The single-period inventory problem: Extension to random yield from the perspective of the supply chain

A special form of the single-period inventory problem (newsvendor problem) with a known demand and stochastic supply (yield) is studied. A general analytic solution for two types of yield risks, additive and multiplicative, is described. Numerical examples demonstrate the solutions for special cases of uniform distribution yield risks. An analysis of a two-tier supply chain of customer and producer reveals that the customer may find it optimal to order more than is needed, since a larger order increases the producer's optimal production quantity.     

Characterizing order processes of using inventory policies in supply chains

This study characterizes order processes under (R,nQ) inventory policies. We show first that the order distribution at an installation is stationary when it uses an (R,nQ) control policy, for any arbitrary stationary distribution of customer demand. We then quantify variance amplification and show that variance of orders is never less than the demand variance. Finally, we extend the analysis to the case where the supply chain comprises of one distributor and N retailers serving customers.     

Enhancing competitive advantage by constructing supply chains to achieve superior performance

This paper studies the impact of configuring supply chain design strategies on performance using real-world example of aligning different supply chain practices to supply chain strategies to achieve competitive advantage. The paper first carries out a synthesis of literature categorising the supply chain strategies, practices and linking them to contexts and competitive advantage. The paper then uses a case study methodology to explore the process of adjusting supply chain strategies and aligned practices to gain competitive advantage in different contexts. The paper reports two case examples of a leaf tobacco company and a mosquito coil manufacturer from India facing different demand characteristics and implementing different supply chain strategies for enhancing performance objectives. Both companies faced a change in their business environment and competitive priorities. In both the examples, companies used a combination of practices for implementing appropriate supply chain strategies to gain competitive advantage. This paper contributes to the academic discipline of supply chain management through developing theory showing the transition of supply chain strategies for achieving superior performance in different business environments. The paper has wide managerial implications by reporting real-life implementation of different supply chain strategies thus bridging the practice-theory gap.     

Implementing coordination contracts in a manufacturer Stackelberg dual-channel supply chain

We examine a manufacturer's pricing strategies in a dual-channel supply chain, in which the manufacturer is a Stackelberg leader and the retailer is a follower. We show the conditions under which the manufacturer and the retailer both prefer a dual-channel supply chain. We examine the coordination schemes for a dual-channel supply chain and find that a manufacturer's contract with a wholesale price and a price for the direct channel can coordinate the dual-channel supply channel, benefiting the retailer but not the manufacturer. We illustrate how such a contract with a complementary agreement, such as a two-part tariff or a profit-sharing agreement, can coordinate the dual-channel supply chain and enable both the manufacturer and the retailer to be a win-win.     

Critical factors affecting information sharing in supply chains

Abstract

The aim of this paper is to empirically examine a comprehensive list of factors that are anticipated to affect information sharing (IS) in supply chains (SC) in the context of a landlocked developing country Nepal. A survey questionnaire was developed and data were collected from 131 supply chain participants in Nepal. Exploratory factor analysis and path analysis were conducted to examine the fitness of the proposed model and the relationships between the identified factors and information sharing. The results suggest that interaction routines and personal connection influenced both operational and strategic information sharing while organisational compatibility, incentives, project payoffs, commitment (inter-organisational), top management commitment and supply network configuration affected operational IS and government support and monitoring were associated with strategic IS. The paper provides empirical evidence on how information sharing is affected in the context of a landlocked developing country. The paper also identifies and discusses the similarities and differences in the importance of these factors on information sharing between developed and developing countries. The main limitation is the moderate sample size as compared to the large number of variables contained in the study which may have limited the use of analytical tools. The study provides a better understanding of information sharing behaviours of supply chain participants in Nepal which will help firms to develop strategies accordingly to enhance information sharing.     

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.     

Impacts of demand uncertainty on retailer's dominance and manufacturer-retailer supply chain cooperation

Recent studies in marketing and distribution channels have shown that the balance of power between manufacturers and retailers is shifting. Based on this observation, we investigate a two-echelon supply chain with a manufacturer and a retailer in this paper. We first develop retailer-dominant non-cooperative game models by introducing a sensitivity of retailer's order quantity to manufacturer's wholesale price; then we analyze two cooperative scenarios, in which the Nash bargaining model is utilized to implement profit sharing between the manufacturer and the retailer. Under the assumption that the manufacturer and the retailer are risk-neutral, we find that the manufacturer and the retailer can bargain to cooperate at any level of retail-market demand uncertainty with exogenous retail price. However, the cooperation is conditional on retail-market demand uncertainty with endogenous retail price: it can be implemented if the fluctuation of retail-market demand is relatively small, and the measure of retail-market demand uncertainty does not exceed an upper bound. Theoretical and numerical analyses show that the retailer's dominance over the manufacturer increases with the increase in the sensitivity of retailer's order quantity to manufacturer's wholesale price under a limitation of retail-market demand uncertainty. Numerical analyses also show that the retailer's dominance decreases with the increase in retail-market demand uncertainty.     

Single or dual sourcing: decision-making in the presence of supply chain disruption risks

The focus of this paper is placed on evaluating the impacts of supply disruption risks on the choice between the famous single and dual sourcing methods in a two-stage supply chain with a non-stationary and price-sensitive demand. The expected profit functions of the two sourcing modes in the presence of supply chain disruption risks are first obtained, and then compared so that the critical values of the key factors affecting the final choice are identified. Finally, the sensitivity of the buyer's expected profit to various input factors is examined through numerical examples, which provide guidelines for how to use each sourcing method.     

Quick response and supply chain structure with strategic consumers

This work explores the impact of quick response on supply chain performance for various supply chain structures with strategic customer behavior. By investigating pricing and inventory decisions in decentralized supply chains under revenue-sharing contracts and in centralized supply chains, we study the performance of four various systems and compare the value of quick response in different supply chain structures. The results show that if the extra cost of quick response is relatively low, the value of quick response would be greater in centralized systems than in decentralized systems. On the other hand, if the extra cost is high, decentralized supply chains reap more incremental profits from adopting quick response. We also find that revenue-sharing contracts enable a decentralized supply chain to outperform a centralized supply chain, but only allow limited flexibility of allocating total profits between a manufacturer and a retailer.     

A hybrid approach to configure eco-efficient supply chains under consideration of performance and risk aspects

Formal models that support multi-criteria decision making represent a strongly growing area in sustainable supply chain management research. However, uncertainties and risks are seldom considered in quantitative models for green supply chain (SC) design. The paper at hand suggests a hybrid approach to configure an eco-efficient SC for a new product under consideration of economic and environmental risks. Discrete-event simulation is applied to assess the financial, operational and environmental performance of different SC configuration options while the value-at-risk concept is adapted to evaluate related SC risks. The analytic hierarchy process is employed to solve the resulting multi-criteria decision problem of choosing the best option. The approach is illustrated at a case example of a fast moving consumer goods manufacturer.     

Impact of secondary market on consumer return policies and supply chain coordination

In this paper, we develop a unified model to study the inventory management problem of a product and the coordination of the associated supply chain consisting of a single supplier and considerably many retailers in the presence of a secondary market. Specifically, consumer returns are allowed in the initial sales. Then, we introduce a secondary market to salvage the returns and the leftovers from the initial sales. In this secondary market, a discount price will be offered to the consumers but no returns are accepted. Moreover, between the primary and the secondary market, there is an internal market where retailers can trade among themselves so that they are able to adjust their inventory levels to prepare for the sales in the secondary market. We study the retailers' and the supply chain's inventory decision in this case and highlight the impact of the secondary market on the sales as well as on the supply chain coordination contracts. We conclude that the secondary market helps us to increase the total wholesale volume. Numerical examples show that the total sales profit is also increased. However, the secondary market aggravates the incentive conflict between the retailers and the supply chain on deciding the optimal inventory levels and hence requires the supplier to offer more generous buyback or sales rebate contracts for coordination of the supply chain. Finally, we extend our analysis to more general cases and also show that our results are robust to some of the modeling assumptions.     

Coordinated responsiveness for volatile toy supply chains

Demands for innovative products in short selling windows are highly unpredictable. This volatility creates demands with dramatic peaks and troughs due to risk-avoidance behaviours among manufacturers and retailers. The consequences are high obsolete inventory, lost sales, and markdowns. Theoretically, the concepts of quick response and postponement are among the potential solutions for such as a volatile and seasonal toy supply chain. This study explores the role of responsiveness and coordination in improving supply chain performance. It is based on an in-depth case study in a European toy supply chain. Consumer and retailer demand patterns and their implications to the manufacturer's supply chains are analysed. Opportunities for relocating order penetration points (OPP) and quick response are simulated, and appropriate relocation rules are established. It is concluded that OPP relocation and responsiveness are beneficial but inadequate in improving the supply chain. Coordination of ordering behaviours is necessary. Coordination processes to achieve greater performance between the toy manufacturer and two of its retailers are presented. Furthermore, the concept of ‘coordinated responsiveness’ is proposed, which combines the concepts of quick response, accurate response and coordination.     

含交付时间不确定性的供应链协调策略研究

分析含有交付时间不确定性的季节性供应链管理问题.如果在供应链中共享供应商的交付时间不确定性信息,零售商可以调整订货量,减少销售损失,就有可能提高供应链的整体利润.分析指出,当交付时间不确定性程度大时,信息共享能提高改进供应链绩效的可能性,但不一定能提高供应链的整体绩效,因而,仅仅采用信息共享有应用价值,但有一定的局限性.进一步分析发现,存在能协调这种含有交付时间不确定性供应链策略,能使供应链达到整体绩效最大化,并且对供应链的利润进行分配,协调策略能有效地弥补信息共享的局限性.     

Governance of sustainable supply chains in the fast fashion industry

This paper examines the impact of corporate social responsibility behavior on the sustainability performance of focal companies and their partners in fast fashion supply chains. The attributes of sustainability and the mechanism of sustainability governance of the fast fashion supply chain are also discussed. From the perspective of strategic corporate social responsibility, we first analyze the motives for adopting sustainability governance in fast fashion supply chains, and identify seven competitive sustainable attributes of the fast fashion product based on sustainable development theory. Then, by establishing a sustainability governance framework, we identify seven factors that affect the sustainability governance decision-making and evaluate the efficiency and legitimacy mechanism of sustainability governance from internal and external perspectives. Finally, we explore the application of the governance mechanisms via a case study based on H&M’s seven sustainability commitments. The findings suggest that the core influence and centrality of a corporation should be strengthened from the perspective of internal governance, and stakeholders should collaborate to achieve sustainability governance throughout the entire fast fashion supply chain from the perspective of external governance.     

Performance of spare parts supply chains in developing industries

Spare parts supply chains of manufacturing equipment in developing industries such as the Saudi manufacturing sector often operate in one direction. Importing production machinery and setups to run such developing industries, from more developed industrial countries, sway the flow of spare supplies upstream. Based on empirical data collected from 210 local manufacturing firms, this study characterises and models such supply chains. The effects of supplier proximity, diversity and time lag on spare parts supply chain performance were explained using structural equation modelling. Delivery time lag and supplier diversity increased the deficiency of spare parts availability. Opposite to earlier consensus found in the literature, the impact of supplier proximity on spare parts supply chain performance was insignificant. Recent improvements in the agility and capacity of logistical services might have diminished the influence of supplier remoteness. However, supplier proximity correlated with supplier diversity in such supply chains.     

Coordinating a three level supply chain with flexible return policies

This paper studies the coordination issue of a three level supply chain selling short life cycle products in a single period model. The manufacturer first negotiates the trade contract with the retailer, then with the supplier. We construct the so-called flexible return policy by setting the rules of pricing while postponing the determination of the final contract prices. With return policies between each pair of adjacent firms, unsold products or used modules dissembled from the unsold products are returned level by level from the retailer to the upstream firms and each firm shares in the loss due to the overstock. We show that the three level supply chain can be fully coordinated with appropriate contracts and the total profit of the channel can be allocated with any specified ratios among the firms.     

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.     

A systematic approach for supply chain conflict detection with a hierarchical Petri Net extension

Coordinating and managing distributed entities in a supply chain is a challenging task due, in part, to conflicts present in such systems. If not handled effectively, the conflict can degrade the performance of the system as a whole due to the fact that each individual entity may be working towards goals that sub-optimize the integrated system. Therefore, the ability to discover conflicts would be a valuable asset, particularly if the discovery occurred proactively. This paper presents a methodology, extending the concept of basic Petri Nets, to discover supply chain conflict before they occur and cause detrimental effects to system performance. The approach involves linking hierarchical levels of the supply chain system and detecting conflicts occurring when the single entities, each optimized for it own operations, are combined together in a supply chain. These conflicts are not obvious or intuitive in examining the single entities of the supply chain, but when integrated the conflicts are discovered by the methodology. We applied the proposed methodology on a real-world supply chain to illustrate the validity of the tool. Although, further research is needed to fully explore this method of conflict detection, we believe that this research does indeed provide some much needed insight into the daunting task of conflict discovery and therefore proactive handling of these potentially negative occurrences in the supply chain.     

Coordination in supply chains: an evaluation using fuzzy logic

Supply chain coordination (SCC) is an effective approach to improve supply chain (SC) performance. The coordination can be achieved when interdependent entities work together by sharing resources and information to achieve common objectives aligned to maximise customer value for the entire SC. There are a number of mechanisms by which the SC members can coordinate, e.g. contracts, information sharing, information technology and collaborative initiatives. To communicate frequently and effectively, the partners are required to have good information systems and capability to share information. To coordinate with each other the SC members are required to have capabilities to implement coordination mechanisms effectively. In this paper, a model is proposed to measure the effect of these mechanisms on the extent of coordination. Currently, there is no scale of measurement reported in the literature to measure the SCC. A fuzzy logic approach combined with the analytic hierarchy process (AHP) is proposed to evaluate the extent of coordination. The proposed methodology is demonstrated through a case study of an automotive parts manufacturer.     

Mitigating disruptions in a multi-echelon supply chain using adaptive ordering

Supply chains often experience significant economic losses from disruptions such as facility breakdowns, transportation mishaps, natural calamities, and intentional attacks. To help respond and recover from a disruption, we investigate adjustments in order activity across four echelons including assembly. Simulation experiments reveal that the impact of a disruption depends on its location, with costlier and longer lasting impacts occurring from disruptions at echelons close to ultimate consumption. Cost functions based on system inventory and service can be quite ill-behaved in these complex problem settings. Expediting, an adaptive ordering approach often used to mitigate disruptions, can trigger unintended bullwhip effects, and hurt rather than help overall performance. As an alternative to expediting interventions, dynamic order-up-to policies show promise as an adaptive mitigation tool. We also find benefits in the dynamic policies from incorporating a metaheuristic parameter search over multiple echelons, yielding significantly better solution quality than embedded unimodal search.