Supply Chain Setting Research Articles

Renegotiations in the Presence of Supply Disruptions

We study the ability to renegotiate in a supply chain setting with the possibility of supply disruption. Disruptions are a real threat to supply chains, especially as the supply chains become longer and more complex. When buyers and sellers write a purchase contract, specifying every possible contingency related to disruptions may not be realistic. However, the ability to renegotiate once a disruption occurs can help buyers and suppliers find efficient solutions. We conducted a controlled laboratory experiment consisting of three studies, each exploring different conditions regarding relationship length, bargaining power, and communication. Our findings indicate that the ability to renegotiate increases buyer profit and decreases disruption inefficiency in short-term relationships but not in long-term ones. In free bargaining, where bargaining power is equal, the impact of renegotiation is greater than in ultimatum bargaining, where bargaining power is unequal. Additionally, when communication is not allowed in ultimatum bargaining, renegotiation significantly enhances buyer profit and reduces disruption inefficiency. These insights can assist managers in designing and negotiating incomplete contracts in environments prone to supply disruptions. The findings can aid managers in designing and negotiating incomplete contracts in environments with supply disruptions.

Power in coordinating supply chain projects in humanitarian settings: A case study of Rohingya refugee camps

AbstractHow and why is power used in humanitarian projects? Coordinating organizations, such as UN agencies, carry power and influence over NGOs to advance the interests of beneficiaries. However, coordination can be managed by a single authority or by multiple authorities that share or delegate responsibilities. Furthermore, coordinators may leverage different types of power, including non‐mediated forms like referent and expert power, or mediated forms such as reward, legitimate, or coercive power. This research draws upon 57 interviews regarding organizational behavior with members of international and local non‐governmental organizations (NGOs), UN agencies, and government officials involved in managing Rohingya refugee camps in Southern Bangladesh. The observations suggest that in single‐authority layered projects, referent and expert powers are commonly employed, leading to improvements in quality and delivery performance. Reward power is typically wielded informally and is linked to cost performance. In dual‐layered projects, legitimate power is used to enhance quality and delivery performance. This article's originality lies in its extension of the use of power to multi‐tiered supply chain settings; its contribution is to organizational theory regarding the resolution of principal‐agent issues; and its insights are into the nuanced effects of different types of power based on project types. It offers valuable guidance to policymakers and practitioners, highlighting effective approaches for coordinating inter‐organizational efforts in challenging and unconventional supply chain settings.

3D Printing-as-a-Service: An Economic Analysis of Pricing and Cocreation

Three-dimensional (3D) printing technology has opened up possibilities for product design collaborations between device providers and customers. To enable an environment of cocreation, device providers are now renting 3D printers via the 3D-as-a-Service (3DaaS) model. Although prior research has examined pricing and quality issues in the traditional manufacturing setup, these studies have not analyzed such decisions in the 3D printing supply chain setting, where end users possess the ability to customize product designs. Therefore, several important questions remain unanswered from the perspective of the 3D printing device provider. For example, what is the appropriate pricing model for providing 3DaaS? How do factors such as the extent of design customization and the complexity influence the pricing strategy of the 3DaaS firm? Our analysis shows that if the customers’ impact on the product quality is relatively high or low, the pay-per-build pricing model generates a higher profit than the fixed-fee pricing model. Interestingly, we also find that if customers frequently print highly intricate product designs, the firm might choose the pay-per-build pricing model, only if the likelihood of design failure for these complex structures is low. Otherwise, the firm might opt for the fixed-fee pricing model.

Optimizing negotiation process of buyer-supplier collaboration in the gambier supply chain

Abstract The current gambier supply chain presents the disparity issue in profit distribution between the business actors. This issue could be analyzed regarding the collaboration that exists between the involved parties, particularly in the negotiation process. The present study aims to develop an optimization model of the negotiation process between supplier (farmers) and collector (buyer) in gambier supply chain. In a decentralized supply chain setting, the linear programming is applied to develop the optimization planning model for both players. Optimized models were built to align the order level of buyers and the supply quantity of suppliers. The proposed negotiation process is applied iteratively to align the order and supply quantity. The developed models have been verified through computational testing using both real and estimated data. Practical implication of the research results can assist the related actors in the gambier supply chain.

The Relationship between Supply Chain Resilience and Digital Supply Chain and the Impact on Sustainability: Supply Chain Dynamism as a Moderator

This research aims to explore the complex interplay between supply chain resilience (SCR), digital supply chain (DSC), and sustainability, focusing on the moderating influence of supply chain dynamism. The goal is to understand how these elements interact within the framework of contemporary supply chain management and how they collectively contribute to enhancing sustainability outcomes. The sample size is 300 CEOs and managers. The study approach integrates quantitative research methods. Structural equation modeling (SEM) is utilized to quantitatively analyze the direct and indirect effects of SCR and DSC on sustainability. The numerous surveys we conduct among supply chain ecosystem stakeholders provide a rich picture of practical implications and contextual nuances. In sum, our early findings generally support a positive relationship between SCR and sustainability in and of itself, declaring the need for more resilient supply networks for sustainability. We further find the beneficial impact of digital technologies in promoting sustainability via enhancing environmental control and controlling for efficiency in supply chains. We also offer evidence to show that supply chain dynamism compounds the positive logic between SCR and DSC and sustainability. As a final word, it must be noted that our work speaks to the burgeoning literature on supply chain dynamism as a moderator by examining the direct and contingent effects of SCR and DSC not only on performance but sustainability. By shedding light on the moderating role of dynamism, the study provides fresh insights into the multifaceted nature of supply chain management and sustainability practices. The study’s findings enhance theoretical understanding by elucidating the synergistic effects of SCR, DSC, and sustainability in dynamic supply chain settings. The study augments the existing theoretical frameworks by integrating the concepts of resilience, digitalization, and sustainability into a comprehensive model. Practical and economical, the research offers actionable guidance for organizations aiming to improve sustainability performance through resilient and digitally advanced supply chains. By acknowledging the role of supply chain dynamism, managers can tailor strategies to manage disruptions effectively and leverage digital innovations. Economically, adopting sustainable practices can result in cost savings and competitive advantages. The research emphasizes the importance of aligning supply chain strategies with sustainability goals to drive long-term value and societal impact.

ESG disclosure and corporate cost stickiness: Evidence from supply-chain relationships

We investigate the effect of Environmental, social, and governance (ESG) disclosures by customer firms on suppliers’ cost stickiness in a supply-chain setting. Our findings indicate that ESG disclosures can mitigate suppliers' cost stickiness, mainly due to reduced optimistic expectations from suppliers' management. Further analysis reveals that the negative relationship intensifies with increased geographical and social distance between suppliers and customers, and when they belong to different industries.

Impact of supply risk on cost pass-through

ABSTRACT We study the cost pass-through rate in a supply chain setting where a buying firm sources from either a single unreliable supplier or dual unreliable suppliers. Numerous papers studying cost pass-through rates have assumed that supply is always certain and ample, which is not usually the case in practice. We find that the cost pass-through rate should depend on the supply uncertainty, its risk-sharing levels with upstream suppliers, and different sourcing strategies. In particular, the cost pass-through rate increases in supply risk-sharing levels, but decreases under single sourcing, compared to dual sourcing.

Challenges and opportunities for process intensification in Europe from a process systems engineering perspective

Process Intensification (PI) is an effective way to enhance process efficiency and sustainability at affordable costs and efforts, attracting particular interest in the European area, as one of the most important chemical production areas in the world. PI primarily contributes by developing and testing new processing technologies that once integrated within a process improve the overall process performance substantially but as a result, it may alter the overall process (flowsheet) structure and its dynamic behavior. As such PI plays a key role in improving energy efficiency, optimizing resource allocation, and reducing environmental impact of industrial processes, and thereby leading to a cost-effective, eco-efficient, low-carbon and sustainable industry. However, along with opportunities, the PI new technologies have challenges related to failures in longer-term performance. In this respect, Process Systems Engineering (PSE) stance is more on integration aspects of new PI technologies into processes by making process (re)designs, doing operability studies, and performance optimizations within a supply chain setting. PSE contributes to overcoming the challenges by providing systematic approaches for the design and optimization of PI technologies. This perspective paper is a lightly referenced scholarly opinion piece about the status and directions of process intensification field from a PSE viewpoint. Primarily, it focuses on PSE perspectives towards sustainable lower energy usage process systems and provides a brief overview of the current situation in Europe. It also emphasizes the key challenges and opportunities for (new) PI technologies considering their integration in a process in terms of process synthesis and design, process flowsheet optimization, process and plantwide control, (green) electrification, sustainability improvements. Potential research directions on these aspects are given from an industrial and academic perspective of the authors.

Norm spillover? How environmental regulation in downstream industries affects upstream corporate environmental disclosure

ABSTRACT Although firms nowadays widely adopt environmental information disclosure (EID) to respond to stakeholder pressures, their EID quality is quite different. In this study, we examine this EID variation from the perspective of spillover. We argue that EID regulation in downstream buying firms is likely to foster a ‘norm’ of high-quality EID. This norm is likely to spill over to the upstream supplying firms via the influence of buying firms. Using publicly listed firms in China’s stock exchanges during 2011–2020 as a sample, we find that firms are more likely to have high-quality EID when their key buying firms are located in EID regulated (heavy-polluting) industries. Further, media coverage of the supplying firms and the state ownership of buying firms are likely to exaggerate the norm spillover effect. The results still hold after several robustness tests. Additional analysis shows that interlocking directors between buying and supplying firms amplify the effect of buying firms’ EID regulation, which suggests the underlying mechanism of spillover. Finally, heterogeneity analysis shows that the effect of buying firms’ EID regulation varies across suppliers with different firm characteristics. Our findings contribute to the literature on both corporate EID quality and spillover effect in the supply chain settings.

Viewpoints on Robust Supply Chain Network Risk Assessment Using Dynamic Bayesian Networks

The text dissects the exploration of employing dynamic Bayesian networks (DBNs) for reliably assessing the risk posed to supply chain networks. A growing recognition of the complexity and intricacy of contemporary supply chain networks has sparked interest in novel methodologies such as DBNs that can model temporal and spatial dependencies effectively. DBNs emerge as a powerful analytical tool enabling probabilistic inference under prevailing uncertainties, capturing both the inherent and external risks. The paper demonstrates how these networks, bestowed with both temporal and causal mathematical frameworks, offer superior analytical traction over traditional methods in understanding the interconnected risk elements. We discuss their ability to appraise the ever-changing vulnerabilities in a supply chain setting, dynamically adapting to modifications brought by stakeholder actions or market changes. As supply chains burgeon in complexity, the role of DBNs in enabling a robust, comprehensive understanding of risk factors becomes increasingly paramount. Thus, the paper advocates for the DBNs' application as a transformative approach to risk assessment, providing significant foresight and adaptability in an unpredictable supply chain landscape.

Combining deep reinforcement learning and multi-stage stochastic programming to address the supply chain inventory management problem

We introduce a novel heuristic designed to address the supply chain inventory management problem in the context of a two-echelon divergent supply chain. The proposed heuristic advances the current state-of-the-art by combining deep reinforcement learning with multi-stage stochastic programming. In particular, deep reinforcement learning is employed to determine the number of batches to produce, while multi-stage stochastic programming is applied to make shipping decisions. To support further research, we release a publicly available software environment that simulates a wide range of two-echelon divergent supply chain settings, allowing the manipulation of various parameter values, including those associated with seasonal demands. We then present a comprehensive set of numerical experiments considering constraints on production and warehouse capacities under fixed and variable logistic costs. The results demonstrate that the proposed heuristic significantly and consistently outperforms pure deep reinforcement learning algorithms in minimizing total costs. Moreover, it overcomes several inherent limitations of multi-stage stochastic programming models, thus underscoring its potential advantages in addressing complex supply chain scenarios.

Supply chain risk model for cement industry based on interpretive structural model driven by FMEA

Purpose: This paper aims to identify, analyze, model the risk elements in the supply chain and further set future trends to evaluate risks in other domains of cement manufacturing industry. Cement is the second most consumed material in the world, has a fast supply chain in the global market. This has driven the authors to study the supply chain risks for this sector.Design/methodology/approach: Through a detailed literature review and interaction with industry experts, 19 risk elements have been identified that may disrupt the supply chain activities. Failure Mode and Effect Analysis (FMEA) is used to prioritize these risk elements based on the risk priority number (RPN). RPN is derived from the severity, occurrence, and detectability of these risk elements in various process functions of the supply chain. 10 risk elements are selected from this analysis that have higher priority number. Further, these elements have been fed to the Interpretive Structural Model (ISM) that derived the contextual interrelationship among these elements. Further MICMAC analysis has been implemented on the risk elements based on their driving and dependency power.Findings: Unpredicted heavy rainfall and energy shortages have been identified as the root causes of other risk elements. Increasing turnaround time in logistics and fleet adjustment during heavy demand, having the highest dependence power, are considered as the most important risk elements in the cement industry supply chain. Originality/value: This is the first study in the domain of supply chain risks which has analyzed and modelled risks for cement industry. This work would provide the decision-makers of cement industry to focus on the specific risk elements for reducing disruptions in the supply chain.

Effect of Guided Delegation and Information Proximity on Multitier Responsible Sourcing

Problem definition: Guided delegation, a practice in which companies provide guidelines when delegating supplier management to tier 1 firms, is a common practice in managing complex supply chains. We study the benefits and risks of this approach in a three-tier supply chain setting consisting of a buying firm, a tier 1 contract manufacturer, and tier 2 suppliers, where responsibility risk stems from the tier 2 suppliers. We analyze the buyer’s profit and the supply chain’s responsibility risk under a guided-delegation model, in which the buyer specifies an authorized tier 2 supplier for the tier 1 manufacturer as a guideline and may audit the tier 1 firm for compliance. We compare this model with a full-delegation model, in which the buyer fully delegates tier 2 supplier selection to the tier 1 firm. Methodology/results: We formulate a Stackelberg game for the buyer’s contract design problem. We show that guided delegation does not always yield its expected results of lower supply chain risk and greater buyer profit. In instances where compliance auditing is financially more attractive to the buyer than paying a premium for tier 1’s responsible sourcing, guided delegation can result in higher profit but increased risk because compliance auditing cannot completely eliminate the risk. Additionally, when tier 1 anticipates buyer audits and demands higher wholesale prices to offset potential penalties, guided delegation may lead to decreased risk but lower profit for the buyer. Our analysis shows that delegating audit responsibilities to tier 1 often does not improve the buyer’s profit, and in situations where it does, it invariably raises the supply chain risk. Managerial implications: Our research identifies the potential downsides of guided delegation, offering insight for external stakeholders on where to focus efforts to avoid these pitfalls. It suggests that the intended benefits of guided delegation can only be realized when paired with compliance auditing. Supplemental Material: The online appendix is available at https://doi.org/10.1287/msom.2020.0446 .

Pricing strategies in a dual-channel green closed-loop supply chain considering incentivized recycling and circular economy

In recent years, significant attention has been dedicated to the design of closed-loop supply chains. However, opportunities exist to refine modeling approaches in alignment with circular economy principles. This refinement could foster the collaborative involvement of customers and retailers, resulting in a more sustainable operational framework. This study aims to address this gap, fostering waste reduction, resource conservation, and collaborative engagement in closed-loop supply chains. Thus, a multi-level, dual-channel green closed-loop supply chain that integrates circular economy principles is examined. We focus on implementing an incentive-based recycling program and examining various closed-loop supply chain settings: centralized, decentralized, and collaborative. We aim to determine optimal equilibrium prices, greening levels, and advertising strategies while considering the concurrent aspects of greening and incentivized recycling in today environmentally conscious era. By developing a demand function that integrates price elasticity, cross-price impacts, sustainability, and advertising, we evaluate performance through numerical examples and a case study in the clothing industry. The findings indicate that a collaborative approach surpasses a decentralized one regarding sustainability, guaranteeing profitability across the supply chain. The study also underscores the trade-offs between centralization and decentralization, with the former failing to ensure maximum individual profitability despite augmenting overall chain profits. Our findings can guide managers in reconciling profitability with sustainability when choosing supply chain structures, accentuating the value of collaborative strategies and green cost-sharing contracts. Furthermore, our results highlight that targeted advertising can stimulate demand for green products, and incentivizing circular economy practices through collaboration can yield positive environmental and economic outcomes.

Does free brand spillover benefit online retailers? Roles of logistics service selection

Brand spillover is a pivotal tool that online retailers have adopted to market their new brand products, especially when competing against well-known product brands that prone to free-riding. This common practice seems beneficial to the adopters, but the motivation remains unclear in a supply chain setting. This study explores a co-opetitive supply chain in which a famous brand manufacturer (she) sells her own-branded products by commission via an online retailer (he) with a private label, who determines whether or not to utilize free brand spillover. The upstream manufacturer has to decide between two logistics service strategies, namely, Scenario T (i.e., using third-party logistics to serve the sales of their own-branded products) and Scenario R (i.e., employing the high-quality logistics of the online retailer). We explore the strategic interactions of the two firms and characterize their equilibrium. We reveal that when the decreased brand attractiveness of implementing third-party logistics is low, the brand manufacturer opts for the third-party logistics; otherwise, she embraces the high-quality logistics of the retailer. Interestingly, the brand manufacturer may be less inclined to utilize the logistics service of the retailer if he employs free brand spillover because it will help intensify market competition from the manufacturer’s perspective. Moreover, although free brand spillover enhances the attractiveness of the retailer’s private label without any cost, the retailer may not adopt it when the brand spillover intensity is low and the decreased brand attractiveness of the third-party logistics is moderate. Finally, we provide managerial insights and guidance for the firms’ managers on how to use the above strategies to obtain a “win–win” outcome. We also extend our analysis to the setting with imperfect substitutes, where the deterrence effect of brand spillover on the manufacturer’s logistics choice remains the same.

Supply chain preparedness: How operational settings, product and disaster characteristics affect humanitarian responses

Supply chains are dynamic and complex systems. This holds particularly true for humanitarian supply chains that operate under strong uncertainty. In view of an ever‐growing gap of unmet humanitarian needs, it is essential to gain a better understanding of the behavior of humanitarian supply chain systems. Despite a growing academic output in this field, there is a lack of empirical studies that take an integrated view on humanitarian supply chains and support decision makers with fact‐based evidence. Based on four extensive case studies and existing literature, we developed a system dynamics model that reflects the operational reality of humanitarian organizations in form of their centralized, hybrid and decentralized settings. The model provides a holistic supply chain view and measures the operational performance with regard to response cost, delivery lead time and impact on the local economy. Furthermore, we studied the impact of preparedness investments to enhance operational performance in the supply chain and deliver more humanitarian assistance with the limited resources available. Finally, we used our model to analyze the impact of major shocks such as the COVID‐19 pandemic to assess the vulnerability of humanitarian supply chains. The results indicate that operational settings, product and disaster characteristics have a major influence on the supply chain performance both in the noninvestment case as well as in the case where preparedness investments have been made. Specifically, for low‐value items, we find that decentralized settings have the lowest supply chain costs while for high‐value items the price difference between local and international procurement determines which setting is the most cost‐effective one. The preferability of the supply chain setting strongly depends on the indicator chosen. Hence, ultimately, the findings emphasize the need to apply appropriate indicators and identify their trade‐offs to comprehensively analyze the performance of humanitarian supply chain settings. The newly introduced Humanitarian Return‐on‐Investment concept can play an important role in this context.

A two-stage stochastic collaborative intertwined supply network design problem under multiple disruptions

An intertwined supply network (ISN) is a set of interconnected supply chains with dynamic structures that efficiently provide products and services to numerous customers. ISNs inherently involve collaboration among several enterprises that have their own supply chain. Such collaboration is pivotal in their long-term resiliency under major disruptions. This paper studies a two-stage stochastic network design problem that incorporates three different resilience strategies to design ISNs under a fair collaboration. We consider capacity expansion, capacity sharing, and rerouting as resilience strategies. We consider disruptions to be stochastic and to incorporate two sources of uncertainty: transportation costs and available capacity at facilities. We develop a Monte-Carlo simulation-based algorithm that uses the sample average approximation scheme to generate high quality solutions for our problem. We analyze the robustness and efficiency of the proposed model on a set of instances with up to 117 nodes and six collaborating enterprises. The value of collaboration on the ISN performance is assessed by a thorough sensitivity analysis of different metrics. In particular, we evaluate the impact of different levels and scales of random disruptions and flexibility on the network performance, which provides insights into the balance between cost and resilience.

The Role of Managerial Ability in Supply Chain Management

This study investigates whether supplier firms’ managerial ability affects their strategic decisions in supply chain management. Previous research documents that suppliers could collaborate with or be exploited by powerful major customers. I expect that suppliers with high-ability managers are perceived to be with more favorable future prospects to fulfill contractual obligations and thus possess stronger bargaining power. As a result, these suppliers could resist rent extraction from major customers and achieve supply chain collaboration, making it beneficial for them to operate with a concentrated customer base. Using a comprehensive sample of supply chain links, I hypothesize and find a positive association between managerial ability and customer concentration. I also find that suppliers with more able managers are more likely to continue their existing supply chain relationships. This paper extends the implications of managerial ability to the supply chain setting and adds to the understanding of collaboration/competition between suppliers and customers.

Safety stock placement in supply chains with expediting

Numerous documented implementations demonstrate the guaranteed-service (GS) model of safety stock optimization has applicability to practice. The standard GS (S-GS) model employs safety stock as the only countermeasure to satisfy a specified demand bound, assuming any demand in excess of the bound will be addressed by countermeasures which are not modeled. We extend the S-GS model to explicitly include expediting as a second countermeasure. Thus, our two-countermeasure GS (2C-GS) formulation addresses more demand variability explicitly than the S-GS model. We characterize a stage’s optimal base-stock level as the maximum of two base-stock calculations, and show how the resulting optimization problem can be efficiently solved using existing GS solution techniques. For normally distributed demand, we analytically characterize when the S- and 2C-GS approaches deploy different configurations of safety stock. For a series of numerical experiments, we find that the 2C-GS model places safety stocks at more stages than the S-GS model. When compared to the 2C-GS solution, the suggested safety stock positioning of the S-GS approach results in an average cost increase of 7%, and a maximum of 42%, in real-world supply chain settings. Furthermore, the benefits from expediting increase when downstream stages have greater expediting capability.

Supply chain visibility: A Delphi study on managerial perspectives and priorities

Visibility across supply chains has been a key concern for organisations for many years, but the tools and information systems to achieve real-time visibility have not been available until recently. In response to uncertainty and complexity, advanced information and communication technologies have been explored for supply chain visibility (SCV). However, managerial perspectives are largely absent from the current literature. In response, this paper systematically documents managerial factors influencing SCV and information that should be collected and shared among supply chain partners for better visibility. A multi-stage Delphi analysis was conducted with 26 supply chain experts from various globally recognised enterprises with manufacturing units located worldwide. The results provide details on prioritised managerial perspectives and experiences within (1) factors affecting SCV (drivers, enablers, challenges and contingencies), (2) SCV content (supplier, internal and customer information) and (3) implications of SCV (capabilities and performance effects). One observation was that forecasting is not deemed as important due to severe disruptions in supply chains. Real-time visibility for better predictability emerged as the top priority. This study is among the few that empirically explores factors influencing supply chain visibility and generates new insights into why barriers can be difficult to overcome in complex supply chain settings.