Building and Sustaining Interorganizational Information Sharing Relationships: The Competitive Impact of Interfacing Supply Chain Operations with Marketing Strategy

Information technology has radically altered the management of supply chain operations; many business partners who are adjacent on the supply chain can gain from entering inter-organizational information sharing (IOIS) relationships and sharing information that was previously accessible to only one of them. This situation is typical in retailer-supplier logistics management relationships. The first part of our study analyzes different forms of virtual integration - relationships between independent companies that result in some of their operations resembling those of a single vertically integrated firm - and classifies them based on their models of information sharing across the supply chain. We find that there are four primary policies that firms adopt when they exchange information across the supply chain; these are EDI, vendor managed inventory (VMI), continuous replenishment (CR) and category management (CM). Typically, corporations view the development of inter-organizational information systems, and the sharing of information as being targeted at increasing operational efficiency by reducing ordering costs, inventory costs and supply lead times. Many studies have focused on studying IOIS technology issues, and estimating the value generated from these arrangements using traditional models of inventory and ordering costs. However, we find that in a number of cases, the information shared can have cross-functional value - it can also be used to improve a supplier's production planning, and to alter their marketing and sales strategies. Paradoxically, however, suppliers who receive such information feel that not only are their benefits minimal, but they often end up worse off than before the IOIS was implemented. The second part of our study explains this paradox. We show how retailers and other buyers can successfully contract to end up with more value than is generated by the sharing of information. Using game-theoretic models of strategic interaction, we show that this effect intensifies as the competitive value of the information to the supplier's marketing and sales departments increases. Besides, as the value that could be generated by the sales and production divisions of the supplier increases, we demonstrate how the supplier loses more and more value. Furthermore, the buyer need not actually share the information to derive these rents; we indicate why the possibility of sharing is sufficient, even when the buyer cannot independently create value from that information. The practical contributions of this inter-disciplinary study are manifold. We provide a clear and lucid description of the different levels at which organizations share information. We also describe a fairly general modeling framework which lays the foundation for a deeper analysis of this increasingly important area. Our strategic results demonstrate that a single focus on the technological or operational aspects of IOIS can mislead managers significantly. The true costs and benefits of these relationships can only be judged by recognizing the cross-functional impact of the information flows on the operational architecture, the marketing strategies of the suppliers and buyers, and the nature of competition within the respective organizations' industries.Information Systems Working Papers Serie

U.S. Fresh Fruit and Vegetable Marketing: Emerging Trade Practices, Trends, and Issues

In the past year, trade practices between fresh produce shippers and food retailers gained national attention. Shippers are concerned that recent retail consolidation has led to market power and the growing incidence of fees and services. Retailers argue that these new trade practices reflect their costs of doing business and the demands of consumers. Trade practices include fees such as volume discounts and slotting fees, as well as services like automatic inventory replenishment, special packaging, and requirements for third-party food safety certification. Trade practices also refer to the overall structure of a transaction-for example, long-term relationships or contracts versus daily sales with no continuing commitment. This study compares trade practices in 1999 with those prevalent in 1994, placing them in the broader context of the evolving shipper/retailer relationship. Most shippers and retailers reported that the incidence and magnitude of fees and services associated with transactions has increased over the last 5 years. Fees paid to retailers are usually around 1-2 percent of sales for most of the commodities we examined, but 1-8 percent for bagged salads. Information on the incidence and magnitude of these new practices is scarce. To augment information that is publicly available, we interviewed a limited number of shippers, retailers, and wholesalers about their firms and trade practices. We received a high level of voluntary cooperation from the interviewed firms.produce, fresh fruit and vegetables, fresh-cut produce, trade practices, fees and services, slotting fees, retail consolidation, produce shipper consolidation, Crop Production/Industries, Marketing,

Optimizing replenishment order quantities in uncoordinated supply chains

Many modern supply chains can be described as a series of uncoordinated suppliers. That is each supplier establishes their individual inventory and production policies on both the input and output sides. In these supply links there is minimal coordination between suppliers, and typically only prices and delivery guarantees are contracted. As a consequence, the inventory behavior and associated costs do not exhibit standard patterns. This makes it difficult to model and optimize these chains using classical inventory models. The common approach, therefore, for evaluating uncoordinated supply chains is to use Supply Chain Analytics software. These retrieve operational data from Enterprise Resource Planning (ERP) systems and then characterize the historical inventory performance behavior. Nearier (2008) developed a joint production inventory model for estimating inventory costs in uncoordinated chains as an alternative to supply chain analytics. They proposed a (Q, R, δ)2 relationship between each pair of sequential suppliers, where Q is the order quantity, R is the reorder level, and δ is the production or consumption rate. In this arrangement each part has two inventory locations: (i) on the output side of the seller, and (ii) on the input side of the buyer. hi this dissertation, the (Q, R, δ)2 model was extended. Three specific research tasks were accomplished in this regard. First, the inventory estimation accuracy of the original (Q, R, δ)2 model was improved. This was accomplished by deriving a more reliable estimate of the residual inventory at the end of each supply cycle. Further, a more accurate model of the inventory behavior in supply cycles where the seller has no production was developed. A discrete inventory simulation was used to demonstrate a significant improvement in the estimation accuracy, from a 10-30 % error range to within 5% error on average. Second, a prescriptive model for deriving the optimal Q when reducing inventory costs in a (Q, R, δ)2supply relationship was developed. From simulation studies, it was found that due to differences in production batch sizes, production rates, and replenishment order quantities, the inventory cost function exhibits a non-differentiable step-wise convex behavior. Further, the steps are observed to occur at integer ratios of Q and the buyer\u27s production batch. This behavior makes it difficult to analytically derive the optimal Q, which could occur at one of the step points or any intermediate point. A golden section based search heuristic for efficiently deriving the optimal Q was developed. Third, the robustness of Q to demand shifts was studied. A demand shift occurs wherever the mean demand jumps to a higher or lower level, similar to a moving average forecast. The demand shift range beyond, which there is significant deterioration in inventory costs and a change in the supply policy Q is justified, was determined Two supply policies were studied: (i) fixed delivery batch and (ii) fixed production period. For each stochastic demand shift behavior, a delivery batch size or production period that minimizes the total cost of both suppliers is selected

Relative Importance, Specific Investment and Ownership in Interorganizational Systems.

Author's post-print on any open access repository after 12 months after publication. Must link to publisher version http://www.ucalgary.ca.ezproxy.lib.ucalgary.ca/bnault/files/bnault/itm_sep_2008.pdfImplementation and maintenance of interorganizational systems (IOS) require investments by all the participating firms. Compared with intraorganizational sys- tems, however, there are additional uncertainties and risks. This is because the benefits of IOS investment depend not only on a firm’s own decisions, but also on those of its business partners. Without appropriate levels of investment by all the firms participating in an IOS, they cannot reap the full benefits. Drawing upon the literature in institutional economics, we examine IOS ownership as a means to induce value-maximizing noncontractible investments. We model the impact of two factors derived from the theory of incomplete contracts and transaction cost economics: relative importance of investments and specificity of investments. We apply the model to a vendor-managed inventory system (VMI) in a supply chain setting. We show that when the specificity of investments is high, this is a more critical determinant of optimal ownership structure than the relative importance of investments. As technologies used in IOS become increasingly redeployable and reusable, and less specific, the relative importance of investments becomes a dominant factor. We also show that the bargaining mechanism—or the agreed upon approach to splitting the incremental payoffs—that is used affects the relationship between these factors in determining the optimal ownership structure of an IOS.Ye

Portuguese football clubs´ merchandising products: a qualitative approach to guide supply chain strategy choice

In recent years the commercial activity has become increasingly important for Portuguese football clubs’ finances, having as one of its main drivers the sales of merchandising products. Therefore, a competent management of their Supply Chains should be a priority for clubs. This thesis proposes to guide these products’ Supply Chain strategy choice by conducting a qualitative assessment approach based on three global dimensions: Product, Demand and Supply characteristics. The merchandising products featured in the analysis are Match Shirts and Scarfs, for Big and Medium & Small Portuguese clubs. Data was collected by interviewing industry professionals and surveying consumers

A Stochastic Process Study of Two-Echelon Supply Chain with Bulky Demand Process Incorporating cost Sharing Coordination Strategies

This research considers a single-item two-echelon supply chain facing a sequence of stochastic bulky customer demand with random order inter-arrival time and random demand size. The demand process is a general renewal process and the cost functions for both parties involve the renewal function and its integral. The complexity of the general renewal function causes the computational intractability in deciding the optimal order quantities, so approximations for the renewal function and its integral are introduced to address the computational complexity. Asymptotic expansions are commonly used in the literature to approximate the renewal function and its integral when the optimal decisions are relatively large compared to the mean of the inter-renewal time. However, the optimal policies do not necessarily fall in the asymptotic region. So the use of asymptotic expansions to approximate the renewal function and its integral in the cost functions may cause significant errors in decision making. To overcome the inaccuracy of the asymptotic approximation, this research proposes a modified approximation. The proposed approximation provides closed form functions for the renewal function and its integral which could be applied to various optimization problems such as inventory planning, supply chain management, reliability and maintenance. The proposed approximations are tested with commonly used distributions and applied to an application in the literature, yielding good performance. By applying the proposed approximation method to the supply chain cost functions, this research obtains the optimal policies for the decentralized and the centralized cases. The numerical results provide insights into the cost savings realized by the centralization of the supply chain compared to the decentralized case. Furthermore, this research investigates coordination schemes for the decentralized case to improve the utilities of parties. A cost sharing mechanism in which the vendor offers the retailer a contract as a compensation of implementing vendordesired inventory policy is investigated. The sharing could be realized by bearing part of the retailer’s inventory holding cost or fixed cost. The contract is designed to minimize the vendors cost while satisfying the individual rationality of the retailer. Other forms of coordination mechanisms, such as the side payment and delayed payment, are also discussed

Structuring postponement strategies in the supply chain by analytical modeling

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Supply Chain

Traditionally supply chain management has meant factories, assembly lines, warehouses, transportation vehicles, and time sheets. Modern supply chain management is a highly complex, multidimensional problem set with virtually endless number of variables for optimization. An Internet enabled supply chain may have just-in-time delivery, precise inventory visibility, and up-to-the-minute distribution-tracking capabilities. Technology advances have enabled supply chains to become strategic weapons that can help avoid disasters, lower costs, and make money. From internal enterprise processes to external business transactions with suppliers, transporters, channels and end-users marks the wide range of challenges researchers have to handle. The aim of this book is at revealing and illustrating this diversity in terms of scientific and theoretical fundamentals, prevailing concepts as well as current practical applications

E-COMMERCE IN AGRICULTURE: DEVELOPMENT, STRATEGY, AND MARKET IMPLICATIONS

Marketing,