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

Online Channels and Store Brands: Strategic Interactions

This study examines the strategic interactions between the online channel strategies of a national brand manufacturer and the store brand strategies of a retailer. We develop a game-theoretical model in which a manufacturer makes channel choices, a retailer selects product lines, and both need to take the other’s strategy into consideration. We compare the results with cases where no interactions are involved to explicate how the manufacturer’s online channel choice affects the retailer’s store brand strategy, and vice versa. The results suggest that the retailer executes a more defensive strategy if the threat of the online channel is severe but tends to be cooperative when the threat is less alarming. The manufacturer, however, would rather give up its efficient online channel to act cooperatively when the store brand is introduced. Our findings explain certain stylized facts regarding supply chain coordination

Evolution of a supply chain management game for the trading agent competition

TAC SCM is a supply chain management game for the Trading Agent Competition (TAC). The purpose of TAC is to spur high quality research into realistic trading agent problems. We discuss TAC and TAC SCM: game and competition design, scientific impact, and lessons learnt

Small and Medium sized Enterprises’ Collaborative Buyer-Supplier Relationships: Boundary Spanning Individual Perspectives

Boundary-spanning individuals (BSIs) play a critical role in supply chain management, especially in small and medium sized enterprises (SMEs) where interactions with buyers and suppliers can depend heavily on just a few individuals. This study, utilizing data from Korean manufacturing-sector SMEs, explores whether cooperative social value orientations of SMEs’ BSIs influence the effects of collaborative buyer-supplier initiatives. The results suggested that the performance implication of decision-sharing initiative increases when BSIs have a high level of cooperative social value orientation. However, it also negatively moderates the relationship between risk/benefit sharing (involving financial losses or gains) and performance suggesting possible negative side-effects. However, we found that such orientation also negatively moderates the relationship between risk/benefit sharing (involving direct financial losses or gains) and relationship performance suggesting possible negative side-effects

Supply Chain Simulation: A Survey

This paper provides a survey of simulation in supply chain management.It reviews four types of simulation, namely spreadsheet simulation, system dynamics, discreteevent simulation, and business games.Which simulation type should be applied, depends on the type of managerial question to be answered by the model.Moreover, this paper summarizes novel sensitivity and robustness analyses.This sensitivity analysis yields a shortlist of the truly important factors in large simulation models with (say) a hundred factors.The robustness analysis optimises the important factors controllable by management, while accounting for the noise created by the important non-controllable, environmental factors.Both analyses are illustrated by a case study involving the simulation of a supply chain in the mobile communications industry in Sweden.In general, simulation is important because it may support the quantification of the benefits resulting from supply chain management.simulation;logistics;performance measurement;risk analysis;uncertainty;bifurcation;supply chain management

Efficient coalition formation and stable coalition structures in a supply chain environment

We study a real supply chain environment from which specific information and knowledge can be extrapolated for other similar environments. We focus our research on the analysis of the interactions between members forming different teams (and between the teams themselves), and on the leader’s management of the supply chain. We note that there are many elements that contribute to the profitability of the network, which is dependent on the actions of the actors involved. We analyze certain characteristics that the actors have, such as their behavior, adaptation and learning levels, effort and willingness. Based on these components, we examine the performance of our actors and of the teams that the actors form. We provide specific calculations that take into account most of the components determining the added value to the system. One of the advantages of our main formula is that it can be used to monitor the progress of the actors, as well as it can help in the identification of problematic aspects impeding in the creation of value for the system. Our formula is very flexible and a modeler is able to adapt it to similar environments, providing him with great insight in the structures that he investigates. We study certain theoretical games from which we uncover certain information and characteristics of similar environments and settings. Moreover, we provide a real life example in order to truly understand the mechanism of the network, and validate our theoretical assessments. Moreover, we provide certain recommendations for a leader that is responsible for the supervision of actors (which have specific responsibilities) and the administration of a supply chain environment.coalition, supply chain management, core, value of the game, Coalition Factor Estimation

The Future of Retail Operations

Retailing consists of all the activities associated with the selling of goods to the final consumer. In this article, we review the research on retail operations published in Manufacturing & Service Operations Research (M&SOM) since 1999. We then discuss the current retail landscape and the new research directions it offers, in which M&SOM can play a prominent role