Keep Your Friends Close? Supply Chain Design and Disruption Risk

In this article, we evaluate the relationship between supply chain design decisions and supply chain disruption risk. We explore two supply chain design strategies: (i) the dispersion of supply chain partners to reduce supply chain disruption risk versus (ii) the co‐location of supply chain partners to reduce supply chain disruption risk. In addition, we assess supply chain disruption risk from three perspectives: the inbound material flow from the supplier (supply side), the internal production processes (internal), and the outbound material flow to the customer (customer side) as a disruption can occur at any of these locations. We measure disruption risk in terms of stoppages in flows, reductions in flow, close calls (disruptions that were prevented at the last minute), disruption duration (time until normal operation flow was restored), and the spread of disruptions all the way through the supply chain. We use seemingly unrelated regression (SUR) to analyze our data, finding that lead times, especially supply side lead times, are significantly associated with higher levels of supply chain disruption risk. We find co‐location with suppliers appears to have beneficial effects to the reduction of disruption duration, and, overall supply side factors have a higher impact when it comes to supply chain disruption risk than comparable customer side factors.     

Sourcing Research as an Intellectual Network of Ideas*

What are the current intellectual clusters in the sourcing literature? How do these clusters relate to each other? How has sourcing‐related research changed over the last 10 years? We respond to these questions by examining the intellectual structure of research in the sourcing literature across 21 journals during the last decade (1998–2007). Multidimensional scaling is used to analyze cocitation data involving 72,003 citations from 1,960 sourcing articles. The results indicate that 10 different sourcing clusters emerged in the 1998–2002 period and 6 sourcing clusters surfaced in the 2003–2007 period. Five of the intellectual clusters in 1998–2002 disappeared in 2003–2007, five clusters remained, and one new cluster materialized in 2003–2007 that did not exist in the earlier period (Managerial Behavior and Upstream Decision Making).     

Role of Random Capacity Risk and the Retailer in Decentralized Supply Chains with Competing Suppliers

This research considers a supply chain under the following conditions: (i) two heterogeneous suppliers are in competition, (ii) supply capacity is random and pricing is endogenous, (iii) consumer demand, with and without an intermediate retailer, is price dependent. Specifically, we examine how uncertainty in supply capacity affects optimal ordering and pricing decisions, supplier and retailer profits, and the incentives to reduce such uncertainty. When two suppliers sell through a monopolistic retailer, supply uncertainty not only affects the retailer's diversification strategy for replenishment, but also changes the suppliers’ wholesale price competition and the incentive for reducing capacity uncertainty. In this dual‐sourcing model, we show that the benefit of reducing capacity uncertainty depends on the cost heterogeneity between the suppliers. In addition, we show that a supplier does not necessarily benefit from capacity variability reduction. We contrast this incentive misalignment with findings from the single‐supplier case and a supplier‐duopoly case where both suppliers sell directly to market without the monopolistic retailer. In the latter single‐supplier and duopoly cases, we prove that the unreliable supplier always benefits from reducing capacity variability. These results highlight the role of the retailer's diversification strategy in distorting a supplier's incentive for reducing capacity uncertainty under supplier price competition.     

Quantity Flexibility Contracts: Optimal Decisions with Information Updates*

We study single and multiperiod quantity flexibility contracts involving one demand forecast update in each period and a spot market. We obtain the optimal order quantity at the beginning of a period and order quantities on contract and from the spot market at the then prevailing price after the forecast revision and before the demand materialization. The amount that can be purchased on contract is bounded by a given flexibility limit. We discuss the impact of the forecast quality and the level of flexibility on the optimal decisions and managerial insights behind the results.     

Options Contracts with Overbooking in the Air Cargo Industry

In today's world economy, which is marked by intensified international trade, air cargo acts as a key facilitator. However, cargo airlines continue to struggle to be profitable because of very high asset costs and substantial demand uncertainty. To improve upon this situation, we propose an options contract. Our model captures the main features of cargo trade between an airline and a freight forwarder and allows us to derive an optimal reservation policy. We then go on to analyze the impact of overbooking on the profit of the cargo capacity provider. The model is subsequently applied to real‐life booking data provided by a major cargo carrier. This enables us to compare current contractual arrangements with the ones proven optimal in the model. A numerical study provides insights about the impact of overbooking on contract parameters and profitability. Managerial insights to be drawn conclude this study.     

Equity‐Based Incentives and Supply Chain Buy‐Back Contracts*

We analyze the effect of equity‐based incentives in a supply chain with a downstream firm and an upstream supplier. By using the operational decision as a signal to influence external investors’ beliefs, the downstream firm's manager intends to maximize a convex combination of the interim share price and the terminal cash flows. We show that equity‐based incentives create a side effect. Specifically, with a universal buy‐back contract, the deadweight loss of signaling induced by equity‐based incentives could spread throughout the supply chain and cause chain‐wide damages. To mitigate such undesirable consequences, we propose a new mechanism to eliminate the inefficiency. We derive the optimal mechanism that maximizes the downstream firm's profits subject to the constraint that the supply chain efficiency is not undermined. In contrast to the full‐information benchmark, this mechanism gives positive surplus to the supplier. [Submitted: January 5, 2011. Revisions received: June 20, 2011; December 11, 2011. Accepted: December 22, 2011.]     

Outsourcing vs. in-house production: a comparison of supply chain contracts with effort dependent demand

We analyze the effort and pricing decisions in a two facility supply chain in which one of the parties can exert costly effort to increase demand. We consider an outsourcing model in which the supplier makes the effort decision and an in-house production model in which the manufacturer decides on the effort level and we compare these two models with each other. We analyze and compare several contracts for decentralized supply chain models and we aim to find which contracts are best to use in different cases. We find the optimal contract parameters in each case and perform extensive computational testing to compare the efficiencies of these contracts. We also analyze the effect of the powers of the parties in the system and the effect of system parameters on the performances of the contracts and on the optimal values of the model variables such as price, effort and demand.     

Price competition,cost and demand disruptions and coordination of a supply chain with one manufacturer and two competing retailers

This paper studies the coordination of a supply chain with one manufacturer and two competing retailers after the production cost of the manufacturer was disrupted. We consider two coordination mechanisms: an all-unit quantity discount and an incremental quantity discount. For each mechanism, we develop the conditions under which the supply chain is coordinated and discuss how the cost disruption may affect the coordination mechanisms. For the all-unit quantity discount scheme, we find that the manufacturer charges the lower-cost retailer for a lower unit wholesale price in order to induce him to order more products. If the costs of two retailers have a remarkable difference, then the all-unit quantity discount scheme cannot coordinate the supply chain with disruptions. While the cost disruption may affect the wholesale prices, order quantities as well as retail prices, it is optimal for the supply chain to keep the original coordination mechanism if the production cost change is sufficiently small. The model is also extended to the case with both cost and demand disruptions. The equilibrium strategies of the retailers are investigated when the manufacturer cannot timely react to the disruptions such that she has to keep the original mechanism. We illustrate the results by numerical examples.     

改进模式对比研究

本文从企业竞争优势来源出发,研究企业动态能力的选择和实施问题。对比分析了三种企业普遍采用的改进模式:流程再造、阶段式改进方式以及持续改进模式。着重对容易引起混淆的持续改进和阶段式改进两种模式从指标、组织作用机制、竞争能力构建等方面进行了较为详尽的对比分析,并结合两种改进模式各自的特点,提出了流程化阶段式改进的观点,分析了改进模式的选择如何影响企业长期竞争能力。     

Improving control through effective performance measurement in SMEs

Research has demonstrated that the use of performance measures in SMEs (small to medium sized enterprises) is limited. Financial measures, which are required for examination by external stakeholders, are generally well developed. However, operational measures are typically ad hoc and lack formal structure. A structured approach to measuring perform ance in SMEs should improve strategic control. Current approaches, however, have proved inadequate for the specific requirements of the SME sector. A new process is presented for developing effective performance measurement in SMEs, which is tested through a case study. The aim of the process is to develop measures that drive operational performance towards the achievement of strategic objectives. The results of the case study demonstrate the potential of the process for improving strategic control and stimulating continuous improvement in SMEs.     

Models for supply chain reengineering

The goal of this paper is to provide a first step in the development of a coherent set of modelling methods for supply chain reengineering. This paper shows that different fields of attention in supply chain management should be approached with different modelling methods. Three modelling methods are presented: the event process chain (EPC) method; the activity chain model (ACM) method; and the GRAI grid method (adjusted for supply chains). EPC modelling focuses on time relationships between primary processes/functions, and is customer oriented. ACM modelling focuses on functions/processes and information flows. GRAI focuses on decision structures and information flows. The three methods are described, and an application of the methods to a case study company is presented. This paper concludes with a comparison of the methods and a discussion of their applicability.     

信息技术对价格信息不对称的影响研究

信息技术降低了企业和客户获取信息的成本,从而对价格信息不对称产生影响。本文从客户搜索产品价格信息的角度,分别对四种市场进行分析,得出了在短期市场中,考虑IT影响时信息不对称降低、客户获得较低价格的结论;长期市场中,考虑IT影响时,信息不对称消失、市场演变为完全竞争市场的结论。最后,给出企业制定价格策略的建议。     

Supply Chain Disruptions and the Role of Information Asymmetry

This research investigates how information asymmetry between the firm and its investors can influence supply chain disruptions. In such settings, these actors may be induced to take steps which exacerbate rather than ameliorate both the likelihood and impact of disruptions. By better understanding these mechanisms, managers and investors alike are better armed to avoid the costly consequences.