scholarly journals Supply Chains and Antitrust Governance

2021 ◽  
Author(s):  
Nitish Jain ◽  
Sameer Hasija ◽  
Serguei Netessine
Keyword(s):  
Supply Chain ◽  
Supply Chains ◽  
Operations Management ◽  
Demand Uncertainty ◽  
Wholesale Price ◽  
Minimum Order ◽  
Fair Competition ◽  
Legal Costs ◽  
Contract Structure ◽  
Fixed Fee

Antitrust regulations are meant to promote fair competition in the market, but balancing administrative and legal costs with enforcement can be difficult when multilayered supply chains are involved. The canonical example of this challenge is the landmark Illinois Brick ruling, which limits antitrust damages to only the direct purchasers of a product; for instance, consumers can file antitrust claims against colluding retailers but not against colluding manufacturers—only retailers can file claims against manufacturers. This controversial ruling was meant to reduce legal costs, but it can clearly lead to missed enforcement opportunities. In this paper, we demonstrate how the Illinois Brick ruling interacts with contracts adopted in the supply chain, and we show that otherwise equivalent supply chain arrangements can have markedly different effects. In particular, we find that wholesale price, minimum order quantity, revenue sharing, and quantity discount contracts lead retailers to take legal action against manufacturers in the event of collusive behavior. However, the wholesale price plus fixed fee contract structure (also known as a two-part tariff or slotting fee contract) facilitates collusion among the manufacturers with retailers compensated by the fixed fee and not filing the antitrust litigation. We further demonstrate that collusion is more likely under high demand uncertainty and high competition at the retail level but is less likely under high competition at the manufacturer level. Our paper helps public enforcers identify market conditions conducive to antitrust violations. This paper was accepted by Vishal Gaur, operations management.

scholarly journals Supply Chain Competition: A Market Game Approach

2020 ◽  
Vol 66 (12) ◽  
pp. 5648-5664 ◽  
Author(s):  
C. Gizem Korpeoglu ◽  
Ersin Körpeoğlu ◽  
Soo-Haeng Cho
Keyword(s):  
Supply Chain ◽  
Supply Chains ◽  
Operations Management ◽  
Wholesale Price ◽  
Market Price ◽  
Market Game ◽  
Wholesale Market ◽  
Supply Chain Competition ◽  
Local Supply ◽  
Buyer Power

We study supply chains where multiple suppliers sell to multiple retailers through a wholesale market. In practice, we often observe that both suppliers and retailers tend to influence the wholesale market price that retailers pay to suppliers. However, existing models of supply chain competition do not capture retailers’ influence on the wholesale price (i.e., buyer power) and show that the wholesale price and the order quantity per retailer do not change with the number of retailers. To overcome this limitation, we develop a competition model based on the market game mechanism in which the wholesale price is determined based on both suppliers’ and retailers’ decisions. When taking into account retailers’ buyer power, we obtain the result that is consistent with the observed practice: As the number of retailers increases, each retailer’s buyer power decreases, and each retailer is willing to pay more for her order, so the wholesale price increases. In this case, supply chain expansion to include more retailers (or suppliers) turns out to be more beneficial in terms of supply chain efficiency than what the prior literature shows without considering buyer power. Finally, we analyze the integration of two local supply chains and show that although the profit of the integrated supply chain is greater than the sum of total profits of local supply chains, integration may reduce the total profit of firms in a retailer-oriented supply chain that has more retailers than suppliers. This paper was accepted by Charles Corbett, operations management.

Vertical Contracts in a Supply Chain and the Bullwhip Effect

2020 ◽  
Author(s):  
Zhan Qu ◽  
Horst Raff
Keyword(s):  
Supply Chain ◽  
Supply Chains ◽  
Operations Management ◽  
Bullwhip Effect ◽  
Price Effect ◽  
Demand Shocks

This paper shows that decentralized supply chains, in which upstream firms use linear wholesale prices, may experience lower upstream production and downstream sales volatility than vertically integrated supply chains and may be less susceptible to the bullwhip effect by which the variance of upstream production exceeds the variance of downstream sales. The reason is that decentralized supply chains exhibit a price effect, whereby upstream producers raise wholesale prices in the case of positive demand shocks and lower wholesale prices in the case of negative demand shocks. Whereas upstream producers benefit from the price effect and, thus, from a dampening of the bullwhip effect, downstream firms may lose, and overall supply chain profit may decrease. This paper was accepted by Vishal Gaur, operations management.

Coordination of Multiechelon Supply Chains Using the Guaranteed Service Framework

2021 ◽  
Author(s):  
Tor Schoenmeyr ◽  
Stephen C. Graves
Keyword(s):  
Supply Chain ◽  
Wholesale Price ◽  
Problem Definition ◽  
Quantity Discounts ◽  
Minimum Order ◽  
Base Stock Policy ◽  
Decentralized Decision Making ◽  
Guaranteed Service ◽  
Stock Policy ◽  
Different Parts

Problem definition: We use the guaranteed service (GS) framework to investigate how to coordinate a multiechelon supply chain when two self-interested parties control different parts of the supply chain. For purposes of supply chain planning, we assume that each stage in a supply chain operates with a local base-stock policy and can provide guaranteed service to its customers, as long as the customer demand falls within certain bounds. Academic/practical relevance: The GS framework for supply chain inventory optimization has been deployed successfully in multiple industrial contexts with centralized control. In this paper, we show how to apply this framework to achieve coordination in a decentralized setting in which two parties control different parts of the supply chain. Methodology: The primary methodology is the analysis of a multiechelon supply chain under the assumptions of the GS model. Results: We find that the GS framework is naturally well suited for this decentralized decision making, and we propose a specific contract structure that facilitates such relationships. This contract is incentive compatible and has several other desirable properties. Under assumptions of complete and incomplete information, a reasonable negotiation process should lead the parties to contract terms that coordinate the supply chain. The contract is simpler than contracts proposed for coordination in the stochastic service (SS) framework. We also highlight the role of markup on the holding costs and some of the difficulties that this might cause in coordinating a decentralized supply chain. Managerial implications: The value from the paper is to show that a simple contract coordinates the chain when both parties plan with a GS model and framework; hence, we provide more evidence for the utility of this model. Furthermore, the simple coordinating contract matches reasonably well with practice; we observe that the most common contract terms include a per-unit wholesale price (possibly with a minimum order quantity and/or quantity discounts), along with a service time from order placement until delivery or until ready to ship. We also observe that firms need to pay a higher price if they want better service. What may differ from practice is the contract provision of a demand bound; our contract specifies that the supplier will provide GS as long as the buyer’s order are within the agreed on demand bound. This provision is essential so that each party can apply the GS framework for planning their supply chain. Of course, contracts have many other provisions for handling exceptions. Nevertheless, our research provides some validation for the GS model and the contracting practices we observe in practice.

scholarly journals Contracts Adjustment under Bilateral Information Updating in a Supply Chain

Complexity ◽  
2020 ◽  
Vol 2020 ◽  
pp. 1-15
Author(s):  
Xinhui Wang ◽  
Yingsheng Su ◽  
Zihan Zhou ◽  
Yiling Fang
Keyword(s):  
Supply Chain ◽  
Production Cost ◽  
Wholesale Price ◽  
Transfer Payment ◽  
Market Demand ◽  
Order Quantity ◽  
Minimum Order ◽  
Information Updating ◽  
Minimum Order Quantity ◽  
Market Outlook

This paper investigates contracts adjustment between one manufacturer and one retailer under bilateral information updating. The manufacturer incurs uncertain production cost and the retailer faces uncertain demand, but they can acquire independent signals to update production cost and demand, respectively. They commit an initial agreement on an initial wholesale price, minimum order quantity, and information sharing as well as the transfer payment and decisions adjustment when information is updated. We find that due to the joint impact of production cost variation and market variation, the manufacturer may not decrease (increase) her wholesale price when the updated production cost is lower (higher) than expected. The retailer places an additional order even if the wholesale price rises when the market outlook is good, but places an order with the minimum order quantity even if the wholesale price falls when the market outlook is bad. Secondly, for a certain level of information accuracy of the production cost and market demand, the retailer is always better off with information updating, but the manufacturer may be worse off with information updating when facing a bad market outlook. Thirdly, when information accuracy of the production cost and market demand varies, the manufacturer only benefits from a high accuracy of production cost. Profits of the retailer and the supply chain are increasing (decreasing) with accuracy of production cost if the updated production cost is larger (smaller) than expected.

Manufacturing SMEs, network governance and global supply chains

2019 ◽  
Vol 27 (1) ◽  
pp. 130-147
Author(s):  
Tony Cragg ◽  
Tom McNamara ◽  
Irena Descubes ◽  
Frank Guerin
Keyword(s):  
Supply Chain ◽  
Supply Chains ◽  
Demand Uncertainty ◽  
Network Governance ◽  
Global Supply Chains ◽  
Informal Networks ◽  
Content Type ◽  
Case Research ◽  
Effective Form ◽  
Supply Chain Governance

Purpose The purpose of this paper is to investigate how small manufacturing firms develop and manage relationships with global suppliers and distributors. In so doing the authors aim to contribute to knowledge about SMEs and supply chain management (SCM). Design/methodology/approach The authors conducted 12 in-depth case studies of SME final assemblers of machinery in the French farm equipment sector. Findings The most effective form of global supply chain governance used by successful SMEs is informal networks involving managers in similar complementary firms, which serve to concatenate links with foreign suppliers and distributors. Research limitations/implications The principal limitation of this research is that it is specific to one sector and therefore questions of transferability are raised. Practical implications The important implication for managers in manufacturing SMEs is that links with other complementary local firms in the same sector need to be developed, leveraged and valued. Originality/value The originality of this case research is that the authors draw on inter-organisational boundaries, power asymmetries and network governance to develop a conceptual framework for the study of SMEs and global supply chains. By focusing on the perceptions of boundary-spanning managers, the authors show how, in circumstances of demand uncertainty, soft network governance is an effective strategic choice.

Exploring information sharing in the extended supply chain: an interdependence perspective

2015 ◽  
Vol 20 (4) ◽  
pp. 455-470 ◽  
Author(s):  
Joakim Kembro ◽  
Kostas Selviaridis
Keyword(s):  
Supply Chain ◽  
Supply Chains ◽  
Information Sharing ◽  
Demand Uncertainty ◽  
Analytical Framework ◽  
Content Type ◽  
Related Information ◽  
Market Shares ◽  
Shared Information ◽  
Meta Information

Purpose – This paper aims to empirically explore demand-related information sharing in the extended supply chain. Design/methodology/approach – Through a single, embedded case design, a range of methods are used to collect data from companies representing three different supply chain tiers, including focal company, first-tier suppliers and first-tier customers. The collected data are analysed through the theoretical lens of interdependence. Findings – The findings indicate that the supply chain actors adapt information sharing to the pooled, serial or reciprocal type of interdependence. Information sharing is thus increased with key dyadic partners representing, for example, unique offerings and high market shares as percentage of total expenditure/sales. The study also unearths several barriers to information sharing beyond dyadic ties, including problems related to dis-aggregated, misinterpreted and/or incomplete information. Research limitations/implications – The study empirically contributes to the existing literature by exploring information sharing in the extended supply chain and by suggesting different approaches to information sharing depending on the type and intensity of interdependence between supply chain partners. Further, the paper contributes to the existing literature on barriers of information sharing in supply chains by identifying barriers specific to multi-tier information sharing. “Meta-information” (i.e. information about the shared information) is needed to overcome some of the barriers of sharing information in cases of weak, pooled interdependencies in the supply chain. Practical implications – Similar to previous empirical research, this exploratory study indicates that companies, in general, refrain from sharing information beyond dyadic ties. Supply chain managers would instead mostly focus on stronger, reciprocal interdependencies and emphasise dyadic information sharing. To further guide managers, a demand profiling framework considering market share and demand uncertainty is presented. It may be interesting to engage in multi-tier information sharing in particular cases where strong interdependence exists between three or more partners. Originality/value – This study contributes to existing research on information sharing in supply chains by empirically studying information sharing in an extended supply chain, applying interdependence theory as its analytical framework and unearthing several barriers that are specific to multi-tier information sharing.

Inventory Management in Competition Environment Based on Customer Service

2011 ◽  
Vol 58-60 ◽  
pp. 2141-2146
Author(s):  
Xiao Di ◽  
Bao Xing
Keyword(s):  
Supply Chain ◽  
Supply Chains ◽  
Customer Service ◽  
Inventory Management ◽  
Demand Uncertainty ◽  
Management Policy ◽  
Management Decision ◽  
Inventory Level ◽  
On Demand ◽  
Optimal Policies

Based on demand uncertainty, the paper studies inventory management decision of two competing supply chains from the perspective of customer service. The paper mainly discusses two different inventory strategies, which are widely used, that is, consignment stock and VMI, and analyzes the optimal policies under three competitive scenarios, which consist of using consignment stock in both supply chains (CC mode), using VMI in both supply chains (DD mode), and using consignment stock in one supply chain but VMI another (VC mode). The paper compares equilibrium inventory level and profit of supply chain in different competitive modes, and concludes that both supply chains use VMI is equilibrium, which means that when manufacturers have right to choose inventory management policy, they prefer VMI. But it isn’t paradoxical with the phenomenon that consignment stock is common in reality, because manufacturers are forced to use consignment by retailer’s channel power.

scholarly journals Control Model for Intelligent and Demand-Driven Supply Chains

2012 ◽  
pp. 262-283
Author(s):  
Jan Strandhagen ◽  
Heidi C. Dreyer ◽  
Anita Romsdal
Keyword(s):  
Supply Chain ◽  
Supply Chains ◽  
Operations Management ◽  
Relevant Information ◽  
Control Model ◽  
Information And Communications Technology ◽  
Future Research ◽  
Small Scale ◽  
Information And Communication ◽  
Trust And Power

Orchestrating supply chains is challenging. This chapter describes how to control a supply chain to make it truly demand-driven – based on the assumption that all relevant information is made available to all partners in real time. The chapter explores the elements of a framework for intelligent and demand-driven supply chain control, with regards to the overall concept and associated principles, and demonstrates these in a case example. Challenges to the realization of the proposed control model include trust and power, supply chain dynamicity and uncertainty, and required investments in competence, standardization, and information and communication technology. Some of these can be met through initial small-scale implementations of the proposed model, to demonstrate effects, and by exploiting facilities for information sharing and collaboration, like supply chain dashboards and control studios. Future research within operations management, technology and information and communications technology (ICT) will support broader realization of the proposed control model.

A simulation–optimization approach for a multi-period, multi-objective supply chain with demand uncertainty and an option contract

SIMULATION ◽  
2018 ◽  
Vol 94 (7) ◽  
pp. 649-662 ◽  
Author(s):  
M Hajian Heidary ◽  
A Aghaie ◽  
A Jalalimanesh
Keyword(s):  
Supply Chain ◽  
Supply Chains ◽  
Demand Uncertainty ◽  
Risk Attitude ◽  
Service Level ◽  
Complex Problem ◽  
Optimization Approach ◽  
Option Contract ◽  
Risk Sensitive ◽  
Objective Model

One of the main challenges in global procurement problems is the uncertainty in the demand and supply sides of supply chains. Besides, decision making in the stochastic supply chains is a complex problem. A powerful technique for decision analysis in complex stochastic problems is simulation. In this paper we propose a simulation-based optimization approach to solve a bi-objective (profit and service level) supply chain with uncertain customer demands and disruption events in the suppliers. The basic assumptions used in this paper are adopted from the multi-period newsvendor problem. In addition, based on the risk attitude of the buyers (retailers), to cope with the uncertainties, they can sign an option contract, reserving additional capacity in the secondary suppliers. Hence, a simulation approach is used to model the behavior (risk attitude) of the buyers. Indeed, because of the demand uncertainty, at the beginning of each contract period, buyers should decide on the amount of ordering from the primary suppliers. The risk attitude of the retailer (as a spectrum) is defined based on the amount of ordering from the primary supplier. Also, we use the Non-dominated Sorting Genetic Algorithm to optimize the bi-objective model. Finally, a numerical example has been solved with the proposed algorithm and the results are reported. The results showed that if the profit is more important than service level, the risk sensitive retailer prefers to show more risk averse behavior.

More Sustainable Supply Chains

2020 ◽  
Author(s):  
Robert D. Klassen ◽  
Jury Gualandris ◽  
William Diebel
Keyword(s):  
Supply Chain ◽  
Supply Chains ◽  
Operations Management ◽  
Design Thinking ◽  
Environmental Issues ◽  
Multiple Stakeholders ◽  
Research And Practice ◽  
Sustainable Supply Chains ◽  
Resource Investment ◽  
Complex Variety

Management efforts to design, develop, and operate more sustainable supply chains encompass an increasingly complex variety of social and environmental issues. More sustainable supply chains must now consider how product, operations, natural resources, technologies, and multiple tiers of organizations collectively create value for a diverse set of stakeholders. For multiple reasons, research and practice have tended to adopt an outcome-based perspective, whereby these efforts focus on a sustainability “destination,” which suffers from several shortcomings. Drawing from research in operations management, stakeholder theory, institutional theory, and innovation, this chapter posits how more sustainable supply chains might be co-defined and co-developed by emphasizing a journey that engages multiple stakeholders beyond supply chain partners. Design thinking is a very promising approach, with its iterative steps of empathy, defining the problem, ideate, prototype, and test. This journey-based perspective provides a framework for structuring engagement and encouraging openness to new observations and insights. Finally, the breadth and depth of collaboration with stakeholders, the nature of governance mechanisms, and the form and scale of resource investment all provide the means to assess the journey as it occurs.

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