Creating a low carbon economy through green supply chain management: investigation of willingness-to-pay for green products from a consumer’s perspective

This study investigates how consumers’ willingness-to-pay (WTP) for green products affects the decisions made by the green supply chain players. Through the application of game theory and uncertainty theory, our findings show that a higher consumer WTP for green products usually leads to a higher retail price and market share of green products, which motivates retailers and manufacturers to invest more in green technology. We also find that an increased WTP for green products can spur retailers to reduce the optimal green cost-sharing rate due to the pressure of increasing costs. In addition, we find that retailers are willing to lower the cost sharing rate when the confidence level increases. Regarding the contributions made by this study, it is one of the first to explore the transmission mechanisms involved in the management of the green supply chain by linking consumers’ WTP for green products to strategic decisions made by green supply chain players under conditions of uncertainty. Furthermore, our study could help green supply chain players to optimise the cost sharing mechanisms they use to generate more revenue, due to the increase in WTP for green products, which will in turn help to facilitate a low carbon economy

An analysis of incentive strategies for single-source suppliers to drive cost reduction

Thesis (M.B.A.)--Massachusetts Institute of Technology, Sloan School of Management; and, (S.M.)--Massachusetts Institute of Technology, Dept. of Electrical Engineering and Computer Science; in conjunction with the Leaders for Global Operations Program at MIT, 2011.Cataloged from PDF version of thesis.Includes bibliographical references (p. 54-55).An organization's decision on which aspects of its operations to outsource represents a key, strategic issue that should be based on maximizing performance throughout the entire value chain. In certain instances strategic outsourcing decisions make it ideal for firms to source from one particular supplier. Singlesource relationships, in particular, necessitate strategic contract development to ensure incentives are aligned throughout the value chain. Much of the existing research in contract development focuses on mitigating fluctuations in demand. Forecasting demand is highly uncertain and can lead to inefficiencies throughout the value chain that contracts can alleviate. However, the defense industry typically has low uncertainty in demand, which offers a unique environment to study contract development. This thesis focuses on contract development with certain demand through case studies in the defense industry. The essence of this thesis revolves around a strategic framework for developing contracts. This framework begins with a discussion of methods for performing a strategic analysis of suppliers. Next an overview of investigating supplier alternatives is provided. The framework then addresses the execution of a contract, which includes writing and negotiating the contract. Finally, contract maintenance is discussed, which includes contract validation as well as managing latent concerns. After the framework is laid out, four different single-source supplier relationships are analyzed. Each of these supplier relationships is investigated to understand the motivation for initiating these particular relationships. The four supplier case studies revolve around the issues of supplier investment costs, internal competition, commodity negotiations, and supplier power. After each case study, the pertinent aspects of the contract development framework are applied to the specific supplier relationship and conclusions are drawn.by Kevin Resch.S.M.M.B.A

An exploratory study of factors influencing make-or-buy of sales activities

Purpose This paper aims to explore how sales managers make resourcing decisions with particular focus on their perceptions of outsourcing. Design/methodology/approach This paper is based on in-depth interviews with 29 senior sales managers from a variety of industry sectors based in the UK. All had more than five years’ experience of making resourcing decisions. Findings The findings are that resourcing decisions are prompted by cost pressure, the need to access skills or to improve flexibility. Outsourcing preferences are strongly moderated by perceived reputational risk. Availability of suitable suppliers and the ability to manage outsourcing are also practical moderators. Research limitations/implications The sample was purposeful in identifying and accessing senior respondents in substantial companies with extensive experience, but it was not random. Practical implications Respondents reported a lack of information available when making resourcing decisions; the model proposed provides a framework by which sales managers can identify the factors which should be taken into account and the information they need to make objective evaluations of resourcing options. Originality/value It has been acknowledged in prior literature that there is relatively little outsourcing of sales activities. This is the first exploratory study of the perceptions of sales managers about resourcing options and the first conceptualisation of how sales resourcing decisions are made

Sustainable Value Proposition Design in a Product-Service System

Many companies have started to add services to their tangible products in order to defend themselves from increased competition from low-cost economies. Research regarding the transition towards product-service systems (PSS) and how the PSS providers' business models are affected exists, but there is a lack of research regarding how the suppliers to the PSS providers are affected by the transition towards PSS. Therefore, this thesis studies the situation for a supplier/partner to an OEM that has changed their business model to a PSS providing one. As the first step in a development of a new business model aims this thesis to provide guidelines for how to set up value propositions suitable for a supplier/partner in this new environment. When technologically complex products, such as aircraft engines, are provided through PSS offerings it is hard to translate customer needs into quality parameters, which makes it hard to sustain the value to customer over time. Therefore, how to keep the value offering sustainable over time is also investigated in this thesis. The aim of this study was to investigate how a sustainable value proposition can be designed for a product and technology supplier/partner to an OEM that offers PSS solutions. The research has been performed through studying relevant literature and collecting empirical data from a case company through semi-structured interviews and a workshop. The case company in this research is Volvo Aero Corporation (VAC). The empirical findings show that VAC wants to offer product-service bundled solution, which fit the whole spectra of PSS value propositions, to their partners/customers. To be able to deliver these different types of product-service bundled solutions different value propositions that suit the different kinds of PSS offerings are needed. Requirements that must be fulfilled to be able to offer and deliver the different types of value propositions exist in terms of securing sufficient information access, aligning the incentives of all actors involved and achieving an internal consensus of what is delivered

Supply chain coordination with information sharing in the presence of trust and trustworthiness: a behavioral model

The strategic use of private information causes efficiency losses in traditional principal-agent settings. One stream of research states that these efficiency losses cannot be overcome if all agents use their private information strategically. Yet, another stream of research highlights the importance of communication, trust and trustworthiness in supply chain management. The underlying work links the concepts of communication, trust and trustworthiness to a traditional principal-agent setting in a supply chain environment. Surprisingly, it can be shown that communication and trust can actually lead to increasing efficiency losses although there is a substantial level of trustworthiness.

Designing Payments for Ecosystem Services

This Policy Series by James Salzman brings attention to a rapidly developing phenomenon—payments for ecosystem services (PES). Salzman, the Samuel F. Mordecai Professor of Law and the Nicholas Institute Professor of Environmental Policy at Duke University, explains when and where ecosystem services can be provided by voluntary markets rather than government actions. The key to understanding how PES work is rooted in the basis of any voluntary market transaction—gains from trade. One party agrees to take action because another party offers an incentive. Both parties benefit. A beekeeper, for example, brings her hives to an orchard to provide pollination services for a fee. But Salzman explores the less obvious services such as forests at the top of a municipal watershed that act as a filter providing clean water to people below. Salzman states that we receive many environmental benefits for “free,” which provides little or no incentive for people to pay for them or for entrepreneurs to provide them. Because price signals that alert individuals about scarce resources in traditional markets are absent, ecosystem services are taken for granted—until they stop providing benefits. Then the cost of remediation or building infrastructure, such as a water treatment plant, makes their value obvious. For decades the solution to environmental protection has been government action. Today, knowledge about environmental processes combined with increased environmental sensitivity provides opportunities for entrepreneurs to find innovative ways of developing markets for ecosystem services

Impact of Back up Quantity Contract on Two-level Supply Chain: A Simulation Approach

In this new era of Supply chain coordination contracts are offered and accepted according to the varying need and specification of the industry and business in discussion. The contract variations arise according to the circumstances and adaptability by both manufacturer and retailer. An important challenge faced by the contracts being offered is the adaptability and robustness when demand observed is different from the forecast. Because of stochastic and uncertain demand, retailer faces lost sales and eventually loses revenue within the same horizon. This paper discusses a back up quantity contract for a single season in which retailer orders for one-shot inventory ordering. Manufacturer retains some part of the ordered inventory as backup and provides the units at first stage. If stock at retailer lags behind the demand, he gets the backup quantity otherwise he pays some agreed upon nominal price to manufacturer in case that inventory is not at all required. We assumed the case of single manufacturer and single retailer. If units are not required, the risk of holding inventory lies with manufacturer and salvaged at zero. The strategy is suitable for businesses having short seasonal products and high demand variability. We used Monte Carlo simulation for analyzing lost sales and supply chain profit scenario and used worst case distribution and normal distribution to validate the Pareto improving contractual relationship

Effective contracting of uncertain performance outcomes : Allocating responsibility for performance outcomes to align goals across supply chain actors

This dissertation contributes to practice and literature by studying how organizations can effectively contract and sell uncertain performance outcomes. In Chapter 2, I study whether supplier shirking in response to outcome uncertainty can be mitigated by combining performance and behavior specification and evaluation. Based on the findings of this study, I advise purchasing managers to invest in the evaluation of perform