Sustainable supply chains for supply chain sustainability: impact of sustainability efforts on supply chain risk

Supply chain managers across the globe are finding it difficult to manage the increasingly complex supply chains despite adopting a variety of risk mitigation strategies. Firms on the other hand have also been adopting various kinds of environmental and social sustainability practices in recent times to reduce carbon footprint and improve their image on the social front. However, very few studies in the extant literature have examined the impact of sustainability practices on supply chain risk. We address this important gap in literature by empirically testing this relationship, using primary data from six manufacturing sectors and 21 different countries including developed as well as emerging markets across the globe. Our findings indicate that risk mitigation strategies do not always reduce the actual supply chain risk experienced by firms, whereas sustainability efforts help reduce supply chain risk, especially in emerging market contexts. In addition, we find that, while reactive risk mitigation strategies on their own fail to reduce supply chain risk, they are effective when used in conjunction with sustainability efforts. We also find that preventive risk mitigation efforts are only effective in mature supply chains such as the OECD countries.     

Simplicity is beauty: pricing coordination in two-product supply chains with simplest contracts under voluntary compliance

Pricing is an important topic in supply chains. In this paper, we explore the coordination challenge with the use of simplest contracts for the case with two products. To be specific, we consider a single-manufacturer single-retailer make-to-order supply chain. In the base model, we consider the case when the product demands are independent and derive the optimal pricing decisions under a decentralised setting. Comparing with the centralised setting, we show that double marginalisation in the decentralised setting reduces the supply chain efficiency by 25%. We then find that the simpler contracts such as the three-parameter two-part tariff (3P-TT) contract and the three-parameter revenue sharing (3P-RS) contract can coordinate the two-product supply chain. We extend the analysis in two cases: (i) the case when the products are substitutable and (ii) the case when the retailer is risk averse, and show that both the 3P-TT and 3P-RS contracts can coordinate the respective supply chain. We also find that the degrees of product substitution and retailer’s risk averse significantly influence the supply chain performance.     

Available-to-promise-based flexible order allocation in ATO supply chains

This paper presents a new available-to-promise (ATP) based order allocation model, which is different from traditional order fulfilment systems in that it considers customer priority in an assemble-to-order (ATO) supply chain environment before the order is fulfilled. First, in terms of customer priority, a pre-allocated model is proposed in order to obtain reserving production capacity ATP and reserving components ATP for each customer class. Then, two order fulfilment models are formulated: the batch order fulfilment model for processing all orders during an order reception period and the real-time order fulfilment model for making order fulfilment decisions when an order arrives immediately. In case that the available production capacity and components are not enough, the ATP searching rules are developed along four dimensions (time dimension, customer demand priority level dimension, product dimension and selling area dimension). Finally, the proposed models are illustrated through an electronic product manufacturing case. The results of the case study show that the performance of the proposed order fulfilment system is better than that of the traditional one.     

Trust-embedded coordination in supply chain information sharing

This paper studies supply chain coordination with trust-embedded cost-sharing contract. In a two-tier supply chain, a retailer (she) and a supplier (he) make their private demand forecasting individually. The retailer places soft-orders, which are costless, non-verifiable and cancellable before shipping, to the supplier. After that, the supplier relies on the retailer’s ordering information to update his demand evaluation and prepare his capacity. How much the supplier relies on the retailer’s ordering information is specified by trust, which is a kind of psychological feeling and affected by multiple factors. When the supplier does not fully trust the retailer, he tends to prepare a conservative capacity to avoid over-production. To coordinate the supply chain, a two-stage coordination process is proposed. At the first stage, the supplier and retailer negotiate a cost-sharing rule to bind soft-orders. At the second stage, the retailer places a soft-order and decides whether or not to bind it referring to the cost-sharing rule. After that, the supplier determines his optimal production capacity. We show that the retailer and supplier value trust differently in the experimental studies. We also find that there is a threshold of negotiation power for the supply chain partners which means the supplier’s/retailer’s expected profit drops down if his/her negotiation power exceeds certain thresholds. The experimental studies also show that the proposed the two-stage coordination is effective.     

Coordination and performance analysis for a three-echelon supply chain with a revenue sharing contract

This paper focuses on a three-echelon supply chain composed of a manufacturer, a distributor and a retailer for a single selling period. Based on a revenue sharing contract, the coordination of the decentralised supply chain with the simultaneous move game or the leader–follower game is analysed. It is determined that the revenue sharing contract can coordinate the decentralised supply chain with the simultaneous move game. Our analysis reveals that the revenue sharing contract cannot coordinate the decentralised three-echelon supply chain with the leader–follower game except for a special situation. However, this result provides an opportunity to develop methodology and results that measure the potential improvement in supply chain performance that can be gained from utilising the revenue sharing contract. This is an important aspect of this paper.     

Coordinating a supply chain under demand and cost disruptions

In this paper, we investigate the coordination of a supply chain consisting of one manufacturer and n Bertrand competing retailers under disruptions of market demand and production cost. We present a coordination model of a supply chain under normal scenarios. Our findings demonstrate that the coordination scheme designed for the initial production plan should be revised when disruptions of market demand and production cost occur. To resolve this issue, we consider the possible deviation costs caused by disruptions and propose optimal decision models for different disruptions under centralised decision-making. We present an improved revenue-sharing contract model to coordinate the decentralised supply chain under disruptions. The proposed models are then further analysed through numerical examples.     

Multi-period hedging and coordination in a prefabricated construction supply chain

In this paper, a multi-period buffer space hedging coordination between a building contractor (BC) and a logistics provider (LP) is investigated. In order to facilitate the application of the construction lead-time hedging (CLTH) strategy, adopted by the BC, extra buffer space needs to be reserved at LP’s intermediate warehouse for contingency usage. This strategy is defined as ‘buffer space hedging (BSH)’ and it increases the pressure of LP on involving extra storage and maintenance cost. Two coordination mechanisms are adopted for solving this BSH problem. One scheme is by introducing a cost-sharing term. A Nash game model is studied to find the individual optimal decisions. Another scheme is a cooperative game model with proper side-payments. We show that adjusting the BSH amount for each review period benefits the supply chain. Both coordination mechanisms enable a win–win outcome. Especially, if system resources are sufficient, the cooperative game outperforms the Nash game. Numerical experiments further demonstrate that the benefit of the proposed model is more significant under the case with lower unit enlarging/rearrangement cost, higher tardiness penalty and unpredictable and uncontrollable construction process-determined assembled and installed prefabs.     

Option contracts for online celebrities as retailers in supply chains

The online celebrity economy, also called the internet celebrity economy, is growing rapidly in China. Celebrity retailers are usually demand sensitive and capital constrained. The capital constraints along with information asymmetry often render supply chains inefficient when manufacturers are producing at non-optimal levels. Few studies have shed light on the online celebrity supply chain, especially with respect to options. In this study, we examine how option contracts can coordinate supply chains. We find that a capital-constrained retailer can achieve more profitable orders when given an option. The manufacturer – without the full information of market demand – also benefits from offering an option to the retailer. Our numerical case shows that the options contract generates different payoffs depending on the capital of the retailer.     

Return policy and supply chain coordination with network-externality effect

The benefits of a consumer return policy have been extensively studied in extent literature. This paper explores the potentially damaging impact of a return policy on the retailer. We develop an analytical framework and examine the economic impact of consumer return among consumers, retailer and supply chain. We distinguish three network-externality (NE) cases: no network externality, fixed network-externality and variable network-externality contingent on return amount to discuss the retailer’s selling price, refund and inventory policies. Our analysis derives the optimal policies and shows that they take the form of contingence model in which the policies depend on consumer initial return and NE return. We also examine the influence of the consumer return NE effect on buy-back contracts of the supply chain and show that while the traditional buy-back contract fails to coordinate the supply chain, the NE effect does not render the differentiated buy-back contract less effective. Finally, we extend our study to a heterogeneous consumer case.     

Production lead-time hedging and coordination in prefabricated construction supply chain management

This paper studies a coordination scheme to solve a production lead-time hedging (PLTH) issue in the prefabricated construction supply chain management. To mitigate tardiness delivery owing to prefab production uncertainty, the project contractor (PC) prefers to inform the prefab factory (PF) an earlier due date which is termed as PLTH strategy. However, this strategy forces the PF to compress its production process. A balance must be optimised through the proposed PLTH coordination scheme. It includes a PLTH-related cost term, i.e. crashing money (charged by the PF to the PC) and a constant transfer term. Three models with different power structures are considered. Firstly, two Stackelberg games with alternative decision-making sequences and an equal power model are discussed to obtain the optimal PLTH amount and crashing money. Later on, a cost-sharing term is used to fairly allocate the system surplus. It is observed that this coordination scheme reduces the PLTH amount and ensures win–win coordination for both parties. Some interesting managerial implications are also obtained from comparison analysis and numerical studies.     

面向供应链合作的信任维系协调体系的研究

为了保证节点企业合作中信任协调的合作关系,以有效地实现企业经营目标,从信任的视角提出了一个包括目标层、合作层、信任协调层、支撑层在内的供应链合作(SCC)信任维系协调的解决思路.把节点企业内、外部的供应链运作、合作行为、业务目标集成起来,给出了整体框架模型,并对基于企业目标的信任协调机制、信任金字塔和实现协调层的具体方式等关键问题进行了探讨.信任协调体系框架模型对供应链合作运作提供了一定的参照.     

Flexible work-in-process production system in supply chain management under quality improvement

For a complex product production, any flexible manufacturing system with a work-in-process inventory is recommended for a supply chain management (SCM) system. Building a flexible manufacturing system increases the total cost of the supply chain; for this reason, a discrete investment is important. For flexible production systems, production rate within a finite specific interval of production rate as work-in-process inventory is calculated. The aim of the supply chain is to reduce the total cost when demand during the lead time is a random variable with a normal distribution. A crashing cost is utilised to reduce the duration of lead time within the supply chain system. A model is proposed to obtain the optimal flexible production rate with the reduced total cost of the supply chain. A classical optimisation technique is employed to obtain the closed-form and quasi-closed-form solutions of the decision variables. An improved algorithm is designed to obtain the global minimum cost of SCM under the framework of a flexible production system. An illustrative numerical example and sensitivity analysis are given to test the model. A numerical study proves that this model obtains the minimum cost with the optimal decision variables.     

Product quality choice in two-echelon supply chains under post-sale liability: insights from wholesale price contracts

This paper considers a two-echelon supply chain consisting of an upstream manufacturer (M) and a downstream Retailer (R) who transact intermediate products via a wholesale price contract. The supply chain provides an experience good to unit-demand consumers. M is liable for the harm caused by its products in a low quality state. A two-stage game model is built to describe how the supply chain operates. With the equilibrium and under certain assumptions, this paper finds that (1) in spite that post-sale product liability positively affects the wholesale price, M’s quality level, the contracted quantity and supply chain members’ profitability are independent of it; (2) when liability-related factors and M’s quality improvement efficiency change, the wholesale price serves as a medium for M and R to mutually share the ex ante expected liability cost, the demand loss caused by the ex ante expected consumer harm and the ex ante quality-improving cost; (3) in response to changes in liability-related factors, the quality performance is in conflict with the financial performance for both M and R, but this conflict disappears in the presence of a change in quality improvement efficiency. Managerial insights are also discussed.     

The value of trade credit with rebate contract in a capital-constrained supply chain

We investigate the value of an innovative trade credit with rebate contract (TCRC) model in a stylised supply chain. In this supply chain, the capital-abundant manufacturer offers an integrated contract involving trade credit, minimum ordering and sales rebate contract to a capital-constrained retailer. To highlight the value of the TCRC model, we compare it with a traditional trade credit financing (TTCF) model in a ‘selling to the newsvendor model’. First, we show that equilibrium strategies exist between the manufacturer and the retailer under the TCRC or TTCF model. Second, this study investigates equilibrium selection between the TCRC and TTCF models for the individual and the supply chain. Finally, we show the manufacturer’s pricing policy, wherein the TCRC model outperforms the TTCF model for the players. Furthermore, we conduct a set of numerical experiments to show evidence for theoretical analysis and measure the operation efficiency of the TCRC model for players in the supply chain.     

Coordination of a dual-channel supply chain after demand or production cost disruptions

Coordinating a dual-channel supply chain could not only achieve the integrated profit of the supply chain but also alleviate the channel conflict. Although some researches addressed this area, there is scant literature to discuss the coordination issue in the situations of disruption. To fill this void, we utilise a contract with a wholesale price, a direct channel’s price and a lump sum fee to coordinate a dual-channel supply chain under the cases of demand disruptions and production cost disruptions. After deriving the optimal contract for each case, we find that the manufacturer can achieve coordination of the disrupted supply chain by adjusting the parameters of the coordination contract used in a normal environment. We also show that after disruptions, there exists a contract adjustment benefit zone, in which both the manufacturer and the retailer can benefit from the adjustment of coordination contract when demand increases or production cost decreases. A further analysis of the production and distribution strategies in the coordinated dual-channel supply chain after disruptions suggests that the adjustment of the total production and sales of each channel depends heavily on the level of disruptions and the degree of consumers’ loyalty to both channels.     

回购契约下应对突发事件的供应链协调策略

在基本回购契约模型基础上,分析了回购契约下实现供应链协调的条件,并针对突发事件造成零售商面临的需求分布变化时供应链协调被打破的问题,提出了具有抗突发事件性的回购契约。这个契约主要将增加的供应商成本考虑进回购价格,使得供应商新增加的成本能够在供应商和零售商之间分配,从而使新的回购契约实现对突发事件的协调应对。应用一个算例对比加以说明。     

Dynamic optimisation for highly agile supply chains in e-procurement context

In the conditions of an increased worldwide competition, supply chains are struggling to respond to an increasingly volatile and complex environment. With technological advances, current practices to build efficient supply chains have changed. Companies are seeking to use internet in order to cope with the flexible and dynamic nature of logistics networks. The purpose of this article is to address the flexible dynamic e-procurement context under asynchronous and repetitive variations over time. The supply chain considered is composed of two levels (buyer–suppliers) operating in highly agile environment. The questions facing the buyer is how many units of product should be purchased and from which supplier in response to variation in term of price and capacity. Because of this highly changing environment characterised by frequent changes in a short time, most of the classical optimisation approaches seem inadequate to address these problems. Recently, dynamic optimisation has been proposed to deal with such problems. However, we have no knowledge of its application in a supply chain context. We suggest a dynamic genetic approach which is applied to an e-procurement context in aim to optimise the procurement process during time.     

Interdependent order allocation in the two-echelon competitive and cooperative supply chain

In this paper, we consider an order allocation problem in a two-echelon supply chain with multiple suppliers and multiple demanders. The orders from the demanders are interdependent in terms of execution sequence. We consider both the competition and cooperation relationships between the suppliers and demanders. We provide formal definition for the order allocation problem and propose a negotiation mechanism which includes a two-stage negotiation protocol and two heuristic negotiation algorithms. Different negotiation strategies are proposed for the demanders and suppliers to resolve the order interdependency and competition conflict. An automated negotiation approach is introduced to implement the negotiation mechanism. The computational experiments show that orders under different supply chain contexts can be allocated with high success rate. We also numerically compare the influence of different negotiation strategies and investigate the interaction of conflict resolutions.     

供应链订货与营销渠道协调的主从对策模型

研究了供应链订货与营销渠道的协调问题,考虑了零售商具有订货成本缩减和营销投资成本,建立了供应链订货与营销渠道协调的Stackelberg主从对策模型.这一模型中,主方零售商具有产品零售价格和投资决策权,从方供应商具有产品批发价格决策权.分析了零售商四种投资策略,针对每种投资策略下的协调模型进行了数值仿真,结果表明在零售商订货成本缩减和营销之间进行投资协调能够同时增加零售商和供应商利润.     

Blockchain-oriented dynamic modelling of smart contract design and execution in the supply chain

Recently, the applications of Blockchain technology have begun to revolutionise different aspects of supply chain (SC) management. Among others, Blockchain is a platform to execute the smart contracts in the SC as transactions. We develop and test a new model for smart contract design in the SC with multiple logistics service providers and show that this problem can be presented as a multi-processor flexible flow shop scheduling. A distinctive feature of our approach is that the execution of physical operations is modelled inside the start and completion of cyber information services. We name this modelling concept ‘virtual operation’. The constructed model and the developed experimental environment constitute an event-driven dynamic approach to task and service composition when designing the smart contract. Our approach is also of value when considering the contract execution stage. The use of state control variables in our model allows for operations status updates in the Blockchain that in turn, feeds automated information feedbacks, disruption detection and control of contract execution. The latter launches the re-scheduling procedure, comprehensively combining planning and adaptation decisions within a unified methodological framework of dynamic control theory. The modelling complex developed can be used to design and control smart contracts in the SC.