Supply Chain Contracting in the Presence of Supply Uncertainty and Store Brand Competition

In today\u27s complex business environment, manufacturers are striving to maintain a competitive advantage over their supply chain partners. Manufacturers\u27 profitability is tightly linked to their strategic interactions with other entities in the supply chain. While numerous studies have been conducted to investigate such interactions in supply chains, certain issues remain unresolved. We apply a game-theoretic framework to analyze two distinct supply chain structures in the presence of supply uncertainty and store brand competition in two essays, respectively. In the first chapter, we study a decentralized assembly supply chain under supply uncertainty. In a decentralized assembly supply chain, one assembler assembles a set of $n$ components, each produced by a different supplier, into a final product to meet an uncertain market demand. Each supplier faces an uncertain production capacity such that only the lesser of the planned production quantity and the realized capacity can be delivered to the assembler. We assume that the suppliers\u27 random capacities and the random demand can follow an arbitrary continuous multivariate distribution. We formulate the problem as a two-stage Stackelberg game. The assembler and the suppliers adopt a so-called Vendor-Managed-Consigned-Inventory (VMCI) contract. We analytically characterize the equilibrium of this game, based on which we obtain several managerial insights. Surprisingly, we show that when a supplier\u27s production cost increases or when his component salvage value decreases, it hurts all other members and the entire supply chain, but it might sometimes benefit this particular supplier. Similarly, when the suppliers do not have supply uncertainty, it benefits the assembler but it does not necessarily benefit the suppliers. Furthermore, we demonstrate that when the suppliers\u27 capacities become more positively correlated, the assembler is always better off, but the suppliers might be better or worse off. Later in the chapter, we also solve the game under the conventional wholesale-price contract. We find that the assembler always prefers the VMCI contract, and the suppliers always prefer the wholesale price contract. In addition, we illustrate that the VMCI contract is more efficient than the wholesale price contract for this decentralized assembly supply chain. In the second chapter, we consider a two-tier decentralized supply chain with a national brand supplier and a retailer. The national brand supplier (she) distributes her products to consumers through the retailer. Meanwhile, the retailer (he) intends to develop and produce his own store brand through a manufacturing source that is different from the national brand supplier. The retailer holds the store brand production unit cost as private information, for which the national brand supplier only has a subjective assessment. Given a supply contract offered by the national brand supplier, the retailer simultaneously decides whether to accept the contract and whether to produce the store brand. The national brand supplier aims to design an optimal menu of contracts to maximize her expected profit as well as extract the retailer\u27s private cost information. We formulate the problem as a two-stage screening game to analyze the strategic interaction between the two players. Despite the inherent computational complexity, we are able to derive the optimal menu of contracts for the national brand supplier, of which the format depends on the national brand supplier\u27s unit production cost. Furthermore, we investigate how the model parameters affect the value of information for each member in the supply chain. We show that the retailer\u27s private cost information becomes less valuable to both the national brand supplier and the retailer when the national brand unit production cost increases. We also illustrate that when the gap between the two possible cost values increases, the private cost information becomes more valuable to the national brand supplier, however the value of information to the retailer himself can either increase or decrease. Finally, we demonstrate that when the perceived quality of the national brand increases, the value of information to the retailer first decreases then increases, but the impact on the value of information to the national brand supplier can be either positive or negative

Conversations with Supply Chain Managers

This paper documents the process of supply chain formation to bring a new product to market, based on phone and personal interviews with supply chain professionals and consultants from a range of industries including but not restricted to high tech, consumer products and services, entertainment, food, furniture, family and entertainment, consulting and other b-to-b services, automotive, and large complex engineered products. Most of these interviews were conducted between September 2009 and January 2010, but some earlier interactions have been incorporated as appropriate. Potentially identifying information has been removed to preserve anonymity, which was promised to the respondents.http://deepblue.lib.umich.edu/bitstream/2027.42/76027/1/1145_Lovejoy.pd

Cooperation in Supply Chain Networks: Motives, Outcomes, and Barriers

This paper analyzes the phenomenon of cooperation in modern supply chains in the light of Game Theory. We first provide a discussion on the meaning of cooperation in supply chains, its motives, outcomes and barriers. We then highlighted the applicability of Cooperative Game Theory as methodology for analyzing cooperation in supply chains. Second, we review recent studies that analyze the cooperation in supply chains by means of cooperative game theory. A special emphasis will be given inventory centralizations games. Finally, gaps in the literature are identified to clarify and to suggest future research opportunities

Adoption of web-based order-processing systems: experiences from tier-1 suppliers in the automotive supply chain

This research studies automobile industry suppliers in Thailand, who have implemented VMI using web-based order-processing technology. It examines their motivations and barriers for implementing the technology, and identifies the enabling factors with greatest impact on the outcomes of such implementation. Data was obtained from 70 tier-1 suppliers of the two biggest automobile assemblers in Thailand. Exploratory factor analysis was used to construct motivation, enabling factors, difficulties/barriers and outcomes of web-based order-processing technology implementation. Multiple linear regression was then used to examine the relationships between enabling factors and operational outcomes. The results show that improving customer responsiveness and the need to retain competitive advantage rather than cost-based orientation were the primary drivers of implementation of web-based order processing. This case provides insights to enable successful implementation by organisations that are planning to deploy the technology, particularly in the early stages of technological diffusion in emerging economies

Quality of Service Practices within Business Market: An Automotive Industry Experience

In todays business market, products alone cannot assure vendors success due to the trend of the market where buyers perceived products and services are equally important. To face this current development, vendors are forced to offer added values to their products. Excellent quality of service is one of the options available because it can lead to the buyers satisfaction, and ultimately, loyalty. To date, little is known about the quality of service practices in the Malaysian Automotive Industry. Therefore, the case study was conducted to understand the practices better. It was investigated in the language of the actors in the industry specifically the buyers. In-depth interviews were conducted to explore the quality of service practices which were felt to be crucial to this study. A hermeneutics analysis method was employed in analyzing the data. Results from the case studies indicated that quality of service practices has played significant roles in the Malaysian Automotive Industry. In addition, the practices are consistent with the four main principles in a buyer-vendor relationship within the automotive industry. This is in line with the current market trend

Effective Supplier Management in Automobile Industry in Pakistan

ABSTRACT Vendor management is a discipline that enables organizations to control costs, drive service excellence and mitigate risks to gain increased value from their vendors throughout the deal life cycle. The term vendor management is usually used within the context of business operations, but individuals may also need to manage vendors from time to time. The purpose of this paper is to provide an explanation about how the buyer and supplier management can be effective in growing industry of automobile of Pakistan. This paper highlights the PESTAL effect on the Buyer and Supplier relationship. Data collected through structured interview questionnaire (based on external and internal factors). The most significant recommendation for practitioners concerns the need to how managers can design the buyer & supplier relationship strategy so that targets can be achieved. The basic contribution of this paper is that it examines the need to develop buyer & supplier relationship for getting maximum gain for achieving production target and meet the market need

Developing supply chain methodologies for small to medium sized enterprises

SIGLEAvailable from British Library Document Supply Centre-DSC:DXN044646 / BLDSC - British Library Document Supply CentreGBUnited Kingdo

Benefit of Supply Chain Coordination

In this paper, we deal with a supply chain in which an assembler orders parts from a supplier. The assembler decides both order size and lead time for the supplier. In response, the supplier will determine its production capacity to fulfill the order from the assembler. Compared with the case where the assembler and the supplier maximize their own individual profits, the supply chain coordination offers a Pareto efficient solution and can give more profit to both parties. The implication of this paper is that the order requested from an assembler to a parts supplier such as in JIT delivery may damage the overall profit in the chain. Therefore, the parties involved had better cooperate with each other rather than emphasizing their own sakes and eventually leading to lower profits

Determinants of supplier plant location: evidence from the auto industry

Automobile supplies industry ; Automobile industry and trade

Determinants and effects of green supply chain management (GSCM)

Green Supply-Chain Management (GSCM) is an increasingly widely-diffused practice among companies that are pursuing environmental excellence. The motivation for the introduction of GSCM may be ethical (e.g. reflecting the values of managers) and/or commercial (e.g. gaining a possible competitive advantage by signalling environmental concern). Drawing upon a database of over 4,000 manufacturing facilities in seven OECD countries this paper assesses the determinants and motivations for the implementation of GSCM. We find that GSCM is strongly complementary with other advanced management practices, and that it contributes to improved environmental performance. The effects on commercial performance are more ambiguous.