Proactive environmental strategies and performance: role of green supply chain processes and green product design in the Chinese high-tech industry

Though many firms still believe that passive environmental strategies are sufficient, it is pertinent that they move beyond this belief and take a proactive supply chain-wide environmental stance so as to create a sustainable environment. In this paper, we seek to extend current work within green supply chain management by considering multiple green supply chain capabilities and performance measures. We hypothesise the linkage between environmental orientation, green supply chain capabilities and performance by drawing upon stakeholder theory and natural resource-based view. More importantly, our study is the first to distinguish between product and process-related capabilities in the green supply chain area and study their direct and mediating role with respect to environmental and financial performance measures. Using survey data collected from 256 Chinese-based high-tech firms, we analyse several hypothesised relationships. Our results provide strong support for the significant role that green product design and green supply chain processes can play in improving firms’ environmental and financial performance. Interestingly, our results also suggest that green product design may not have a direct impact on financial performance.     

Joint pricing and inventory strategies in a supply chain subject to inventory inaccuracy

This paper focuses on pricing strategies, inventory policies for a supply chain when Radio Frequency Identification (RFID) technology is adopted to cope with inventory inaccuracy. The supply chain consists of one supplier and one retailer, in which the RFID tag price is shared between the supplier and the retailer. We present and compare the performance differences between a wholesale price contract and a consignment contract when the retailer is the Stackelberg leader and the supplier is the follower. Based on the optimal pricing and inventory decisions, an interesting observation of contract selection is that there are two critical values of inventory available rate such that when the inventory availability is less than the lower value, both the supplier and the retailer prefer a consignment contract; when the inventory availability is greater than the upper value, a wholesale price contract is their best choice; when the inventory availability is between the two values, the supplier prefers a wholesale price contract and the retailer prefers a consignment contract. Additionally, there exist threshold values of RFID tag price and sharing rate to determine the contract preference for the retailer. Furthermore, the profits of both the supplier and the retailer are independent of the RFID tag price sharing rate in a wholesale price contract, and the supplier has the incentive to invest in RFID tag cost in a consignment contract.     

The performance impact of supply chain agility and supply chain adaptability: the moderating effect of product complexity

Even though research has suggested that supply chain agility and supply chain adaptability are distinct capabilities, little is known about their performance effects and about the contextual conditions under which they are effective. Based on a sample of 143 German firms, we empirically investigate the effects of supply chain agility and supply chain adaptability on cost performance and operational performance using hierarchical regression analysis. We ground our investigation in the dynamic capabilities view and contingency theory. We find that supply chain agility and supply chain adaptability positively affect both cost performance and operational performance. We further find evidence for a mediating role of supply chain agility in the links between supply chain adaptability and performance. Product complexity positively moderates the links between supply chain adaptability and cost performance, and supply chain adaptability and operational performance. The results contribute to the literature by offering a more nuanced understanding of the performance implications of supply chain agility and supply chain adaptability, thereby addressing the crucial question of why their benefits may or may not materialise under varying levels of product complexity.     

Product variety strategies for vertically differentiated products in a two-stage supply chain

In this paper, we study how the presence of coordination, competition and cost structures affect the product variety and pricing decisions in a two-stage supply chain. We consider vertically differentiated industries. Products reach the end customers via assembly companies positioned in the middle-tier between the producers and end customers. The assembly operations incur bill-of-materials (BOM) cost, which includes the cost of raw materials and components as well as the cost of producing, managing and synchronising supply, storage and distribution of these materials and components. We consider three coordination scenarios in the supply chain, and compare an uncoordinated supply chain with a horizontal and a vertical coordination scenario using the Nash equilibria of a multi-leader Stackelberg game between the producers and assembly companies. For exogenously given quality levels, we show that producers and assembly companies should either differentiate their product offering, or offer the high-end product only depending on the BOM cost. In addition, the uncoordinated scenario helps reduce the intensity of competition in the supply chain. For endogenous quality levels, partial product-differentiation equilibrium can emerge. Numerical experiments are performed to illustrate the impacts of BOM cost and quality levels on the equilibrium.     

Review of supply chain configuration and design decision-making for new product

The nature of competitive markets continuously pushes manufacturers to develop new products to meet the increasingly diversified customer demands. Manufacturers thus have to handle the complexities generated during the total life cycles of various product types, from product design to procurement, production, marketing and recycling. Though some management practices in mass customisation help to improve the performance of manufacturing systems, there are still some fundamental problems not covered. Joint decision-making of product and supply chain design, for example, is one of them. The existing industrial practice tends to treat these two problems separately. Decoupling these two problems decrease the design complexity but may lead to suboptimal decision outcome. To enhance understanding of the interconnected decisions for supply chain management and product design, this review collects related literature on this topic and focuses on the analysis of existing papers from an operation research perspective.     

Simultaneous design of a product family and its related supply chain using a Tabu Search algorithm

Product family design is currently facing a multitude of challenges, the main problem stemming from the diversity offered to consumers. To design a product family, designers have to define an efficient bill of materials which ensures product assembly within a predefined length of time in order to satisfy the synchronised delivery principle. In addition, the modules used to assemble the finished products have to be competitive in terms of logistical costs. The ability to anticipate the constraints associated with the production process and with transportation is consequently of great interest. In this paper, we focus on the process of identifying a set of modules to be used in the assembly of the finished product. The objective is to define the bill of materials for each product from the modules belonging to that set, and to assign these modules to distant facilities where they will be manufactured and then shipped to a nearby facility for final assembly within a specific time. We use a set partitioning formulations to represent the problem, and solve it by adapting a Tabu Search algorithm in which the assembly process and the supply chain design are considered at the same time.     

Pricing and warranty decisions in a two-period closed-loop supply chain

For a two-period closed-loop supply chain (CLSC) consisting of a manufacturer and a retailer, Stackelberg game analyses are conducted to examine pricing and warranty decisions under two warranty models depending on who offers warranty for new and remanufactured products and the corresponding benchmark models with a warranty for new products only. Next, we identify the conditions under which warranty for remanufactured products is offered and investigate how this warranty affects the CLSC operations. Subsequently, comparative studies are carried out to examine equilibrium decisions, profitability and consumer surplus of the CLSC between the two warranty models. Analytical results show that offering warranty for remanufactured products does not affect new product pricing in period 2, but influences the pricing of new products in period 1 and remanufactured products in period 2, thereby enhancing remanufacturing, individual and channel profitability, and consumer surplus. Compared to the retailer warranty for remanufactured products, the manufacturer warranty can attain a more equitable profit distribution. If the warranty cost advantage of the manufacturer (retailer) is significant relative to that of the retailer (the manufacturer), the manufacturer (retailer) arises as a natural choice to offer warranty for remanufactured products as this decision enhances both profitability and consumer surplus.     

Pricing decisions for a supply chain with refurbished products

This paper considers a supply chain consisting of a supplier and a retailer where a fixed portion of new products sold will be returned to the retailer and then be repaired and resold as refurbished products at a lower price. Using the utility model, we formulate how consumers will make their choices when facing both new and refurbished products. Then, using the divide-and-conquer method, we derive the supplier and retailer's equilibrium decisions, including the supplier's wholesale price and the retailer's prices for both the new and refurbished products. The main findings include the following. First, refurbished products will be sold in the market only when the refurbishing cost is small. In this situation, as the refurbishing cost increases, most of the negative impact on the retailer will be transferred to the supplier. Second, in the same condition, as the refurbishing cost increases, the wholesale price and retail price of the new product will change in opposite directions. This result contrasts with the traditional pass-through effect. Third, when the repair cost is moderate, the retailer will eventually not sell refurbished products, but its profit can be significantly improved and the double marginalisation effect can be mitigated.     

A vendor-managed inventory scheme as a supply chain coordination mechanism

In this paper, we have considered a vendor-managed inventory (VMI) arrangement in a supply chain (SC), where the buyer imposes a penalty for shipments exceeding an upper limit. We have shown as how the industry practice of VMI under penalty can be used as a SC coordination mechanism. The vendor can influence the buyer to increase the batch size without making the buyer worse off. We also discuss how such a penalty scheme may be derived. Further, we have established the equivalence of VMI under deterministic demand with that of quantity discount models, thus highlighting the need to incorporate both cooperation and coordination perspectives while analysing SC collaboration mechanisms.     

A green supply chain is a requirement for profitability

Many companies are not dramatically changing to more sustainable environmental practices despite pressure from the investment community, the government and consumers. This study explores a simple model that companies can use to understand and improve supply chain sustainability practices. It applies this model in two case studies, Coca-Cola, a leader in global sustainability, and Apple, a company that has only recently started to develop a sustainability strategy. The model was developed through a review of existing research and an application of supply chain principles. The results of this study demonstrate that following this model to eliminate waste throughout the supply chain will make the supply chain more profitable. The outcomes from this study highlight the importance for every company to do so in order to stay competitive. This study is unique in the relative simplicity of its model, combined with the supporting evidence that a sustainable supply chain is the same as a supply chain that is using best practices to reduce waste.     

Evaluating strategic issues in supply chain scheduling using game theory

This paper deals with the problem of scheduling and batch delivery of orders in a supply chain (SC) including a supplier, a manufacturer and a final customer. First, the individual decisions of partners in the SC and their behaviours are analysed through mathematical models. Second, the best policy is obtained assuming that the SC is vertically integrated and the partners fully cooperate (this is called SC scheduling in the relevant literature). Since this strategy is usually against a partner, it might not be implemented in practice as the authors have observed this condition in real world. Hence, a fair sharing mechanism based on game theory concepts is also introduced which can motivate the partners to cooperate and adopt the best policy of the SC. The numerical examples show the superiority of integrated decisions over independent actions and also the importance of the sharing mechanism.     

Consumer search,transshipment, and bargaining power in a supply chain

We study a decentralised supply chain with one manufacturer and two symmetric retailers who could transship their excess inventory between each other. Without transshipment, the retailer’s unsatisfied customers search and buy the product at the other retailer with some probability. With transshipment, the retailer can transship the other retailer’s excess inventory to fulfil its own unmet demand. However, a transshipment price is often charged by one retailer for transshipping goods to another. We show the retailer’s profit is unimodal in the transshipment price, and the manufacturer’s profit increases in the customer search probability. Although the retailer’s preference over transshipment depends on the magnitude of search probability and transshipment price, the retailer may always prefer the transshipment no matter their magnitude. We then study the effect of bargaining power over the transshipment decision (whether to transship between retailers and at what transshipment price). Our analysis suggests that the manufacturer always prefers to control the transshipment price rather than to control whether to transship, while the retailer can prefer both. We also find that increasing bargaining power always benefits the manufacturer but could hurt the retailer. We finally check the robustness of our results by investigating the case with asymmetric retailers     

Stockout propagation and amplification in supply chain inventory systems

We investigate the existence and magnitude of stockout propagation and stockout amplification in the context of supply chain inventory systems. Stockout amplification is a stage-to-stage increase in overall stockout rates. Stockout propagation is the tendency for stockout at one node to instigate a stockout at a neighbouring node and is conceptually related to the idea of cascading failures in physical systems, such as electrical power grids. We study these concepts in both upstream (‘supply side’) and downstream (‘demand side’) directions in the context of normal operating conditions for an adaptive R, S (periodic, order-up-to) inventory policy. We build a simulation model of a 5-stage serial supply chain that experiences normally distributed customer demands and gamma distributed lead times. We find that stockout propagation exists, but contrary to conventional wisdom, it occurs in the upstream direction. There is little indication that stockout propagation is occurring to any significant degree in the downstream direction. We also find stockout amplification occurring in the upstream direction in scenarios where more aggressively adaptive inventory parameter updating is performed. We discuss implications of this work in the areas of supply chain inventory modelling, ordering decisions, safety stock determination, and the use of adaptive inventory policies.     

Roles of inventory and reserve capacity in mitigating supply chain disruption risk

This research focuses on managing disruption risk in supply chains using inventory and reserve capacity under stochastic demand. While inventory can be considered as a speculative risk mitigation lever, reserve capacity can be used in a reactive fashion when a disruption occurs. We determine optimal inventory levels and reserve capacity production rates for a firm that is exposed to supply chain disruption risk. We fully characterise four main risk mitigation strategies: inventory strategy, reserve capacity strategy, mixed strategy and passive acceptance. We illustrate how the optimal risk mitigation strategy depends on product characteristics (functional versus innovative) and supply chain characteristics (agile versus efficient). This work is inspired from a risk management problem of a leading pharmaceutical company.     

绿色供应链管理的基本原理

人口、资源与环境三者之间的矛盾日益突显，要求制造业提高其活动与环境的相容性。绿色供应链管理是从系统的观点与集成的思想出发解决制造业与环境之间冲突的有效方式。从可持续发展的思想出发建立了绿色供应链的概念模型，分析了绿色供应链管理的目标，在此基础上探讨了绿色供应链管理的基本原理，认为共生原理、循环原理、替代转换原理与系统开放原理是实施绿色供应链管理应该遵循的基本原理。     

Pricing and production decisions in a closed-loop supply chain considering strategic consumers and technology licensing

This paper considers a closed-loop supply chain consisting of a manufacturer and a third party in which the manufacturer licenses the third party to undertake remanufacturing activities in the presence of strategic consumers. We analyse the impacts of strategic consumer behaviour and the third-party remanufacturing cost on three kinds of remanufacturing scenarios, namely no-remanufacturing, partial-remanufacturing and full-remanufacturing. We adopt a Stackelberg game to obtain the equilibrium strategies of each remanufacturing model and show that the demand of new products decreases and the demand of remanufactured products increases as consumers become more strategic. Considering the manufacturer’s profit decrease due to strategic consumer behaviour, the manufacturer suffers a smaller profit loss when he licenses the third party to remanufacture because he can charge a higher licensing fee from the third party to share remanufacturing revenues. Moreover, the manufacturer prefers the third-party remanufacturing mode rather than the manufacturer–remanufacturing mode if the third-party remanufacturing cost is relatively low and remanufacturing can always bring a profit increase to both the manufacturer and the third party.     

Lateral inventory transshipment problem in online-to-offline supply chain

Online-to-offline (OTO) is a new commercial model with enormous market potential. Online customer orders are forwarded to the offline brick-and-mortar store to fulfil, which is a combination of dual-channel supply chain. OTO overcomes many disadvantages of the traditional dual-channel supply chain, but still faces uncertain market demand. To reduce the inventory risk caused by demand uncertainty, lateral inventory transshipment is employed in this paper to pool inventory risk in OTO supply chain. We model centralised OTO and decentralised OTO with/without transshipment, and then analyse different scenarios. Our results demonstrate that there exists a unique Nash equilibrium of inventory order levels in dual channels and an optimal transshipment price to maximise the profit of the entire supply chain. Finally, we provide a numerical example of uniform demand distribution. Our analyses offer many managerial insights and show that transshipment always benefits the OTO supply chain.     

A paler shade of green: implications of green product deletion on supply chains

Product management activities by operations, marketing, and finance functions have typically focused on the innovation, acquisition, growth, and management of product lines and products. The same is true when considering product management for green products. The latter stages of critical strategic decisions related to product deletion or discontinuation have received less emphasis. In this conceptual paper, the focus is on green product deletion implications for supply chain management and operations. Organisations may view green product deletion as evolving from a deep green to a paler shade of green in their product offerings. A proposed strategic framework pays particular attention to the implications of the green product deletion decision for supply chain processes and operational competencies. In this situation, lessened organisational greenness needs to be weighed against other organisational and operational competencies. The strategic and inter-organisational relationships associated with this decision help set the stage for future research on this critical, yet neglected, organisational and operational supply chain issue.     

Effects of green supply chain integration and green innovation on environmental and cost performance

This paper argues that mechanisms such as information sharing and collaboration used in green supply chain integration (GSCI) to improve information processing capacity can reduce uncertain outcomes of green product and process innovation. Based on data from a survey of Chinese (Hong Kong) firms, the paper tests whether the three dimensions of GSCI (green internal, customer and supplier integration) improve environmental performance and cost reduction by facilitating green product and process innovation. The results show that green customer integration improves cost and environmental performance through green process innovation (not green product innovation). Both green product and process innovations are facilitated by green customer integration (not green supplier integration), while both green customer and supplier integration significantly depend on green internal integration. These suggest that the distinctive information processing capacity created by green internal and customer integration can facilitate the green process innovation required to improve environmental and cost efficiency, while green product innovation and green supplier integration cannot create such efficiencies.     

Inventory performance of some supply chain inventory policies under impulse demands

This paper attempts to study the impact of impulsive demand disturbances on the inventory-based performance of some inventory control policies. The supply chain is modelled as a network of autonomous supply chain nodes. The customer places a constant demand except for a brief period of sudden and steep change in demand (called demand impulse). Under this setting, the behaviour of each inventory policy is analysed for inventory performance of each node. It is found that the independent decision-making by each node leads to a bullwhip effect in the supply chain whereby demand information is amplified and distorted. However, under a scenario where the retailer places a constant order irrespective of the end customer demand, the inventory variance was actually found to decrease along the supply chain. The variance of the inventory remained constant along the chain when only the actual demands are transmitted by each node. The results also showed that the inventory policy which is best for one supply chain node is generally less efficient from a supply chain perspective. Moreover, the policy which performs poorly for one node can be most efficient for the supply chain. In a way, our results also provide a case for coordinated inventory management in the supply chain where all members prepare a joint inventory management policy that is beneficial for all the supply chain nodes. The results have significant industrial implications.