Downstream Manufacturing Research Articles

Future social change of manufacturing and service industries: Service-oriented manufacturing under the integration of innovation-flows drive

Based on advanced manufacturing and the modern service industry, service-oriented manufacturing propels the economic transition. It motivates the manufacturing and service system to ascend to the middle and upper levels of the value chain. First, the relationship between service-oriented manufacturing and the logic behind value growth is deconstructed. The mechanism of service-oriented manufacturing is elucidated at the levels of the manufacturing network, service network, and integration network. Second, the manufacturing, service and innovation relationships formed in the industry chain are analyzed in terms of the supply chain of the manufacturing network, service chain of the service network, and innovation chain of the integration network. The coordinated hypernetwork model of service-oriented manufacturing is also established. The node relationships and value flows of each sub-network are resolved using variational inequalities according to the principle of each chain operation. The coordinated optimal solution of the hypernetwork is clarified. Additionally, issues concerning the enhancement of equilibrium profits in the hypernetwork are investigated. Finally, we use numerical simulation for specific situations in the hypernetwork of enterprises. Using the strong correlation network of potential value growth of firms generated by social network analysis, a feasible strategy for coordinated optimization of service-oriented manufacturing is proposed. This study finds that the manufacturing equilibrium formula emphasizes that service-oriented manufacturing firms must break the previous industrial separation and obtain the value-added profits from the iteration of manufacturing and service models to enhance the possibility of risk investment in integration innovation. According to the service equilibrium formula, enterprises must avoid the inferior market of services and excessive concentration of resources. Firms strengthen the access mechanisms of service-oriented manufacturing activities by revising the service model and introducing manufacturing operations. In the integration equilibrium formula, the linear feature of innovation indicates that firms should continuously invest in innovation construction and conduct innovation integration activities without incurring losses. Second, the main chain (supply chain, innovation chain) relationship between the manufacturing sub-network and integration sub-network is stronger than the other node relationships. The service network exhibits the characteristics of a weaker service chain than external nodes. Manufacturing value flows are concentrated on middle and downstream manufacturing activities. Service value flows are aggregated by market-oriented principles. Innovation value flows primarily exhibit continuous input and inherited innovation characteristics. Third, technology application, service penetration, the integration scale of manufacturing and service markets, and the market acceptance scale of service and manufacturing are essentially homogeneously related to the manufacturing relationship, service relationship, and innovation relationship, which positively stimulate the activity of value flows in each network. The cost and attrition of technology and service show inhibitory effects on value flows. Fourth, in the value network, the manufacturing value flows of the manufacturing relationship form a U-shape along with the industrial chain. The service value flow of the market is robust and exhibits a “tick”-like pattern in the service network. The innovation value network is mainly attached to the innovation chain and displays point-scattering characteristics.

How can suppliers strategically involve downstream manufacturers in research and development collaboration? A knowledge spillover perspective

Innovation collaboration has become increasingly important for supply chain partners. In this study, we examine the impact of innovation collaboration on supply chain partners, specifically focusing on how suppliers can design strategies to motivate downstream buyers to engage in cost-reduction research and development (R&D) activities. We present a scenario in which two downstream manufacturers purchase identical parts from a shared supplier and compete on the end market while individually investing in R&D. Our findings indicate that the manufacturers may be less inclined to invest in R&D due to knowledge spillover effects, which can reduce their order quantities from the supplier. To address this issue, we propose that the supplier become involved in the R&D through a cost-sharing agreement, aligning the incentives of all supply chain partners and internalizing both supply chain and knowledge externalities. Our results suggest that this approach allows the supplier to share R&D costs with the manufacturers while ensuring that the manufacturers are not worse off in a supply chain collaboration scenario compared to other scenarios. We also recommend that the supplier involve downstream manufacturers with perfect spillovers.

Coordinated Supply Contracts for a Two-Echelon Supply Chain under Given Bargaining Powers

This paper addresses the supply contracts within a decentralized supply chain comprising an upstream component supplier and a downstream manufacturer. With the need to invest in production capacity before the sales season, suppliers often make conservative capacity decisions due to uncertain demand, which gives rise to the double marginalization problem. The distribution of supply chain profits is typically determined based on each member’s relative bargaining power, often exogenously provided in the market. While numerous studies have been conducted to design supply contracts for coordination in decentralized supply chains, most of them overlook the supplier’s capacity constraints and the existing bargaining power structure. To bridge this gap, this study proposes a supply contract scheme that achieves coordination under any given bargaining power structure. The key finding of this paper is that two contract types, namely capacity cost-sharing (CCS) and surplus capacity compensation (SCC), can address the entire spectrum of bargaining powers. This study demonstrates how to identify a specific threshold for a given bargaining power structure, from which the appropriate contract type is selected. Through numerical illustrations, we present how to select coordinated contracts for different bargaining power structures and examine the influence of contract parameters on the profit of each supply chain member. The primary contribution is that this study provides actionable insights for practitioners to effectively implement coordinated contracts by presenting a straightforward and practical methodology.

Supplier's technology upgrading investment strategy considering product life cycle

Technology is evolving rapidly, which has a significant impact on firms' R&D investment decisions. When the downstream manufacturer decides to introduce new-technology products to the uncertain market, the upstream supplier needs to consider whether to invest in R&D to provide new components for the manufacturer. Different from the previous studies, this paper proposes a joint diffusion model that takes the product life cycle of the existing-technology products into account, revealing the impact of the product diffusion process and the existing technology's product life cycle on supplier's strategies. When the product spreads slowly, the later the new-technology product is introduced, the less likely the supplier will choose to invest in R&D. Moreover, the supplier will only invest in R&D as soon as possible or never with a slow product diffusion speed, depending on their R&D capabilities. When the product diffuses rapidly, the later the introduction of new-technology products, the likelihood of suppliers choosing to invest in R&D firstly increases and then decreases. What's more, suppliers are most likely to invest in R&D when existing technology products are just entering the mature stage with a rapid product diffusion speed.

Benefits of sourcing alternative inputs of manufacturers for suppliers

A downstream manufacturer can procure high‐quality inputs from its upstream raw material supplier to produce finished products with high quality. The manufacturer may also have the option to source alternative cheaper low‐quality inputs to partially replace the inputs from its supplier to produce finished products of lower quality. That is, the manufacturer can use a mixture of the supplier's inputs and alternative ones in product design such that product quality depends on the proportion of each input used in products. We endogenize this product quality decision in a simple analytical model to study the impact of this option on the supplier's profits. Intuitively, the option of sourcing alternative inputs could hurt the supplier in two ways: It sells fewer inputs, and it needs to set a lower wholesale price due to competitive pressure. However, our study reveals an opposite finding: The supplier can benefit not only by selling more inputs but also by setting a higher wholesale price when the manufacturer has the option of sourcing alternative low‐quality inputs. This interesting finding is due to the wholesale price push‐up effect: The upstream supplier may deliberately raise the wholesale price when sourcing alternative inputs is an option for the downstream manufacturer. This increased wholesale price encourages the manufacturer to use a higher proportion of alternative cheaper inputs in its product design; as a result, the manufacturer's marginal cost is reduced, which leads to a decrease in its retail price. Therefore, consumer demand for the manufacturer's products becomes higher, which in turn results in higher manufacturer demand for the supplier's inputs. Moreover, we show that despite this higher wholesale price, the manufacturer can earn higher profits by optimally charging a lower retail price. Furthermore, we find that the wholesale price of the supplier's inputs can exceed the manufacturer's retail price, thereby leading to a negative profit margin for the manufacturer from using the supplier's inputs. Finally, we demonstrate the robustness of our findings under several model extensions.

Effect of risk aversion on supply chain performance and energy contracting design with financial asymmetry

AbstractEnergy performance contracting is a contractual arrangement between clients and energy service companies. At present, it is a key tool to implement energy efficiency measures in the existing supply chain management. In this paper, we study the efficiency of the energy performance contracting in a supply chain including one risk‐averse supplier and two risk‐neutral manufacturers with financial asymmetry. The manufacturer with weak finance has no funds to order enough raw materials; thus, the supplier offers a trade credit financing to ensure her normal operation and participate in the competition with the financially strong manufacturer in the market. However, neither manufacturer has extra capitals to develop emission reduction activities. Therefore, the upstream supplier acts as an energy service company and provides an energy performance contracting for two downstream manufacturers to reduce carbon taxes. We analyze important factors such as risk aversion coefficient, carbon tax saving sharing ratio, and variable cost coefficient to explore whether and which manufacturer the supplier should select to provide an energy performance contracting. The results show that, when the risk aversion is high, the supplier will not provide energy‐saving services for any manufacturer. When the risk aversion and the variable cost are low, the supplier tends to offer an energy performance contracting for the manufacturer with weak finance, because the supplier can get more utility from higher wholesale price. However, with the increase of costs, the supplier with a low risk aversion is more willing to provide emission reduction services for the financially strong manufacturer. Furthermore, sensitivity analysis demonstrates that there is always a Pareto region to optimize the utility of supplier and manufacturers, when the supplier provides energy performance contracting for both manufacturers.

Single‐use centrifugal separator enables intensification of the clarification process in biomanufacturing of recombinant proteins

AbstractBACKGROUNDThe need to produce more biologics at lower costs and hence intensify bioprocessing has significantly improved upstream productivity (cell culture titers ≥3 g L−1 and cell densities ≥20 × 106 cells mL−1), shifting the economic and production bottleneck to downstream manufacturing. The first downstream unit operation is the clarification of the cell culture broth to remove various insoluble (such as cells and cell debris) and soluble (such as host cell DNA and proteins) contaminants, producing a feed stream suitable for further downstream purification. The high cell‐density cultures obtained in modern intensified bioprocessing have made legacy single‐use clarification trains (based primarily on depth filtration of the cell culture broth) ineffective and impractical, significantly increasing the economic and material burden of the clarification process.RESULTSWe have developed and characterized approaches that enable intensification of the clarification operation, by increasing process capacities while reducing material requirements and footprint, for single‐use manufacturing facilities. These approaches are based on primary clarification using the Alfa Laval CultureOne™ centrifuge (a continuous solid discharge disc‐stack centrifuge with a single‐use flow path) followed by secondary clarification using single‐use disposable depth filters. We show that these intensified clarification trains are suitable for processing high cell‐density cultures (6–12% packed cell volume) with significantly high yields (≥90%) and impurity clearance, along with reduced operating costs (30–60% savings).CONCLUSIONIncorporating a single‐use continuous discharge centrifuge into the clarification train enables clarification of high cell‐density cultures in single‐use manufacturing facilities and enhances process economic and environmental sustainability. © 2023 Society of Chemical Industry (SCI).

STUDY ON THE RHEOLOGICAL PROPERTIES OF FAST-GROWING EUCALYPTUS

To study the effect of retention and drainage aidson the fast-growing eucalyptus bleached kraft pulp (EBKP) suspensions, different concentrations of cationic polyacrylamide (CPAM)and cationic starch were dosed with EBKP suspensions and their effects on rheological properties were studied. Theshear yield stress (τy)of softwoodbleached kraft pulp(SBKP)and poplar alkaline peroxide mechanical pulp (PAPMP) were comparedandevaluated for their potential applications. The results show that in the steady-state shear condition, the τyof EBKP is proportional to the pulp mass concentration (Cm),corresponding to the exponential relation . SBKP had the highest τyvalues, followed by EBKP and PAPMP. Adding CPAM and cationic starch to EBKP suspensions at low to moderate doses increased the τy, butonce thelevels reached a certain point, the τyvalues began to deteriorate. This research is crucial to achieve optimally and stabilize the downstream manufacturing process in papermaking.

Structural and Immunoreactivity Properties of the SARS-CoV-2 Spike Protein upon the Development of an Inactivated Vaccine.

Inactivated vaccines are promising tools for tackling the COVID-19 pandemic. We applied several protocols for SARS-CoV-2 inactivation (by β-propiolactone, formaldehyde, and UV radiation) and examined the morphology of viral spikes, protein composition of the preparations, and their immunoreactivity in ELISA using two panels of sera collected from convalescents and people vaccinated by Sputnik V. Transmission electron microscopy (TEM) allowed us to distinguish wider flail-like spikes (supposedly the S-protein's pre-fusion conformation) from narrower needle-like ones (the post-fusion state). While the flails were present in all preparations studied, the needles were highly abundant in the β-propiolactone-inactivated samples only. Structural proteins S, N, and M of SARS-CoV-2 were detected via mass spectrometry. Formaldehyde and UV-inactivated samples demonstrated the highest affinity/immunoreactivity against the convalescent sera, while β-propiolactone (1:2000, 36 h) and UV-inactivated ones were more active against the sera of people vaccinated with Sputnik V. A higher concentration of β-propiolactone (1:1000, 2 h) led to a loss of antigenic affinity for both serum panels. Thus, although we did not analyze native SARS-CoV-2 for biosafety reasons, our comparative approach helped to exclude some destructive inactivation conditions and select suitable variants for future animal research. We believe that TEM is a valuable tool for inactivated COVID-19 vaccine quality control during the downstream manufacturing process.

Impact of government subsidy on diagnostic tests decisions of core products in high-end equipment manufacturing

In the high-end equipment manufacturing industry, diagnostic test is a common procedure for core products. The core component supplier could obtain the true quality of its products by implementing diagnostic test during the R&D (research and development) process and adjusting the efforts to achieve better quality. However, diagnostic test is not well implemented due to its high cost. As China’s favorable policies increase in relevant regard, government subsidy becomes an emerging incentive for core product manufacturing. The core product supplier who receive financial incentives usually contributes extra effort to achieve better quality. However, the extra effort comes with a corresponding cost. In addition to this, the supplier has received government subsidy to fund the implementation of diagnostic test. In turn, conducting diagnostic test can provide a safety plug as to whether the supplier should receive government subsidy. To investigate this interaction between the government subsidy adoption decision and the diagnostic test decision, we use game theory to model a supply chain composed of an upstream supplier and a downstream manufacturer, where the supplier is delegated by the manufacturer to research and development a batch of core products and to maintain them during the warranty period. Our research shows that even though government subsidies can provide the supplier with direct financial support, it may still not be adopted. In essence, government subsidy has a bright side and a downside effect on supplier, wherein the former side is the direct financial support and the downside is the extra effort cost. The supplier does not always accept government subsidy because the bright side not always sufficient to cover the downside. Specifically, when diagnostic test is costly or with high-quality products, the supplier will accept subsidy but not perform diagnostic tests regardless of government subsidy. Counterintuitively, if consumer preferences for the product are high, the supplier will choose not to accept government subsidy but to perform diagnostic test. This research contributes to providing some theoretical insights for managers in the high-end equipment manufacturing industry.

Cooperative and noncooperative R&D in duopoly manufacturers with a common supplier

<p style='text-indent:20px;'>We consider the R&D strategy of firms under competitive environments from the supply chain perspective. Specifically, we investigate a supply chain consisting of one upstream component supplier and two downstream manufacturers, who however are the Stackelberg leader(s). At the early stage (<i>R</i>&<i>D</i> <i>stage</i>), the two manufacturers decide on whether to cooperate or not in the R&D activities and how much to invest in R&D accordingly. At the late stage (<i>market stage</i>), the component supplier decides on the uniform wholesale price and the manufacturers decide on the production quantities. Our main findings include: (ⅰ) Cooperative R&D strategy will be adopted when the technology spillover effect is either too large or too small and in contrast non-cooperative strategy will be accepted when the spillover effect is moderate. However, the underlying driving forces for coordination are different when the spillover effect is small or large, i.e., <i>cost reduction effect</i> and <i>sales increasing effect</i>. (ⅱ) Cooperative R&D could increase the social welfare when both the technology spillover effect and the (initial) unit production cost are high. (ⅲ) As the equilibrium under the cooperative R&D strategy is unstable, we give a coordination mechanism, to guarantee the stability of cooperative R&D investments.</p>

Waste emission reduction decision-making for industrial symbiosis chains in a competitive market considering environmental regulations

<p style='text-indent:20px;'>We develop a perfect competitive upstream and downstream manufacturers model in an industrial symbiosis chain that produces partially differentiated products and generates pollution as a byproduct. We investigate the waste emission reduction decision-making of the industrial symbiosis chain in a competitive market while considering environmental regulations imposed by policy-makers or the government in the form of waste emission taxes and subsidies for waste usage. We prove that environmental regulation and market competition positively affect manufacturers' strategies to implement industrial symbiosis. In addition, we discover that implementing industrial symbiosis requires government leadership, while the market mainly plays a supporting role. Similarly, we show that the degree of competition plays a critical role in determining the economic consequences of environmental regulation. Our results suggest that the government or policy-makers should consider market competition when making environmental regulations. Through our simulations, when the upstream and downstream market sizes are the same, we discover that regardless of the market size, as the market competition becomes fiercer, the profit of the centralized model always dominates that of the other models. At the same time, a waste emission contract can be the technique to improve the performance of the decentralized industrial symbiosis chain. We further find that the market size does not affect the manufacturers' final strategies but only has a specific impact on the value.</p>

Efficiency Evaluation of Two-Stage Supply Chains with Loss Aversion using the Dea-Based Cooperative Approach

Most supply chains in reality are composed of multiple enterprises which are independent individuals in terms of organizational structures and operating modes. From the perspective of performance evaluation, optimizing each enterprise’s efficiency independently will probably result in undesired inventory of intermediate products in the supply chain. Taking the two-stage supply chain where the outputs from the upstream supplier are taken as the inputs for the downstream manufacturer as an example, this paper introduces enterprises’ relative dominance into allocating the responsibility of inventory management between two decentralized enterprises. To motivate these enterprises to adopt the allocation strategy, this paper takes the loss aversion of enterprises into account to reveal the utility subjectively perceived by each decentralized enterprise insisting on independence instead of cooperation. Subsequently, a DEA-based cooperative model is developed to readjust the production processes of two decentralized enterprises. We find that adjusting the relevant parameters is able to explore the relationship between the proposed model and the non-cooperative model and the relationship between the proposed model and the centralized model. Finally, a practical example of coordinating sustainable supply chains is applied to illustrate the effectiveness of the proposed model.

A proprietary component manufacturer’s global supply chain design: The impacts of tax and organizational structure

This paper studies the supply chain structure design for a proprietary component manufacturer (PCM) in a global environment. The PCM, producing component with patent protection and/or superior quality, chooses to enter into an overseas market to enhance revenue. There are three supply chain structures available to the PCM: (1) monopoly where the PCM establishes a downstream manufacturing subsidiary to produce and sell the end product, (2) component supplier where the PCM supplies component to a local original equipment manufacturer (OEM), and (3) dual distributor where the PCM supplies component to the OEM but also produces a competing end product. Our analysis suggests that two important features in a global environment, i.e., the global tax disparity and the organizational structure, have significant impacts on the PCM’s supply chain structure design and profits. If the downstream has a tax advantage, it is optimal for the PCM to directly enter into the downstream market with the structure of monopoly. As the downstream tax rate increases, the other two structures, i.e., component supplier and dual distributor, become more attractive. We show that centralization makes the dual distributor and monopoly structures more desirable. However, the OEM may be driven out of the market and the dual distributor structure is infeasible when the downstream tax rate is high enough. Contrary to our traditional wisdom, decentralization may benefit the PCM under certain circumstances.

Design for manufacture and assembly (DfMA) in architectural design meetings: from a case study to knowledge-to-action framework

PurposeDesign for manufacture and assembly (DfMA) challenges architects in managing diverse knowledge across different professional domains. Little research, if any, has documented DfMA as a knowledge-intensive activity happening in real-life cases. This research aims to investigate DfMA knowledge acquisition, sharing and implementation in real-life practice and develop DfMA knowledge-to-action framework for architects.Design/methodology/approachIt does so by (1) conducting observations in design meetings, documentary analysis and interviews, (2) thematic analysis through knowledge management (KM) perspectives and (3) based on this profound understanding, enriching the prior understanding of design as a double diamond process.FindingsThrough the lens of KM, DfMA is not merely a double but multiple diamond process, involving the iteration of making absenting interdisciplinary knowledge available, deciphering tacit knowledge explicit and embedding the knowledge in a design that well considers various criteria, the downstream manufacturing, logistics and assembly in particular. To execute multi-faceted knowledge acquisitions and implementations in DfMA, architects should balance their roles as humble learners, team coordinators, creative leaders and democratic negotiators.Originality/valueThis research reveals the DfMA implementation process, activities and dilemmas from real-world design meetings. The DfMA knowledge-to-action framework developed in this study, along with practice examples and lessons learned, can facilitate architects to play new roles. Future research is recommended to fine-tune the framework by having other stakeholders’ perspectives, refining it with additional cases and developing assistive tools for designers based on the framework.

Continuous manufacturing of monoclonal antibodies: Automated downstream control strategy for dynamic handling of titer variations

Handling long-term dynamic variability in harvest titer is a critical challenge in continuous downstream manufacturing. This challenge is becoming increasingly important with the advent of high-titer clones and modern upstream perfusion processes where the titer can vary significantly across the course of a campaign. In this paper, we present a strategy for real-time, dynamic adjustment of the entire downstream train, including capture chromatography, viral inactivation, depth filtration, polishing chromatography, and single-pass formulation, to accommodate variations in titer from 1–7 g/L. The strategy was tested in real time in a continuous downstream purification process of 36 h duration with induced titer variations. The dynamic control strategy leverages real-time NIR-based concentration sensors in the harvest material to continuously track the titer, integrated with an in-house Python-based control system that operates a BioSMB for carrying out capture and polishing chromatography, as well as a series of pumps and solenoid valves for carrying out viral inactivation and formulation. A set of 9 different methods, corresponding to the different harvest titers have been coded onto the Python controller. The methods have a varying number of chromatography columns (3–6 for Protein A and 2–10 for CEX), designed to ensure proper scheduling and optimize productivity across the entire titer variation space. The approach allows for a wide range of titers to be processed on a single integrated setup without having to change equipment or to re-design each time. The strategy also overcomes a key unexplored challenge in continuous processing, namely hand-shaking the downstream train to upstream conditions with long-term titer variability while maintaining automated operation with high productivity and robustness.

Auswirkungen eines CO2-Grenzausgleichs auf nachgelagerte Industrien

AbstractThis article analyses the cost implications of an EU Carbon Border Adjustment Mechanism (CBAM) for downstream industries in Germany. The restriction to a few basic industries as envisaged in the EU Commission’s proposal is expected to lead to only a slight increase in input costs for downstream manufacturers. This also holds if the CO2 intensities occurring in the countries of origin are used to determine the level of the border adjustment. One reason for this, apart from the restriction to a few basic materials and to direct emissions, is the small share of imports from third countries. To strengthen the steering effect of a CBAM, the inclusion of emissions at upstream production levels therefore seems manageable, to the extent that they apply to intermediate inputs that are also subject to the EU-ETS. In the long term, a CBAM should not be thought of as an end in itself, but as one of several steps towards an international climate club.

The choice of cooperative technology innovation strategies in a supply chain under governmental subsidy

Governments all over the world usually establish the policy of subsidies to stimulate firms’ technology innovation behaviors. The participating firms may share the high risk of expense through cooperative technology innovation. Different forms of governmental subsidies may have a significant impact on the choice of firms’ cooperative innovation strategies. This paper investigates the effect of government subsidies on firms’ technology innovation strategies. We consider two modes of cooperative technology innovation (technology transfer or joint innovation) in a two-level supply chain including an upstream manufacturer (UM) and a downstream manufacturer (DM) in the presence of two forms of governmental subsidies (a per-unit production subsidy or an innovation subsidy). We find that in the presence of either form of governmental subsidy, technology transfer mode is better off for the UM than joint innovation mode when the UM’s distribution power is greater than a threshold, otherwise joint innovation mode is better off. In the presence of a given form of governmental subsidy, the DM’s response strategy is influenced by the interaction of different values of the proportion of revenue and the fraction of innovation cost. In the presence of a per-unit production subsidy, the social welfare is always more under technology transfer mode than under joint innovation mode, while in the presence of an innovation subsidy, the opposite is true. We also show that under a given cooperative innovation mode, both the UM and DM expect a per-unit production subsidy if the per-unit tax credit is high, and they expect an innovation subsidy if the proportion of governmental subsidy is high. Finally, we discuss the robustness of the theoretical results.

Blockchain-Enabled Deep-Tier Supply Chain Finance

Problem definition: For many supply chains, deep-tier suppliers, due to their small size and lack of access to capital, are most vulnerable to disruptions. We study the use of advance payment (AP) as a financing instrument in a multitier supply chain to mitigate the supply disruption risk in a traditional system (with limited visibility) and a blockchain-enabled system (with perfect visibility). The main goal of this paper is to shed light on how blockchain adoption impacts agents’ operational and financial decisions as well as profit levels in a multitier supply chain. Academic/practical relevance: Traditionally, because of the limited visibility in the deep tiers, powerful downstream manufacturers’ financing schemes offered to their immediate upstream suppliers are not effective in instilling capital into the deep tiers. Advancements in blockchain technology improve the supply chain visibility and enable the manufacturer to better devise deep-tier financing to improve supply chain resilience. Methodology: We develop a three-tier supply chain model and take a game-theoretic approach to compare how blockchain-enabled deep-tier financing schemes affect a financially constrained supply chain’s optimal risk-mitigation and financial strategies. Results: We find that although improved visibility via blockchain adoption can help the manufacturer make informed supply chain financing decisions, whether it can benefit all supply chain members depends on the financing schemes in use. Blockchain-enabled delegate financing increases risk-mitigation investments and benefits all three tiers of the supply chain only when the tier 2 supplier is severely capital-constrained with the working capital below a threshold. Because delegate financing endows the intermediary tier 1 supplier with leverage over the manufacturer, the inefficiency inhibits an all-win outcome when the tier 2 supplier is not severely capital-constrained. Blockchain-enabled cross-tier direct financing exhibits a compelling performance as it always leads to win-win-win outcomes (and is thus ubiquitously implementable) regardless of the suppliers’ working capital profile. Managerial implications: Our insights help firms assess opportunities and challenges associated with enhancing supply chain visibility via blockchain adoption.

Subsidization or Diversification? Mitigating Supply Disruption with Manufacturer Information Sharing

With emergencies occurring frequently nowadays, supply disruption has become a potential threat to firms’ operations and supply chain sustainability. To mitigate supply disruptions, downstream manufacturers increasingly provide subsidization for improving supply reliability or implement diversification by employing a dual sourcing strategy. Under either strategy, we consider a supply chain in which a manufacturer with private demand information decides whether to share such information with an upstream supplier, whereas the supplier improves the supply reliability level. Contrary to conventional wisdom, we reveal that the manufacturer may have an incentive to share information with the supplier, and such information sharing can improve the supply reliability. Our results further indicate that when the reliability improvement efficiency is low, the manufacturer prefers diversification. In this situation, with a decrease in reliability improvement efficiency, she also shares the demand information. When the reliability improvement efficiency is medium, the manufacturer forgoes the subsidization and diversification strategies and only shares the demand information. When the reliability improvement efficiency is high and subsidy fraction is low, the manufacturer prefers to provide subsidy to help the supplier overcome the cost on improving reliability (subsidization). In this case, she keeps the demand information to avoid an aggressive wholesale price. We also extend our analysis to the scenario when the manufacturer is allowed to adopt both subsidization and diversification. Interestingly, such combined strategy may even undermine the manufacturer's profit.