Introduction to the Special Issue on Humanitarian Operations and Crisis Management

The Genesis of this Special Issue came from the Board of the POMS College on Humanitarian Operations and Crisis Management (HO&CM). It was seen as a necessary initiative to define the field and examine research opportunities. This Special Issue shows that humanitarian operations pose challenges for P/OM researchers and practitioners that differ markedly from those of conventional supply chains associated with profitable enterprises. On the basis of the eight articles in this Special Issue, we have described and demonstrated the unique characteristics of the POM/HO&CM interaction. We have also identified those attributes that tend to overlap with conventional aspects of POM. In addition to wanting to be cost effective, the issue of equity fairness is pervasive in humanitarian operations, and so is the need to always base considerations on “last‐mile logistics,” that is, getting aid to those in most need. Research is essential to determine how to train researchers to scout out and map the territory of the real problems. One of the most vexing problems is the lack of robust data in the humanitarian domain which is as richly varied as the types of disasters that can occur.     

Improving Humanitarian Operations through Technology‐Enabled Collaboration

Humanitarian supply chains involve many different entities, such as government, military, private, and non‐governmental organizations and individuals. Well‐coordinated interactions between entities can lead to synergies and improved humanitarian outcomes. Information technology (IT) tools can help facilitate collaboration, but cost and other barriers have limited their use. We document the use of an IT tool to improve last‐mile supply distribution and data management in one of many camps for internally displaced persons after the January 2010 earthquake in Haiti, and we describe other current uses of technology in camp management. Motivated by these examples and the interest among humanitarian organizations in expanding the use of such tools to facilitate coordination, we introduce a cooperative game theory model and explore insights about the conditions under which multi‐agency coordination is feasible and desirable. We also outline an agenda for future research in the area of technology‐enabled collaboration in the humanitarian sector.     

保鲜投入影响需求的社区生鲜O2O模式选择与协调研究

在由一个生鲜电商和社区零售店组成的生鲜O2O供应链中,生鲜电商可选择批发模式或佣金模式与社区零售店进行合作。本文考虑价格、保鲜投入水平和增值服务水平影响生鲜农产品需求,分别构建批发模式与佣金模式下的供应链博弈模型,分析了不同模式下新鲜度敏感系数对供应链最优决策的影响,探究了生鲜电商的最优合作模式选择问题。针对生鲜电商和零售店可实现合作模式改善的情形,设计了转移支付契约,分析了合作模式改善对定价、服务和保鲜策略的影响。研究表明,当佣金率低于(高于)1/2时,若保鲜效率较低,生鲜电商选择佣金(批发)模式,若保鲜效率较高,生鲜电商选择批发(佣金)模式。当保鲜效率很低且服务效率相对较高时,零售店总是更偏好佣金模式,但其要求的佣金率不宜过高,否则生鲜电商会选择对其次优的批发模式。当保鲜效率和服务效率都较低时,合作模式的改善不仅能实现供应链成员利润改善,还可以使消费者以低价买到优质的生鲜农产品,增加消费者剩余。     

Replenishment Strategies for Micro‐Retailers in Developing Countries

When formal distribution channels are absent in developing countries, micro‐retailers travel a long distance to replenish their stocks directly from suppliers. This “informal” replenishment strategy is inefficient due to high imputed travel costs involved in the replenishment process. To improve efficiency, one “hybrid” replenishment strategy has emerged under which one of the micro‐retailers in a neighborhood, while continuing its own retail business, also operates as a wholesaler to serve other micro‐retailers in the neighborhood. A major obstacle for the transition from the informal strategy to the hybrid strategy is that the micro‐retailers are reluctant to source from a wholesaler who also competes with them in the retail market. Thus, it is not clear when the micro‐retailers adopt the hybrid strategy instead of the informal strategy. Meanwhile, the micro‐retailers may prefer the “formal” strategy: a traditional replenishment strategy under which one of the micro‐retailers relinquishes its retail business and operates purely as a wholesaler. We examine a situation when competing micro‐retailers contemplate with the three potential aforementioned replenishment strategies. Our equilibrium analysis of the two‐store model reveals that the dominant strategy is: (a) the hybrid strategy when the travel cost is high; (b) the formal strategy when the travel cost is medium; and (c) the informal strategy when the travel cost is low. This key insight is shown continue to hold when we extend the two‐store model to incorporate other issues including: quantity discounts from the supplier, variable operating costs, price competition, local monopolies, and different decision sequences. One additional finding is that the transition from the informal strategy to the hybrid strategy could benefit consumers if the micro‐retailers receive quantity discounts from the supplier. Furthermore, when there are more than two stores, we show that the formal strategy is never dominant. Moreover, when the number of stores increases, the hybrid strategy becomes more preferable to the informal strategy.     

Differential Pricing for Information Sharing Under Competition

We consider a two‐echelon supply chain with a manufacturer supplying to multiple downstream retailers engaged in differentiated Cournot competition. Each retailer has private information about uncertain demand. The manufacturer is the Stackelberg leader who sets the contract terms with the retailers, and benefits from retailers sharing their private information. When all retailers are given the same wholesale price, truthful information sharing is not an equilibrium outcome. We propose two variants of differential pricing mechanisms that induce truthful information sharing by all retailers. The first variant rewards a retailer for providing optimistic information and achieves truthful information sharing as a unique equilibrium. The differential pricing mechanism is optimal in the class of linear‐price, incentive‐compatible, direct mechanisms. The second variant, which incorporates provision for a fixed payment in addition to wholesale prices, preserves all the equilibrium properties of the first variant and additionally “nearly coordinates” the supply chain. Our analysis of differential pricing with a fixed payment provides interesting observations regarding the relationship between product substitutability, number of retailers, information precision, and market power. As products become closer substitutes and/or number of retailers increase, the manufacturer's market power increases, enabling her to extract a larger fraction of the supply chain surplus.     

Pay‐Back‐Revenue‐Sharing Contract in Coordinating Supply Chains with Random Yield

We consider coordination issues in supply chains where supplier's production process is subject to random yield losses. For a simple supply chain with a single supplier and retailer facing deterministic demand, a pay back contract which has the retailer paying a discount price for the supplier's excess units can provide the right incentive for the supplier to increase his production size and achieve coordination. Building upon this result, we consider coordination issues for two other supply chains: one with competing retailers, the other with stochastic demand. When retailers compete for both demand and supply, they tend to over‐order. We show that a combination of a pay back and revenue sharing mechanism can coordinate the supply chain, with the pay back mechanism correcting the supplier's under‐producing problem and the revenue sharing mechanism correcting the retailers' over‐ordering problem. When demand is stochastic, we consider a modified pay‐back‐revenue‐sharing contract under which the retailer agrees to not only purchase the supplier's excess output (beyond the retailer's order), but also share with the supplier a portion of the revenue made from the sales of the excess output. We show that this contract, by giving the supplier additional incentives in the form of revenue share, can achieve coordination.     

供应链中销售商不同竞争地位的比较研究

本文在确定性需求的假设下,基于销售商竞争地位的不同,对由一个制造商和两个供应商组成的供应链进行分析,得出了销售商谋求不同竞争地位应满足的不同条件,比较了不同竞争地位情况下相对应的社会福利、消费者剩余和产业利润等。     

Distributing a Product Line in a Decentralized Supply Chain

Although there is a rich literature on single product distribution in decentralized supply chains, the incentive problems that arise in distributing a product line have largely not been investigated. In practice, most manufacturers distribute a line of products with different features and qualities and not just a single product. Consider a manufacturer who distributes a product line through competing downstream retailers. In this setting, we investigate how and why the retailers' price and inventory decisions deviate from the centrally optimal decisions. Due to substitution between different product variants, as well as between different retailers, the incentive problems associated with distributing a product line are more complicated than that of distributing a single product. We characterize retailers' incentive distortions under a residual‐claimancy contract, and construct contracts that achieve channel coordination. We show that retail price floors or inventory buybacks, appropriately tailored to each product variant, are among the contracts that can achieve coordination. Using numerical simulations, we demonstrate how the optimal contract terms (such as wholesale prices and buyback prices) for each variant are influenced by the parameters of an underlying consumer choice model.     

The Dynamics of Domestic Gray Markets and Its Impact on Supply Chains

Gray markets are created by unauthorized retailers selling manufacturer's branded products. Similar to international gray markets, domestic gray markets are a growing phenomenon whose impact on supply chains is not clear. We consider a supply chain with one manufacturer and several authorized retailers who face a newsvendor problem and a domestic gray market. While a gray market provides an opportunity for retailers to clear their excess inventory (inventory‐correction effect), it also can be a threat to their demand (demand‐cannibalization effect). We first characterize the emerging equilibrium by assuming an MSRP environment. Comparing a decentralized and centralized system, we show that a wholesale pricing contract is quite efficient in a gray market environment; we explain the underlying mechanism and note some of the operational decisions that could hurt that efficiency. We show that the gray market price determines the degree of both the negative effects of demand‐cannibalization and the positive effects of inventory correction, which in turn determines the net impact of gray markets on the retailer's stocking choice and, ultimately, the manufacturer's profit. We then study the authorized retailers' problem as a price‐setting newsvendor. We observe that the gray market creates price competition between the authorized and unauthorized retailers, causing a drop in the primary market price. However, this price competition can be counteracted by the authorized retailers' stocking decision. Finally, we extend our model to consider the cases where the demand can be correlated across retailers.     

Designing Efficient Infrastructural Investment and Asset Transfer Mechanisms in Humanitarian Supply Chains

We analyze the efficacy of different asset transfer mechanisms and provide policy recommendations for the design of humanitarian supply chains. As a part of their preparedness effort, humanitarian organizations often make decisions on resource investments ex ante because doing so allows for rapid response if an adverse event occurs. However, programs typically operate under funding constraints and donor earmarks with autonomous decision‐making authority resting with the local entities, which makes the design of efficient humanitarian supply chains a challenging problem. We formulate this problem in an agency setting with two independent aid programs, where different asset transfer mechanisms are considered and where investments in resources are of two types: primary resources that are needed for providing the aid and infrastructural investments that improve the operation of the aid program in using the primary resources. The primary resources are acquired from earmarked donations. We show that allowing aid programs the flexibility of transferring primary resources improves the efficiency of the system by yielding greater social welfare than when this flexibility does not exist. More importantly, we show that a central entity that can acquire primary resources from one program and sell them to the other program can further improve system efficiency by providing a mechanism that facilitates the transfer of primary resources and eliminates losses from gaming. This outcome is achieved without depriving the individual aid programs of their decision‐making autonomy while maintaining the constraints under which they operate. We find that outcomes with centralized resource transfer but decentralized infrastructural investments by the aid programs are the same as with a completely centralized system (where both resource transfer and infrastructural investments are centralized).     

Co‐opetition and Investment for Supply‐Chain Resilience

This paper considers the problem of disruption risk management in global supply chains. We consider a supply chain with two participants, who face interdependent losses resulting from supply chain disruptions such as terrorist strikes and natural hazards. The Harsanyi–Selten–Nash bargaining framework is used to model the supply chain participants' choice of risk mitigation investments. The bargaining approach allows a framing of both joint financing of mitigation activities before the fact and loss‐sharing net of insurance payouts after the fact. The disagreement outcome in the bargaining game is assumed to be the result of the corresponding non‐cooperative game. We describe an incentive‐compatible contract that leads to First Best investment and equal “gain” for all players, when the solution is “interior” (as it almost certainly is in practice). A supplier that has superior security practices (i.e., is inherently safer) exploits its informational advantage by extracting an “information rent” in the usual spirit of incomplete information games. We also identify a special case of this contract, which is robust to moral hazard. The role of auditing in reinforcing investment incentives is also examined.     

Supplier Capacity and Intermediary Profits: Can Less Be More?

We identify market conditions under which intermediaries can thrive in retailer‐driven supply chains. Our main finding is that, as a consequence of the retailers’ leadership position, intermediaries prefer products for which the supply base (existing production capacity) is neither too narrow nor too broad; that is, less existing capacity can result in more intermediary profit. We also show that our main finding is robust to (i) the presence of horizontal competition among retailers and intermediaries, (ii) the existence of exclusive suppliers, and (iii) the ability of the retailers to source directly from the suppliers. Nevertheless, we find that horizontal competition between intermediaries encourages them to carry products with relatively smaller production capacity, whereas exclusive suppliers and direct sourcing encourage intermediaries to carry products with relatively larger installed capacity.     

Innovations in humanitarian supply chains: the case of cash transfer programmes

Abstract

Cash transfer programmes (CTPs) are revolutionizing humanitarian supply chains (HSCs), yet just how CTPs are to be understood as innovation, and how they impact on HSCs, remains unclear. Innovation in the humanitarian context more often than not stems from outside humanitarian organizations – that is innovation occurs in their supply chain. The aim of this study is to further the understanding of supply chain innovation (SCI) in the humanitarian context. Based on empirical evidence this article suggests a supply chain innovation model (SCIM). This SCIM is useful because it allows different processes to be understood and compared, by providing guidance on how innovations progress. The contribution of this research is threefold: First, the research presents a SCIM for the humanitarian context. Second, this is the first application of a SCIM to the humanitarian environment. Finally, the research is field based and grounded in empirical observations thus adding to the literature and offering insights to practice.     

Competition and Coordination in a Two‐Channel Supply Chain

We study competition and coordination in a supply chain in which a single supplier both operates a direct channel and sells its product through multiple differentiated retailers. We study analytically the supply chain with symmetric retailers and find that the supplier prefers to have as many retailers as possible in the market, even if the retailers' equilibrium retail price is lower than that of the supplier, and even if the number of retailers and their cost or market advantage prevent sales through the direct channel. We find that the two‐channel supply chain may be subject to inefficiencies not present in the single‐channel supply chain. We show that several contracts known to coordinate a single‐channel supply chain do not coordinate the two‐channel supply chain; thus we propose a linear quantity discount contract and demonstrate its ability to perfectly coordinate the two‐channel supply chain with symmetric retailers. We provide some analytical results for the supply chain with asymmetric retailers and propose an efficient solution approach for finding the equilibrium. We find numerically that the supplier still benefits from having more retailers in the market and that linear quantity discount contracts can mitigate supply chain inefficiency, though they no longer achieve perfect coordination.     

Supporting collaboration in humanitarian supply chains – insights from a design science project

Abstract

The growing number of large-scale relief operations and humanitarian aid initiatives is stretching the resources – financial, material and human – of humanitarian actors to their limits. Challenges to collaborate both within international humanitarian organizations, and among their direct and indirect supply chain partners often contribute to the inefficient use of resources, or ineffective operations. In this research, we discuss collaboration in humanitarian supply chains, and analyze causes of their dysfunctional operations. Furthermore, we develop an experiential learning approach that can sensitize humanitarian supply chain actors to causes of information distortion. The simulation approach was implemented in the field and instructional design cycles yielded insights into how staff apply their learnings under the specific conditions of humanitarian relief work.     

有限产能直销优先策略下双渠道供应链的定价博弈模型

针对产能约束下的双渠道供应链,考虑实际中常用的直销优先分配产能的策略,基于Stackelberg博弈研究制造商(领导者)和零售商(追随者)的定价决策,刻画均衡解并深入分析直销优先策略下产能约束对双渠道供应链利润的影响。研究发现,在不同产能水平下,制造商对两个渠道的依赖程度会发生变化。当产能短缺时,其利润主要源于直销渠道;而当产能相对充足时,其愿意分享更多的产能以换取零售渠道上的批发利润,且此时增大产能可能会损害制造商的利益。对零售商而言,当产能短缺时,其采用高溢价来弥补获得较少产能的劣势;当产能相对充足时,其采用薄利多销的策略来获取更多的利润。当产能过剩时,双方的利润不再受产能的影响,且产能过剩对双方而言不一定是最好的情况。研究结论为制造商的定价与在双渠道中的产能分配策略选择提供有益的管理启示。     

Controversial Role of GPOs in Healthcare‐Product Supply Chains

This paper examines the controversial role that Group Purchasing Organizations (GPOs) play in the supply chains for healthcare products. Among the controversies, perhaps the most fundamental one is whether or not GPOs reduce purchasing costs for their members. However, the fiercest controversy is around the “contract administration fees (CAFs)” that GPOs charge to manufacturers. We examine these and other controversies using a Hotelling duopoly model. Among our conclusions: GPOs increase competition between manufacturers and lower prices for healthcare providers. However, GPOs reduce manufacturers' incentives to introduce innovations to existing products. We also demonstrate that the existence of lower off‐contract prices is not, per se, evidence of anticompetitive behavior on the part of GPOs. Indeed, we demonstrate that, under certain circumstances, the presence of a GPO lowers off‐contract prices. We also examine the consequences of eliminating the “safe harbor” provisions that permit healthcare GPOs to charge CAFs to manufacturers, and conclude that it would not affect any party's profits or costs.     

Positioning Inventory in Clinical Trial Supply Chains

As a result of slow patient recruitment and high patient costs in the United States, clinical trials are increasingly going global. While recruitment efforts benefit from a larger global footprint, the supply chain has to work harder at getting the right drug supply to the right place at the right time. Certain clinical trial supply chains, especially those supplying biologics, have a combination of unique attributes that have yet to be addressed by existing supply chain models. These attributes include a fixed patient horizon, an inflexible supply process, a unique set of service‐level requirements, and an inability to transfer drug supplies among testing sites. We provide a new class of multi‐echelon inventory models to address these unique aspects. The resulting mathematical program is a nonlinear integer programming problem with chance constraints. Despite this complexity, we develop a solution method that transforms the original formulation into a linear integer equivalent. By analyzing special cases and through numerical study of both real‐life and simulated examples, we demonstrate the effectiveness of the solution and develop insights into inventory positioning and the cost drivers in clinical trial supply chains.