Part Of Supply Chain Research Articles

A critical incident approach to consumer response in the smartphone market: product, service and contents

Multitudes of theory-based models have been developed and applied to identify drivers behind user behaviors in various information systems (IS) markets. Although these theory-based models have been successful in identifying and explaining consumer behavior, their fixed nature necessitates customization efforts when applied to a specific usage context. In this paper, we utilized critical incident technique (CIT) as a complementary approach to IS user behavior study to traditional theory-based models in the context of the smartphone market. Through a two-stage survey, both positive and negative critical incidents are collected, which are categorized into device, device-related services, network services and content services. Then, their impacts on user intention variables of loyalty and recommendation are derived by a structural equation analysis of 795 smartphone users’ responses. The results can be summarized as follows: Positive critical incidents improve user intentions whereas negative ones worsen them; among the positive incidents, the events related to network services are the most influential; Critical incidents related to application contents are the most influential among the negative; Mobile device manufacturers are the most strongly affected by critical incidents among the smartphone supply chain parties. Merits of CIT in IS user behavior study have been demonstrated: CIT’s flexible nature provides convenience in adapting to a particular IS usage context; Both positive and negative incidents are examined, yielding a complementary implication to other methods. We also revealed that a conventional wisdom of CIT to focus mainly on negative critical incidents might have to be adjusted since positive ones might be more influential depending on the particular context of IS usage.

Service Channel Choice for Supply Chain: Who is Better Off by Undertaking the Service?

In recent years, increasing interests have arisen in adding product value through the provision of service. This study considers the problem in which a demand‐enhancing service can be provided by different supply chain parties, resulting in four alternative service channels: (a) manufacturer undertaking service, namely M‐channel, (b) retailer undertaking service, namely R‐channel, (c) manufacturer outsourcing service to third‐party (3P), namely M‐3P‐channel, and (d) retailer outsourcing service to 3P, namely R‐3P‐channel. We quantitatively model these service channels and derive the optimal decisions with the following observations: When the service costs are equal for the different parties, there is a conflict in service channel choice since both the manufacturer and the retailer prefer to undertake the service or hire the 3P by themselves, although M‐channel generates the highest market demand and system profit; When the service costs are different among these parties, R‐channel and 3P‐channels are more preferable if the service cost is less sensitive to the service level and if the market demand is more sensitive to the service level. We also conduct an empirical study to test some of the insights developed from the analytical models; our empirical findings support the analytical results.

Minimax Distribution-Free Procedure for Mixture Inventory Model with Variable Lead Time and a Service Level Constraint by Reducing Order Cost

SYNOPTIC ABSTRACTAs supply chains have become more extended in recent years, coordination and information sharing among supply chain members to improve system efficiency have attracted much interest. In order to achieve a higher degree of coordination and automation among the supply chain parties, the supply chain sometimes invests in reducing the ordering cost to streamline and speed up transactions via the application of information technology. If the ordering cost per order could be reduced effectively, then the total relevant cost per unit time could be automatically improved. In this study, we investigate a continuous review inventory model involving controllable lead time for the mixtures of distributions of the lead time demand, subject to a service level constraint in order to accommodate more practical features of the real inventory systems. Further, ordering cost can be reduced by an investment in which the optimal inventory control approach is shaped to account for the service level restriction.We assume that any mixture of distribution functions of the lead time demand gives only known finite, first two moments, but its probability distribution is unknown, and we apply a minimax distribution-free procedure to find the optimal solution. Moreover, a computational algorithm with the help of a computer code using the software MATLAB 7.0 is developed to solve the problem. A numerical example is presented to illustrate the theoretical results, and a sensitivity analysis is performed with respect to the various system parameters. Through sensitivity analysis, some observations and managerial implications are presented.

Control and enforcement in order to increase supplier inventory in a JIT contract

Prompt response to customer demand has long been a point of major concern in supply chains. “Inventory wars” between suppliers and their customers are common, owing to cases in which one supply chain party attempts to decrease its stock at the expense of the other party. In order to ensure that suppliers meet their commitments to fulfill orders on time, customers must formulate incentives or, alternatively, enforce penalties. This paper deals with a customer organization that has a contract with a supplier, based on Just-In-Time strategy. Initiating a policy of sanctions, the customer becomes the lead player in a Stackelberg game and forces the supplier to hold inventory, which is made available to the customer in real-time. Using a class of sanctioning functions, we show that the customer can force the supplier to hold inventory up to some maximal value, rendering actual enforcement of sanctions unnecessary. However, contrary to expectations, escalation of the enforcement level can in fact reduce the capacity of the supplier to replenish on time. Consequently, the customer must sanction meticulously in order to receive his inventory on time. Having the possibility to devote a few hours each day to sanctioning activity significantly reduces the customer's expected cost. In particular, numerical examples show that the customer's costs under an enforcement level may be only 2 percent higher than his costs in a situation in which all inventory is necessarily replenished on time.

Don't ask, don't tell: Sharing revenues with a dishonest retailer

When different supply chain parties have private information, some form of information sharing is required to improve supply chain performance. However, it might be difficult to ensure truthful information transfer when firms can benefit from distorting their private information. To investigate the impact of dishonest information transfer, we consider a single-supplier single-retailer supply chain that operates under a contract with a revenue sharing clause, providing the retailer incentive to underreport sales revenues. In practice, suppliers utilize audits based on statistical tools that, for example, compare the retailers’ sales reports and order quantities to limit, but not necessarily eliminate, cheating. We investigate the impact of such limited cheating on the different supply chain constituents. We show that when the retailer can exert sales effort, a supplier might benefit from the retailer's dishonesty. Our findings also suggest that if the retailer's negotiation power is high or if retailer effort is effective, the supplier should reduce the retailer's revenue share and absorb some of the demand risk to increase retailer participation. When facing a less powerful or less capable retailer, the supplier might be better off extracting profitability upfront through a higher wholesale price.

Cloud-Based Global Supply Chain: A Conceptual Model and Multilayer Architecture

The cloud manufacturing (C-Manufacturing) paradigm, as an advanced form of networked manufacturing, has recently been proposed based on a combination of existing manufacturing systems and emerging technologies, such as cloud computing, virtual manufacturing, agile manufacturing, manufacturing grid, Internet-of-things (IOT), and service-oriented technologies. In this study, through investigating the main goals of C-Manufacturing and today's hypercompetitive global marketplace circumstances, a prospective conceptual model called cloud-based global supply chain (CBGSC) has been developed which can overcome or mitigate the issues and risks associated with supply chain processes on a global scale. CBGSC extends the conventional three-tier customer–manufacturer–supplier supply chain model into a new five-tier customer–cloud provider of manufacturing applications (CPMA)–manufacturer–cloud provider of supplying applications (CPSA)–supplier model, in which the CPMA and CPSA tiers act as intermediators in order to enhance the diversity and intensity of the markets and businesses of conventional supply chain parties while securing their own profits. On the other hand, CBGSC enriches the notion of C-Manufacturing by incorporating CPSAs to safeguard smooth and continuous supply of raw materials and goods to manufacturers (physical resource providers), thus prevailing the “share to gain” philosophy within the whole network. Also, aiming to facilitate practicalizing the CBGSC, we have proposed a multilayer architecture for the CBGSC with seven layers of user, interface, application, service, resource virtualization and service encapsulation, perception, and resource, which are blended together via four basic aspects of security, optimality, resilience, and information technology (IT) and information and communications technology (ICT) infrastructure.

Managing channel profits of different cooperative models in closed-loop supply chains

The importance of closed-loop supply chains has been widely recognized in literature and in practice. The paper investigates interactions among the different parties in a three-echelon closed-loop supply chain consisting of a single manufacturer, a single retailer and two recyclers and focuses on how cooperative strategies affect closed-loop supply chain decision-making. Various cooperative models are considered by observing recent research and current cases, and the optimal decisions and supply chain profits of these models are discussed. By comparing various coalition structures, we discover that cooperative strategies can lead to win–win outcomes and increase an alliance׳s profit and can be effective ways of achieving greater efficiency from the point of view of the overall supply chain. Finally, the paper presents a detailed comparative analysis of these models and provides insights into the management of closed-loop supply chains.

Inequity aversion in a joint economic lot sizing environment with asymmetric holding cost information

Screening contracts (or ‘menu of contracts’) are frequently used for aligning the incentives in supply chains with private information. In this context, it is assumed that all supply chain parties are strictly (expected) profit-maximizing. However, previous empirical work shows that this is a critical assumption. In fact, it seems that inequity adverse subjects are willing to invest money for achieving higher relative payoffs. Interestingly, the classical approach to design incentive compatible mechanisms gives the agent cheap leeway to increase relative pecuniary payoffs and thereby achieving more equitable profit allocations, because the agent is left (almost) indifferent between two contract alternatives. In other words, we argue (and actually observe in laboratory experiments) that this classical approach of contract design allows the agent to achieve more equitable outcomes at low cost. Since the agent’s better relative performance solely stems from reducing the principal’s payoffs, we observe a substantial negative impact on the overall supply chain performance. The present work relaxes the assumption of the profit-maximizing buyer (agent) in a serial supply chain for a lot sizing framework with asymmetrically distributed holding cost information and deterministic end-customer demand. The study provides researchers and managers an approach on how to account for disadvantageous inequity aversion (ie, the agent suffers from profits being lower than the principals profits) by designing a contract that anticipates such behaviour while providing a solution method for the resulting non-linear mathematical program. We denote the resulting contract as ‘behavioural robust’, since it limits the inefficiency losses that result if agents exhibit disadvantageous inequity aversion instead of being strictly profit-maximizing. A numerical study compares the advantages of the ‘behavioural robust’ contract against the classical screening contract. The results highlight that supply chain performance losses can be substantially reduced under the behavioural robust contract.

Coordinating collaboration in contractually different complex construction projects

Purpose– The paper aims to compare the coordination of supply chain networks in contractually different complex construction projects.Design/methodology/approach– A comparative case study of the coordination of collaborative work in two successful hospital construction projects was conducted. One of the projects applied multiple dyadic contracts, whereas the other project applied one multi-party contract between the parties. The projects were located in the USA. Data were collected by observing the coordination on the construction sites for six weeks and by conducting 72 interviews.Findings– The paper shows that depending on the contract type, the timing and extent of complementary procedural coordination differs during projects. Compared with one multi-party contract, the dyadic contracts needed to be complemented during the design phase with three additional procedural coordination mechanisms: organizational design, processes for collaborative work and integrated concurrent engineering sessions. Additionally, common rules of conduct were taken into use during the construction phase. However, regardless of the contract type, procedural coordination mechanisms, such as co-located working, collaborative decision-making in inter-organizational meetings, a liaison role and shared project goals were needed throughout the projects.Practical implications– If multiple dyadic contracts are applied, procedural coordination mechanisms have to be co-created by all supply chain parties at the beginning of the project.Originality/value– The paper provides an understanding on successful contractual and complementary procedural coordination mechanisms of supply chain networks in complex construction projects.

Contracting for Capacity under Renegotiation: Partner Preferences and the Value of Anticipating Renegotiation

This paper studies contract renegotiation in a stylized supply chain model. Two original equipment manufacturers (OEMs) sign fixed‐quantity contracts with a contract manufacturer (CM) prior to demand realization. Contract renegotiation after demand realization allows the OEMs to use capacity that is more or less than what they contracted for. We assume that the extra profit due to efficient allocation of capacity is allocated to the supply chain parties according to the egalitarian rule and investigate when an OEM's expected post‐renegotiation profit is maximized. We aim to understand how an OEM's expected post‐renegotiation profit is affected by her ability to negotiate a low wholesale price in the initial contract as well as the ability of the other OEM to do the same. Regardless of whether renegotiation is anticipated or not at the time of the initial contract, we find that an OEM, who had weak buyer power vis‐a‐vis the CM and was unable to negotiate a low wholesale price in the initial contract, may benefit more from renegotiation than a stronger OEM. In addition, we show that how the expected post‐renegotiation profit of an OEM changes with demand variance or anticipating renegotiation depends on the strength of the OEM's buyer power. Finally, we numerically test the robustness of our results in a supply chain with three OEMs and also identify when the OEMs prefer to leave the CM out of the renegotiation.

Evaluating the Modern Airlines Maintenance Parts Supply Chain Reliability and Effectiveness

The estimation of RFID in the support of supply chains of aircraft parts is of growing interest and is analyzed, especially in the proposed analytical model of this paper. This model helps us pick up a superior comprehension of the connections between different expenses brought about and the RFID impact on an aircraft support following procedure. Utilizing a RFID system, the company specialized in aircraft parts can accumulate savings. For this we need to consider that technology can remove inaccuracy in inventory delays brought about by mishandling in the component repair. This contextual analysis represents wonder through the utilization of numerical suppositions, highlighting the advantages of RFID. Furthermore, the estimation of RFID in aircraft maintenance is assessed utilizing sensitivity analysis, as per the parameters of the model of expense decreases in misusing repair parts and inventory control. The discoveries support the industry acceptance of RFID innovation, demonstrating that this is beneficial to support organizations of aircraft parts. Finally, in this paper we are considering the mishandling of the damaged parts of the air craft and also the cost reduction and the mishandling of the inventory parts. A sensitivity analysis is also carried out for the parameters that are used for the decrease in the utilizing the parts, cost reduction and the inventory control.

Transport outsourcing and transport collaboration relationship: The risk hedging perspective

Although transport outsourcing decision-making and collaborative transport management (CTM) have been “hot topics” for years, their links are still not thoroughly explored. The purpose of this paper is to contribute to a better understanding of the relationship between them. In particular, we focus on the conflicting and complementary features of these concepts with regard to their capability to hedge against transport outsourcing-related risks. Transport outsourcing is often a tool for transferring part of the demand risks from the primary parties in supply chains to transport service providers. However, new relationships introduce some new risks - outsourcing contract risks. It is important to identify, estimate and compare such kinds of risks. Transport collaboration may decrease both the demand risks and the outsourcing contract risks, although the relationship with the latter is more complex. It is used an exploratory research based on a combination of a literature review and empirical examples.

Internet medicine and pharmacies: Private choice, public risks, and healthcare business

IntroductionThe injury or liability principle articulated by the classic political economist, John Stuart Mill, proscribes state intervention in private choices and actions that do not impose harmful costs on others. This study determines its validity in the context of the Internet model of healthcare business. Specifically, it examines the supply chain, marketing, and (vertical and horizontal) third party effects of online medicines and medical information.MethodsTrending was performed to extract underlying patterns of online production and consumption behavior in a time series. Although Internet pharmaceutical markets are borderless and global, the study delimits the regulatory framework to the United States.ResultsUtility-maximizing preferences combine with cognitive tendencies to build and sustain consumer trust and confidence in Internet-based medicines and healthcare services. These provide distinct supply chain, marketing, and networking advantages to rogue pharmacies, while evading traditional regulatory safeguards, at the expense of drug quality, consumer safety, and market integrity. However, public policy interventions in Internet medicine and pharmacies can be costly and burdensome.ConclusionThe study suggests a utilitarian valuation of Mill's injury principle because it is concerned not only with individual freedom from restraint, but with autonomy to which freedom from government interference is a means rather than an end in itself. The efficiency and multi-polar accountability of policy interventions, rather than their necessity, are major challenges in the context of Mill's principle. Distinguishing between legitimate and counterfeit medications sold online carries heavy transaction costs, while any actual and potential harms resulting from the Internet trade, and their containment, have significant third party effects.Key messagesEfficient solutions to problems and issues raised by pharmaceutical lemons inevitably entail some form of government intervention, even if market-oriented approaches are pursued. Governments should consider if better attribution of property rights, altering incentives of Internet sellers, and a tort-based system are more efficient than heavy reliance on criminal law. Nonetheless, the study asserts that regulating the public regulators is just as critical as outsourcing regulation, supply chain tracking and data-banking, marketing disincentives, multi-pronged educational initiatives, and intersectoral and intergovernmental collaborations.

Analysis of three level supply chain of inventory with deterioration for multi-items

Article history: Received October 2 2013 Received in Revised Format Mach 17 2014 Accepted March 28 2014 Available online April 1 2014 The objective of this work is to generalize the three echelon supply chain model proposed by Jaber and Goyal (2008) [Jaber, M. Y., & Goyal, S. K. (2008). Coordinating a three-level supply chain with multiple suppliers, a vendor and multiple buyers. International Journal Production Economics, 116, 95-103.] for multi-items where single item was considered in production and distribution. This paper develops the coordination amongst different parties in a three-echelon supply chain with a centralized decision process. Producer, suppliers and retailers are the parties of the supply chain where multiple suppliers deliver various types of raw materials to a producer; producer produces different types of items, multi-items, in different units of the factory and supplies the items to multiple retailers. Different deterioration rates for finished items and raw materials are also considered. The model developed of this paper guarantees that the local costs for the members either remain the same as before coordination, or decrease as a result of coordination. A numerical example along with graphical illustrations is considered and the sensitivity analysis is provided to test the feasibility of the proposed model. © 2014 Growing Science Ltd. All rights reserved

The Impact of Power Differentials on Management Accounting in Supply Chain Relationships: An Exploratory Study of Technology Firms

The process of inter-firm relationships often involves a rich interplay between the parties that works to take advantage of each other’s capabilities. Prior studies have shown that changing partner capabilities after the initial formation have a large impact on the subsequent development and success of the relationship. We add to this research by examining how combinations of different resource-based sources of bargaining power held by contracting parties in the supply chain drive their appropriation, coordination and cooperation concerns; and how these concerns affects the use of management control decisions. We develop a framework that contrasts the two common sources of resources-based bargaining power that describe the specific endowments of buyers and suppliers in a business to business relationship: market dominance and design dependence. Under resource-based bargaining power asymmetry we propose that the resource dominant partner will use management controls to address appropriation concerns, while the weaker partner will use the same to address coordination concerns. Under resource-based bargaining power symmetry and high interdependence relationships we propose that in addition to dealing with appropriation and coordination concerns, both partners will use management controls as a relational signal in addressing cooperation concerns. We examine this framework using case studies of five well known multinational electronics original design manufacturers, as they relate to the management of their component suppliers. We observe that the use of management control practices by buyers is different across different combinations of buyer market dominance and supplier design dependence.

Infrared analysis for counterfeit electronic parts detection and supply chain validation

Within the electronics industry, counterfeit electronic components entering the supply chain have steadily become an increasing threat accounting for more than 8 % of global merchandise trade and an annual $600 billion enterprise. Currently, there are not many cost-effective and nonintrusive solutions for counterfeit detection of electronic parts. In this paper, the authors present a statistical approach for detecting counterfeit components based on infrared (IR) analysis by the use of independent component analysis (ICA). As a prominent higher-order statistical analysis technique, ICA is capable of extracting relevant features from IR data. The latest applications and the extended algorithms of ICA have been elucidated for the purposes of classification and identification of counterfeit electronic parts. The theoretical framework of ICA is presented along with extensive experimental results to illustrate its feature extraction function in counterfeit electronic parts detection.

A single-vendor single-buyer joint economic lot size model subject to budget constraints

In current competitive business environment, firms have realized that integrated scheduling and managing their supply chain through its different levels is substantial. On the other hand, the supply chain parties act under some restrictions, and ignoring these limitations results in infeasible solutions in many real-world case studies. The purpose of this paper is to present a joint economic lot size (JELS) model, which considers the buyer's and the vendor's budget limitations to achieve a more reliable model solution. The idea is to present an extension of the model originally proposed by Ben-Daya et al. (Eur J Oper Res 185:726–742, 14). In addition, a solution algorithm is presented to make the solution procedure of proposed constrained model less complex. Numerical analysis is conducted to show the effect of applying the budget constraints.

A Holistic Incentive Model of Information Sharing in Supply Chain

It is broadly recognized by global companies that information sharing is one of the key aspects of coordination amongst parties in a supply chain. Companies can efficiently manage the product flow and information related to the issues such as production capacity, customer demand and inventory at lower costs through information sharing. Different incentive mechanisms were presented to tackle the complexities in information sharing. However, the relation between different incentive mechanisms and the performance measures of supply chain is not yet developed. The objectives of this paper are to: understand and appreciate various incentive mechanisms available for information sharing in supply chain, propose a holistic model to explore different incentive mechanisms both quantitative and qualitative and their value in supply chain.

A Quantal Choice 'Paradox' in a News Vendor Experiment: The Dominant Anchoring Effect

Experimental newsvendor studies have shown that mean order quantities deviate from the normative predictions. In an effort to explain this phenomenon, a number of behavioral models have been proposed that can accurately account for this mean ordering behavior. However, an often overlooked result of newsvendor experiments is that order quantities exhibit considerable variability, despite the fact that price and cost parameters are constant. In this paper, we develop a simple behavioral model that predicts both mean order quantities and order variability. We begin by first describing our forecast anchoring model, which relies on a combination of simple decision heuristics, rather than an expected utility approach. We then fit the model by the generalized method of moments to a well-known newsvendor experimental data set. The estimated model parameters are used to generate predictions for ordering decisions in a separate external newsvendor data set, as an out-of-sample test. We find that our forecast anchoring model can predict both the mean and variability of order quantities well. Furthermore, as a robustness check, we conduct our own newsvendor experiment, which considers a unique setting with asymmetric two-point demand. We show that our model continues to fit ordering decisions well, whereas other models are not robust enough to provide an accurate fit in this setting. Across the different data sets, we also find a consistent pattern of subjects tending to anchor heavily on their demand forecast when the product profit margin is high. Overall, our study provides a new perspective for explaining and predicting order variability observed in behavioral inventory decisions. Our model predictions can help the upstream supply chain party better anticipate the order variability from the downstream buyer and thus improve profitability.

Dynamic conformance and design quality in a supply chain: an assessment of contracts’ coordinating power

We consider a two-echelon supply chain involving one manufacturer and one supplier who collaborate on improving both design and conformance quality. Design quality is supposed to increase product desirability, and therefore market demand, while conformance quality should reduce the proportion of defective items, and therefore increase the manufacturer’s sales revenue. We investigate how the supply chain parties allocate effort between design and conformance quality under both cooperative and non-cooperative settings in an intertemporal framework. Furthermore, we evaluate wholesale price contracts and revenue-sharing contracts in terms of their performance and coordination power. We show that although a revenue-sharing contract enables the manufacturer to effectively involve the supplier in quality improvement, neither contract type allows for perfect coordination resulting in the quality that can be achieved by a cooperative supply chain. We thus suggest a reward-based extension to the revenue-sharing contract, to ensure system-wide optimal quality performance. Importantly, we find that the supplier would be better off adopting a reward-based revenue sharing contract and refusing a standard revenue-sharing contract, while the opposite would be true for the manufacturer.