-sharing contract under three different scenarios: the supplier is risk-averse and the retailer is risk-neutral, or the retailer is risk-averse and the supplier is risk-neutral, or both are risk-averse. We find that the revenue-sharing contract mechanism allows the supplier to offer a lower wholesale price, effectively bearing part of the retailer’s cost risk. In return, the retailer compensates the supplier with a larger portion of their revenue, and the lower wholesale price also stimulates the retailer’s desire to order more products. In addition, risk aversion always reduces the optimal order quantity in the supply chain. Interestingly, when the retailer’s risk aversion level is low, the supplier charges a higher wholesale price under the risk-averse supply chain than that under the risk-neutral supply chain. However, if the retailer’s risk aversion level is high enough, the supplier should charge a lower price to stimulate the retailer under the risk-averse supply chain to retain the order size to maintain the channel profit.

IoT-enabled coordination for recommerce circular supply chain in the industry 4.0 era

The current advances in integrating devices through the Internet of Things (IoT) have encouraged researchers to focus on the applications of IoT in the recommerce business. Recommerce and the circular economy are growing worldwide as customers and businesses prioritize sustainability. A lack of coordination between channel participants is a significant hurdle to successfully adopting Circular principles in the recommerce industry. This study explores the coordination issue for a circular supply chain consisting of a Web-based recommerce platform and an IoT-enabled original equipment manufacturer. The proposed study is analyzed using a mixed-method research strategy combining a case study with a game-theoretic model. We analyze the problem under a consignment contract with revenue sharing for different channel structures. We introduce a hybrid contract to coordinate the decentralized channel in a cooperative game model. The results show that the consignment contract cannot coordinate the business in a decentralized structure. The recommerce platform achieves perfect coordination through the hybrid contract and obtains a unique Pareto optimization. We are proposing a IoT-enabled system in which resources are not wasted, thereby providing a way for businesses to use the circular economy concept to achieve sustainability goals.

Sustainable supply chain coordination: extant literature, trends, and future research directions

Sustainable supply chain coordination: extant literature, trends, and future research directions

Examining supply chain financing: A comparative and coordination analysis under a buyback contract

This paper focuses on financing schemes for a supply chain with high salvage values of unsold products. Combining the buyback contract with a partial credit guarantee (PCG) contract and trade credit (TC) contract, we propose two financing schemes, PCG-Buyback and TC-Buyback, to provide flexible financing services for a capital-constrained retailer and obtain equilibrium strategies of each supply chain member. Furthermore, for PCGBuyback, this paper obtains a Pareto coordination frontier consisting of the credit guarantee coefficient and the buyback price at different initial capital levels, which is more flexible to achieve supply chain coordination. Finally, we analyze the manufacturer’s strategic choices of PCG-Buyback and TC-Buyback in terms of credit guarantee coefficient, buyback price, and financing rate. Our results show that PCG-Buyback is the optimal financing scheme for the manufacturer when both the credit guarantee coefficient and buyback price (or financing rate) are low; otherwise, TC-Buyback is the dominant strategy. This study explores how the risk-sharing mechanism combination of PCG and buyback contracts can provide a more flexible approach to supply chain coordination. Additionally, it highlights the significance of the manufacturer selecting a better financing scheme based on its individual characteristics.

Vaccine supply chain decision and coordination with manufacturers competition under blockchain technology

With vaccine incidents occur frequently and the wide application of blockchain technology, the construction of blockchain-based vaccine supply chain (VSC) has become a feasible solution to effectively solve vaccine safety problems. However, there is a lack of research on the operation decision of blockchain-based VSC. Based on this, combined with the current situation of vaccine manufacturers competition in the vaccine market, we build a game model of blockchain-based VSC and explore its optimal decision and coordination strategies. The results show that the higher the vaccine substitutability, the higher the profit of each member. When the production cost ratio of the two vaccine manufacturers is low, they will be more willing to join the blockchain system. When the proportion of problematic vaccines is low, it is more beneficial for the VSC to adopt blockchain technology. The cost-sharing contract can neither effectively coordinate the blockchain-based VSC nor realize its Pareto optimality. The blockchain-based VSC coordination can be achieved by two vaccine manufacturers signing revenue-sharing contracts or two-part tariff contracts with the vaccination unit respectively.

Dual channel sales in supply chain: live streaming or traditional e-commerce

In recent years, live streaming is becoming a popular channel to sell products all over the world. Compared to traditional e-commerce channel, live streaming channel may not only bring consumers more shopping convenience, but also pose consumers more privacy concern. This paper considers a supply chain consisting of a manufacturer and an e-tailer who sells through dual channels (i.e., live streaming and traditional e-commerce) to explore how shopping convenience and privacy concern affect the optimal decisions. We build game models of two pricing (exogenous and endogenous) and two incentive contracts (wholesale price and two-part tariff). We find that the optimal promotion efforts are decreasing in shopping convenience while increasing in privacy concerns under the wholesale price contract, and independent of them under the two-part tariff contract when pricing is not a decision (such as iPhone); the optimal promotion efforts are increasing in shopping convenience while decreasing in privacy concern when pricing is a decision (such as the seasonal products). Whether the retail pricing is a decision or not, supply chain coordination can be achieved by the two-part tariff contract, but not through the wholesale price contract. Further, the two-part tariff contract is more favorable to the manufacturer if the exogenously given retail price is low, and the wholesale price contract is more favorable to the manufacturer if the retail price is high; the two-part tariff contract is always more beneficial for the supply chain than the wholesale price contract. Finally, we extend our analysis to relax a more realistic form with a variable effort elasticity and verify the robustness of the theoretical results.

Coordinating a platform supply chain with reference promotion effect and Big Data marketing

In this paper, the differential game model is constructed to study the coordination problem of platform supply chain by introducing the impacts of Big Data marketing and reference promotion effect on consumer conversion rate. Firstly, the optimal strategies and the profits under centralized and decentralized modes are given by applying the optimal control theory, and the comparative analyses are carried out. Subsequently, in order to coordinate the platform supply chain, a combined contract including a two-part tariff scheme and a promotion cost sharing scheme is designed. Finally, the effects of system parameters on equilibrium strategies and coordination contract are analyzed. The results show that the respective decisions of the manufacturer and the e-commerce platform as well as the total profit of the supply chain are higher under centralized mode. Moreover, within the feasible region, the combined contract not only achieves channel coordination but also improves the economic situations of channel members. It can be also observed that the coordination capacity of the proposed contract reduces with an increase in the memory parameter and improves with an increase in parameters such as the effectiveness of the Big Data marketing and the effectiveness of the reference promotion effect.

An hedonic evaluation of the impacts of vertical coordination on business performance amongst apple producers in Morocco

We present an econometric analysis of the marketing of apples in Morocco that investigates the relationship between vertical coordination arrangements and the prices of apples for farmers. In this study, the hedonic method is used to evaluate the vertical coordination of apple fruit chains by analyzing the marginal implicit price of different product characteristics. We examine the variables influencing apple prices for farmers, comprising intrinsic factors related to the farm's characteristics and quality attributes such as fruit variety and fruit diameter. Additionally, we consider extrinsic variables associated with marketing factors, including vertical coordination systems, payment terms, seasonality of sale, cold storage, and geographical origin. Based on a nationally representative survey of 190 apple growers in the southeast of Morocco, an empirical analysis is conducted. Results highlight the pivotal role of apple growers' experience in elevating farm-level prices, indicating a deeper understanding of market dynamics. Significant price variations are tied to quality attributes, notably a 19.2% premium for larger apples (75–85 mm diameter), indicating market preference. The economic analysis underscores the influence of apple varieties, with Golden commanding a 16.4% higher price, indicating heightened consumer demand. Additionally, the study found that marketing factors, vertical coordination models, payment terms, seasonality of sale, cold storage, and geographical origin also have a positive impact on apple prices. Furthermore, vertical coordination models positively impact apple and prices provide producers with guidance for effective supply chain coordination. These insights, extending beyond theory, serve as a roadmap for policymakers to support the agricultural sector. Equipped with knowledge of business performance, farmers can implement targeted measures to enhance the marketing value of their agricultural products, fostering resilience and profitability in the Moroccan apple sector.

The Development Strategy of Dual-Channel Supply Chain of Smart Elderly Care Service from the Perspective of Time Perception

The development of smart elderly industry is an inevitable way to cope with the aging of the population. This research takes the smart elderly care service supply chain as the object, combines the social emotional choice theory for the first time, and uses the time perception to refine the elderly care demand into future-orientation demand and present-orientation demand. This paper analyzes the coordination effect of suppliers’ efforts to meet the needs of the elderly under the two conditions of no contract and benefit-sharing contract on the dual-channel supply chain of smart elderly care services. The results show that the benefit-sharing contract is more conducive to maximizing the profit of the supply chain, and the segmentation of elderly demand is conducive to giving full play to the advantages of dual-channel differentiated services, which is conducive to forming a win-win situation of improving the service efficiency of the smart elderly service supply chain and increasing the happiness index of elderly users. The main contributions of this paper are: Using geriatric behavioral psychology to analyze the motivation of the elderly and designing the service effort level index considering the needs of the elderly. Match online and offline channels with personalized services to give full play to the “smart” effect. Based on the game method of Hotelling and Stackelberg, the coordination and optimization of the smart elderly care services dual-channel supply chain, considering the needs of the elderly are realized. This is of great research significance for maximizing the benefits of the smart elderly service supply chain and promoting the development of the smart elderly industry.

Revising the basic principles of integrated marketing communications during a health-related crisis: the case of Croatian tourism and hospitality industry

PurposeAligning corporate communications through different information sources is a great challenge for marketers, especially those operating in the tourism sector, which has been harshly affected by the recent COVID-19 pandemic. This paper provides a deep analysis of the implementation of seven basic principles of the integrated marketing communications (IMC) paradigm in a crisis situation.Design/methodology/approachIn-depth interviews with tourism and hospitality service providers were conducted in the fourth quarter of 2021 in Croatia, a destination that showed remarkable results in terms of the number of international tourist arrivals during the pandemic.FindingsMost firms successfully transitioned from tactical to strategic IMC implementation. Some problems were reported in the coordination of communication tools and channels. Whereas the use of digital technology was enhanced, database management did not receive sufficient attention. Message clarity represented the greatest challenge, while consumer-centric communication was the most neglected principle. Relationship building was pursued mainly through B2B rather than B2C communication, whereas brand equity development pursued through communication mix mostly focused on increases in awareness, perceived quality and attitudinal loyalty.Research limitations/implicationsThis research is qualitative in nature and provides opinions on IMC adoption from the managerial perspective only.Practical implicationsThis paper provides guidelines for the successful integration of marketing communications (marcom) in an extremely ambiguous and uncertain environment.Originality/valueThe contribution of this work lies in the proposal of a new refined and expanded theoretical framework of IMC principles and numerous marcom strategies for operating during the COVID-19 pandemic, thus providing relevant implications for academia and industry.

Research on investment optimization and coordination of fresh supply chain considering misreporting behavior under blockchain technology

In the traditional fresh supply chain, farmers commonly conceal the true quality information of their products in order to achieve better sales. This article focuses on the use of blockchain technology to address the issue of false freshness reporting in a two-level fresh supply chain consisting of a rural cooperative and a supermarket. Taking into account the dual losses of quality and quantity in the process of agricultural products transportation, the impacts of the product freshness and the blockchain investment level on random market demand are quantified in this paper. And game models for centralized and decentralized decision-making before and after investing in blockchain technology are proposed. By comparing the supply chain optimal decisions and performances under different scenarios, a revenue-cost sharing contract is designed to coordinate the decentralized decision-making. Simulation results show that the application of the blockchain technology can further consolidate the superiority of the centralized decision-making. However, there is a certain threshold for the application of the blockchain technology in decentralized decision-making. When the unit cost of blockchain exceeds the threshold, the rural cooperative will abandon its cooperation with the supermarket due to reduced profits. And the combined contract also has a threshold boundary for its coordinating effect on decentralized decision-making.

Paying Living Wages in Supply Chains: The Effects of Uncertainties, Coordination, and Competition

The living wage (LW) movement is part of the fight against forced labor: It aims to ensure that workers receive an income that can cover their daily subsistence needs. Our study expands the current understanding of LW pay by shifting from the traditional labor-capital view to an operations and supply chain management perspective. We use a game theoretical approach to explore the different responses of two competing supply chains to LW accreditation. We find that a moderate LW standard allows for Pareto optimality where key stakeholders (i.e., manufacturers, retailers, consumers, and workers) have a collective interest in promoting the LW movement. From a multistakeholder lens, the LW movement is only sustainable if the LW standard is neither too aggressive nor too conservative. We further demonstrate the following points. (1) Not all types of uncertainties are harmful to supply chains with LW pay. Yield uncertainty slows down the progress of the LW movement, whereas demand uncertainty encourages the voluntary adoption of LW pay among all stakeholders. (2) Supply chain coordination may slow the adoption of voluntary LW pay, which implies that the classic coordination paradigm is not a panacea in alleviating the plight of underpaid workers. (3) From the perspective of competition intensity, greater monopsony power hinders the progress of the LW movement, and we provide evidence for the positive effects of a competitive environment on incentivizing voluntary LW pay.

Digital economy structuring for sustainable development: the role of blockchain and artificial intelligence in improving supply chain and reducing negative environmental impacts

In the current global context of environmental degradation and resource constraints, the pursuit of sustainable development has become an imperative. One avenue that holds promise for achieving this objective is the application of digital technologies, which have the potential to decouple economic growth from its carbon footprint. However, it is crucial to ensure that these technologies are designed and governed in a prudent manner, with a strong alignment to environmental priorities. This study focuses on exploring the potential roles of blockchain and artificial intelligence (AI) in supply chain coordination and impact mitigation. Furthermore, they have the capacity to incentivize recycling and circular business models, as well as facilitate carbon accounting and offsetting. To fully realize these benefits, it is essential to deploy these technologies within inclusive collaborative frameworks that take into consideration social and ecological considerations. The study also offers policy recommendations that highlight key leverage points for digital innovation, enabling countries to embark on smart and green industrial transformation pathways. By harnessing the potential of blockchain and AI in supply chains, governments can promote transparency, traceability, and accountability, thereby fostering sustainable practices and reducing environmental impacts. Incorporating blockchain and AI technologies into supply chain approaches leads to a substantial improvement in efficiency, as demonstrated by a numerical analysis. In conclusion, the integration of innovative digital technologies offers significant opportunities to optimize production systems and economic activity while prioritizing sustainability objectives for the betterment of society and the environment. These technologies have the potential to mitigate environmental externalities by addressing information imbalances within global supply chains. However, it is essential to prioritize inclusive governance that emphasizes democratic participation to mitigate any unintended negative consequences, especially for vulnerable communities. By ensuring inclusive decision-making processes, we can maximize the positive impact of these technologies while minimizing potential harm.

The challenges to circular economy in the Indian apparel industry: a qualitative study

Purpose In recent years, researchers and practitioners have paid a great deal of attention to the circular economy (CE) due to its potential social and environmental benefits. However, limited attention has been devoted in the literature to studying the barriers to CE implementation in the apparel retail industry in emerging and developing nations besides China. Consequently, the purpose of this paper is to analyse the barriers to implementing CE in the Indian garment retail market. Design/methodology/approach This exploratory study uses a comprehensive literature analysis to identify the micro-level impediments to CE adoption in India's garment retail industry. The study aims to identify these barriers using a Delphi process, consisting of three stages. The first stage involves literature reviews and expert opinions, while the second and third stages involve survey methods with 14 industry professionals and academics. The use of the two primary data sources allows for triangulation of the data, which improves the validity of the findings and enables broader conclusions to be drawn from the results. Findings This study indicates that the top three challenges to implementing CE principles in the Indian apparel retail industry are “standards and regulation barriers” (84%), “strategic barriers” (82%) and “supply chain management and technology barriers” (79%). Strategies for overcoming these obstacles include gaining top management support, coordinating supply chain components, training and employee motivation. Research limitations/implications This study considers only Indian apparel retail industry, and the practical implications could potentially limit the study to emerging Asian economies. Originality/value To the best of the authors’ knowledge, this is the first research of its type to explore CE obstacles at the organizational level in the Indian garment retail business. Thus, it contributes to a greater understanding of the topic and enables practitioners to develop effective policies and business strategies for CE and sustainability.

Retail Buyer and Manufacturer Influence

Retailers often employ professionals known as retail buyers to determine the right quantities of products to order. However, in many economies and industries, a manufacturer may seek to unduly influence the buyer through various means. One such means is to offer the buyer kickbacks (incl. entertainment, travel, gifts) in return for a large order. Despite prominent examples of retailers taking initiatives against kickbacks, the practice persists in many economies and industries. To aid initiatives combating kickbacks, one needs to do the right diagnosis and identify the root cause. To this end, in this paper, we introduce the retail buyer as a distinct player in the retail channel and study the implications of the tug-of-war between the retailer and the manufacturer to influence the buyer. Interestingly, we find when kickbacks are feasible, the manufacturer need not always benefit, and the retailer need not always be the victim. We show a well-designed buyer compensation plan is key for the retailer to avoid kickbacks from distorting the buyer’s demand assessments. Moreover, when the reputational harm from kickbacks is not too high, the retailer may be the one tacitly facilitating kickbacks by undercompensating the buyer and influencing her demand assessments such that it can leverage kickbacks for shifting some of its buyer compensation cost to the manufacturer. This sharing of cost may allow for better channel coordination. Furthermore, this cost-shifting mechanism of kickbacks we have identified in this paper can explain their persistence. No retailer tolerates kickbacks when the reputational harm is high. This paper was accepted by Eric Anderson, marketing. Supplemental Material: The online appendix is available at https://doi.org/10.1287/mnsc.2021.01646 .

Risk preferences, newsvendor orders and supply chain coordination using the Mean-CVaR model

The standard newsvendor model assumes that decision-makers in the supply chain are risk-neutral. This paper explores the newsvendor problem using risk measures building on the classical normative definition of risk preferences by certainty equivalents to model risk-averse, risk-neutral, and risk-taking decision-makers. We suggest the Mean-CVaR model based on the popular risk measures Value-at-Risk (VaR) and Conditional Value-at-Risk (CVaR). The objective function is characterized by a tolerance level differentiating between low and high profits and by a pessimism level representing the weight of low profits. For the first time, we prove that the optimal order quantity is higher (lower) than the risk-neutral order quantity if and only if the newsvendor is risk-taking (risk-averse). The equivalence of product-specific risk preferences and the size of the order quantity enables the determination of the Mean-CVaR parameters from given order quantities or from a target profit. Further, based on supply chain’s objective maximization criterion, we discuss supply chain coordination with Mean-CVaR decision-makers. We show that a simple wholesale price contract can coordinate the supplier–buyer supply chain and completely characterize the decision makers’ risk preferences under supply chain coordination. For example, if the coordinator (supplier) is risk-averse, a coordinating wholesale price exists for a less risk-averse buyer as well as for a risk-neutral and risk-taking buyer. We also determine the Mean-CVaR parameters if the coordinator specifies a target for the supply chain profit and the buyer communicates a target profit. In this case, the coordinating wholesale price depends on the ratio of the target profits and we show the impact on supply chain efficiency.

Supply chain disruptions during COVID-19 pandemic: Key lessons from the pharmaceutical industry

Purpose: This study extends previous research by exploring the key lessons learned by the pharmaceutical industry in South Africa from the COVID-19 pandemic supply chain disruptions.Design/methodology/approach: Having embraced the interpretivist paradigm, 25 supply chain professionals were purposively selected on the basis of their experience and deep knowledge of the industry and interviewed using the semi-structured approach of interviews. A qualitative data analysis programme, ATLAS.ti (version 9.1), was used to analyse the transcripts.Findings/results: Following thematic analysis, the following themes emerged from the primary data: supply networks, demand planning and management, supply chain coordination, inventory management, logistics management and local production.Practical implications: It is crucial to build resilience in the design of pharmaceutical supply chains. A comprehensive demand management strategy and use of data analytics need to be adopted by pharmaceutical companies to improve demand visibility, responsiveness and supply chain resilience. The study also revealed the need for local production, as local skills and enterprises are being developed.Originality/value: This study has extended the body of knowledge on the supply chain disruptions, particularly in the pharmaceutical industry by building on the studies that were conducted during COVID-19, many of which were not based on empirical data. It also points supply chain professionals in a direction which enables them to develop a disruption strategy while providing justification for policymakers to support investment in the development of the requite skills for the pharmaceutical industry and the development of local production facilities.

Incentive-based coordination for scheduled delivery in prefab construction

An increasing number of projects are adopting prefabrication to economize on time, labor, and materials in fixed-position layout operations, such as construction, ship building, and aircraft manufacturing. In such contexts, independent contractor and fabricator make interdependent decisions, which calls for prudent supply chain management because performance relies on coordination between their decisions. Many studies have developed integrated systems and propose various algorithms for scheduling efficiency and reliability. Nevertheless, they pay scant attention to conflicting interests amongst independent partners, which may result in subpar performance not only for the supplier but for the contractor as well. Coordination of conflicting interests has been extensively studied in economics and supply chain management; yet, those studies focus on order-quantity decisions under demand uncertainty for profit maximization, while managers in fixed-position operations are more concerned about delivery decisions under scheduling uncertainty for cost minimization. We consider the case of construction and explore a contractual scheme that aligns the agents’ decisions for coordination in a construction supply chain. Specifically, we propose a supplier rebate for coordination: the supplier grants a rebate if the contractor accepts the shipment in accordance with the delivery schedule that the contractor initially chose. We show that the optimal rebate fully coordinates the supply chain to minimize the joint supply chain costs. Thus, both the contractor and supplier benefit from the coordination by negotiating a mutually acceptable way to allocate the savings in joint costs between them. We further show that the rebate motivates the contractor to enhance its work scheduling.

Research on Supply Chain Coordination Decision Making under the Influence of Lead Time Based on System Dynamics

Supply chain coordination has been a research hot spot in supply chain management. This paper constructs a secondary supply chain system. Taking the abatement of the bullwhip effect and the double marginal effect as the coordination objective, a simulation study of supply chain decision coordination was conducted using system dynamics. First, by controlling the lead time, it was found that in the decentralized decision-making model, the profit of the supplier and the whole supply chain increases with the shortening of the lead time, and vice versa for the retailer. In the centralized decision-making model with the addition of information sharing and contract, it was found that the retailer’s profit is consistent with the trend of the supplier and the supply chain as a whole, and the supplier’s profit is lower than that of decentralized decision making in the pre-cooperation period. In addition, it is also found that adjusting the contract parameters can effectively improve the situation. Finally, the above models were analyzed for supply chain coordination decisions based on two scenarios: “cooperative stability” or “balance of effects”.

Pricing and coordination in a dual-channel supply chain considering internet celebrity’s sales effort and personal influence

The main purpose of this paper is to study the coordination, price and sales effort decisions of a dual channel supply chain under live streaming commerce mode. In nowadays’ e-commerce age, more and more people have interest in live streaming especially after the outbreak of COVID-19, but the research on live streaming supply chain is lacking. To fill this gap, a supply chain composed of a manufacturer and an internet celebrity is established, in which the demand is affected by the internet celebrity’s sales effort and personal influence. Considering different power structures of the supply chain, price and sales effort decisions are studied in four models: Nash, manufacturer dominant (MD), internet celebrity dominant (KD) and cooperative game models. Subsequently, the feasible region of bargaining game is discussed in terms to share the extra profits and coordinate the supply chain. The manufacturer and the internet celebrity can be coordinated through bargaining problem in the cooperation model, and the extra profits sharing ratio is depend on each other’s bargaining power. Numerical analysis is further provided to test the propositions and show the impacts of market share rate, internet celebrity’s commission rate and personal influence on supply chain’s performance.