Supply Chains and Segment Profitability: How Input Pricing Creates a Latent Cross-Segment Subsidy

2011 ◽  
Vol 86 (3) ◽  
pp. 805-824 ◽  
Author(s):  
Anil Arya ◽  
Brian Mittendorf
Keyword(s):  
Supply Chains ◽  
Wholesale Price ◽  
Value Added ◽  
Supply Side ◽  
Demand Side ◽  
Predatory Pricing ◽  
Contribution Margin ◽  
Relative Contribution ◽  
Brand Recognition ◽  
Downstream Reach

ABSTRACT: Recent years have seen an increased emphasis on developing more precise accounting measures of market- and customer-level profitability. By their very nature, such segment profitability measures may unwittingly neglect complementarities. Such complementarities have been widely recognized on the demand side due to brand recognition, predatory pricing, or interdependent products. We develop a model showing that important supply-side complementarities can also be prevalent. In particular, when a firm relies on a self-interested supplier for inputs used across multiple segments, the wholesale price it pays depends on the average profitability of its segments. Taking such interaction between upstream pricing and the firm’s downstream reach into account, the model shows that: (1) segment profit calculations can understate or overstate the value added by the segment depending on the segment’s relative contribution margin, and (2) the firm sometimes benefits from devoting resources to less profitable segments and perhaps even from serving seemingly unprofitable markets and/or customers.

scholarly journals Nature of Indonesia’s Deindustrialization

2020 ◽  
Vol 9 (2) ◽  
pp. 220-232
Author(s):  
Muhammad Irfan Islami ◽  
Fithra Faisal Hastiadi
Keyword(s):  
Regression Analysis ◽  
Manufacturing Sector ◽  
Descriptive Analysis ◽  
Value Added ◽  
Downward Trend ◽  
Supply Side ◽  
Demand Side ◽  
Policy Makers ◽  
Productivity Data ◽  
Per Capita

This research aims to identify the nature of deindustrialisation on Indonesia’s economy. To test the negative deindustrialisation, this research performed a descriptive analysis on value-added, export-import, and productivity data of manufacturing sector. To test the premature deindustrialisation, this research conducted a regression analysis to create a simulation of value of GDRP per capita at the top of industrialization taken place on Indonesia’s economy. Descriptive analysis shows that deindustrialization in Indonesia prevails with downward trend of value-added, trade performance, and productivity of manufacturing sector. Subsector analysis also shows that manufacturing subsectors having high value added experienced negative trend in all mentioned indicators. The result of premature deindustrialization model regression shows that the peak of industrialization in Indonesia achieved at lower level income per capita compared to several thresholds of premature deindustrialization. Those results show that negative and premature deindustrialisation prevailed in Indonesia’s economy.  The consequence of these research’s results is to promote the politics of reindustrialization. There are several recommendations for policy makers to enhance performance of manufacturing sector. From demand-side, it is important to expand market of manufacturing product internationally and domestically. From supply side, the policy makers should increase the investments and insentives for businesses.

scholarly journals Pandemic turned into pandemonium: the effect on supply chains and the role of accounting information

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ajantha Velayutham ◽  
Asheq Razaur Rahman ◽  
Anil Narayan ◽  
Michael Wang
Keyword(s):  
Supply Chain ◽  
Supply Chains ◽  
Raw Materials ◽  
Accounting Information ◽  
Supply Side ◽  
Demand Side ◽  
Content Type ◽  
Business Entities ◽  
Respiratory Devices

PurposeThe purpose of this study is to examine the disruptive effects of COVID-19 on supply chains and question the role of accounting information in managing these supply chains in the face of such disruptive effects.Design/methodology/approachThe study first explains the effects of COVID-19 on the supply chains of business entities. It then explains the role of accounting information in supply chain management, questions accounting information's ability to play such a role, and makes recommendations for better accounting disclosures and accounting research for supply chains of firms. To illustrate the salient points, a case study of Fisher and Paykel Healthcare is conducted. It identifies the risks and uncertainties of supply chains exposed by COVID-19 disruptions to businesses.FindingsCOVID-19 has affected Fisher and Paykel Healthcare from both the supply-side (upstream) and demand-side (downstream) perspectives. On the supply side, it has disrupted the supply of raw materials used in the manufacture of respiratory devices and the costs of importing such materials. On the demand side, it has disrupted market logistics and customer demand. This has subsequently affected production. Such disruptions can be overcome through the dissemination of appropriate accounting information for the different stages of the supply chain to the managers. Such accounting information can also be useful to external stakeholders for minimizing their risks.Originality/valueThe study attempts to create an awareness of the supply chain uncertainties faced by managers and stakeholders arising from exogenous shocks, such as a pandemic, and how these uncertainties can be mitigated by aligning accounting information flows with the supply chain activity flows. The observations made in this paper are at a conceptual level and, therefore, can be applied to any industry.

Strategic Manufacturers in Online Cash-Back Shopping

2021 ◽  
pp. 2150005
Author(s):  
Chen Chen ◽  
Yongrui Duan
Keyword(s):  
Theoretical Model ◽  
Wholesale Price ◽  
Consumer Surplus ◽  
Retail Price ◽  
Supply Side ◽  
Surprising Result ◽  
Demand Side ◽  
Product Valuation ◽  
Downstream Competition ◽  
Heterogeneous Consumers

Cash-back industry is now witnessing surging development. Prior works on cash-back sites focus mainly on the demand side, while we are also interested in the supply side. We develop a game theoretical model with a manufacturer, an online retailer, cash-back site(s), and heterogeneous consumers. We find that when the cash-back channel cannot attract new consumers, the manufacturer raises the wholesale price and the retailer raises the retail price, which may lead to the cash-back paradox where all consumers face higher prices. Therefore, when there exists a cash-back channel, the manufacturer is always worse off and the retailer is better off when low-type consumers’ product valuation is intermediate, and consumer surplus and social welfare are both lower. When the retailer affiliates with two competing cash-back sites, the manufacturer contributes to the mitigation of double marginalization problem by raising the wholesale price to a lesser extent, which drives the surprising result that when there exists downstream competition, cash-back sites enjoy higher commission rate and under some circumstances, offer lower cash-back rate and enjoy higher profit. We also show that only when the cash-back channel makes the size of the low-type segment double will the manufacturer be better off with this channel.

US GDP is set for a rapid consumption-led rebound

2021 ◽  
Keyword(s):  
Supply Chains ◽  
Federal Government ◽  
Economic Activity ◽  
Public Land ◽  
Supply Side ◽  
Demand Side ◽  
Content Type ◽  
Behavioural Changes ◽  
Commodity Production ◽  
Direct Payments

Significance Economic activity is likely to heat up rapidly as people spend some of the savings accumulated in 2020 and direct payments given to them by the federal government. Impacts Domestic travel, hospitality and entertainment will rebound rapidly but longer-term demand could suffer from permanent behavioural changes. Supply chains have faced supply-side disruption and may face demand-side pressures as people return to offices, drive, and eat out more. Commodity production will be under pressure as demand for petroleum rises and the Biden administration restricts output on public land.

scholarly journals Understanding the demand side and coordinating the supply side for connected goods and services

2010 ◽  
Vol 4 (1-2) ◽  
pp. 17-23
Author(s):  
Gro Ladegård ◽  
Eirik Romstad
Keyword(s):  
Consumer Preferences ◽  
Value Added ◽  
Supply Side ◽  
Demand Side ◽  
Coordination Networks ◽  
Goods And Services ◽  
New Information ◽  
Production Space ◽  
Human And Social Capital ◽  
Two Sides

This paper addresses the coordination and innovation issues needed for promoting value added at the rural and regional level. There are two sides to value added: the ability to meet consumer demand, and to identify least cost ways of supplying the demanded goods. Human and social capital plays an important role on both sides. At the municipality level the supply side issues are complex. First, because the production space has far more dimensions than for the single entrepreneur. Second, because the value of some goods and services produced depend on what other goods and services that is available. On the supply side networks are important to solve the coordination issues, while networks for identifying and understanding consumer preferences are important on the demand side. Participation in these two network types compete for the same scarce resource, the time of the inhabitants of a municipality. We address these issues in more detail. A major insight from our work is that in addition to the time conflict, innovation and new information may make it more difficult to maintain coordination networks.

Application of a Tax to E-Commerce Deliveries in Barcelona

2021 ◽  
pp. 036119812110124
Author(s):  
Genís Majoral ◽  
Francesc Gasparín ◽  
Sergi Saurí
Keyword(s):  
Cost Benefit Analysis ◽  
Cost Benefit ◽  
Supply Side ◽  
Environmental Tax ◽  
Positive Outcomes ◽  
Demand Side ◽  
Benefit Analysis ◽  
Revenue Collection ◽  
Last Mile ◽  
The Impact

The number of e-commerce transactions is increasing worldwide. Deliveries of goods purchased online generate externalities throughout the whole supply chain and, particularly, the increasing concern about the last-mile distribution of goods. The escalating presence of vans in cities contributes to poor air quality, climate change, noise, and congestion. So far, the majority of solutions to address this issue are based on the supply side, such as electric vans, optimizing the routing and pick-up-points, and so forth. Even in other transport sectors, pricing solutions are well known, yet they have not been extended to e-commerce delivery. This paper aims to propose an environmental tax falling on the demand side and equaling the externalities from this activity. The analysis has been particularized for the case of Barcelona. A cost–benefit analysis to assess the impact of such a tax has been carried out. When revenue collection is reinvested in the logistics sector, and for subsidizing electric distribution vehicles, the results indicate that the levying of the tax can generate positive outcomes.

112 How Will the Purebred Association Adapt to a Changing Beef Industry?

2021 ◽  
Vol 99 (Supplement_1) ◽  
pp. 39-39
Author(s):  
Mark McCully
Keyword(s):  
Supply Chains ◽  
Genetic Information ◽  
Gene Editing ◽  
Value Added ◽  
Beef Industry ◽  
Breed Improvement ◽  
Pull Through ◽  
Optimum Production ◽  
Selection Tools

Abstract The role of the breed association has historically been to keep a registry of a pure breed, aggregate the performance data surrounding that one breed, develop breeding and selection tools, and conduct breed promotion. Larger associations have been able to augment that with operating magazines and other media, running branded beef programs, feeder calf marketing programs, and genetic evaluation for other breeds. The relevance of breed associations is being and will continue to be challenged as genomics and large commercial databases develop and allow for breeding and selection tools to be developed independently by large breeders or private entities. Gene editing and other such technology will also challenge the traditional seedstock models and opens the door for proprietary genetic lines. Breed associations may need to modify their traditional policies to incorporate these innovations. Supply chains will continue to become far more sophisticated and will incorporate more genetic information to guide management decisions and potentially validate brand promises around sustainability. To stay relevant, breed associations of the future will need to do the following: Balance the needs of diverse membership (show, hobby, lifestyle, etc.) with commercial industry value and significance. Have access to large amounts of data and be leaders in adopting the most current technologies. Deliver tools for breeders that enhance the profitability of commercial producers – identify optimum production levels vs maximum outputs. Work collaboratively with multiple supply chains providing the needed genetic information. Be a significant educational resource to breeders and commercial producers. Be a leader in research on breed improvement and genetic advancement. Have value-added programs that create real and sustained pull-through demand for the end product.

scholarly journals The position of the farm holiday in Austrian tourism

2019 ◽  
Vol 4 (1) ◽  
pp. 697-711 ◽  
Author(s):  
Erika Quendler
Keyword(s):  
Empirical Research ◽  
Relative Position ◽  
Secondary Data ◽  
Point Of View ◽  
Local Context ◽  
Supply Side ◽  
Data Sets ◽  
Demand Side ◽  
Tourist Destinations ◽  
Tourist Accommodation

AbstractTourism is vitally important to the Austrian economy. The number of tourist destinations, both farms and other forms of accommodation, in the different regions of Austria is considerably and constantly changing. This paper discusses the position of the ‘farm holiday’ compared to other forms of tourism. Understanding the resilience of farm holidays is especially important but empirical research on this matter remains limited. The term ‘farm holiday’ covers staying overnight on a farm that is actively engaged in agriculture and has a maximum of 10 guest beds. The results reported in this paper are based on an analysis of secondary data from 2000 and 2018 by looking at two types of indicator: (i) accommodation capacity (supply side) and (ii) attractiveness of a destination (demand side). The data sets cover Austria and its NUTS3 regions. The results show the evolution of farm holidays vis-à-vis other forms of tourist accommodation. In the form of a quadrant matrix they also show the relative position of farm holidays regionally. While putting into question the resilience of farm holidays, the data also reveals where farm holidays could act to expand this niche or learn and improve to effect a shift in their respective position relative to the market ‘leaders’. However, there is clearly a need to learn more about farm holidays within the local context. This paper contributes to our knowledge of farm holidays from a regional point of view and tries to elaborate on the need for further research.

ANALYZING THE RELATIVE INFLUENCE OF SUPPLY SIDE, DEMAND SIDE AND REGULATORY FACTORS ON THE SUCCESS OF COLLABORATIVE ENERGY INNOVATION PROJECTS

2016 ◽  
Vol 20 (02) ◽  
pp. 1650029 ◽  
Author(s):  
ALEXANDRA RESE ◽  
ANKE KUTSCHKE ◽  
DANIEL BAIER
Keyword(s):  
Structural Equation ◽  
Success Factors ◽  
Relative Influence ◽  
Equation Modeling ◽  
Supply Side ◽  
Demand Side ◽  
Firm Level ◽  
Regulatory Factors ◽  
Innovation Projects ◽  
Energy Innovation

The analysis of the importance of supply side and demand side factors with regard to innovative behavior is quite old. In this paper, these two categories are used to distinguish and examine the relevance of several success factors for collaborative innovation projects on the firm level in the German energy sector. The literature emphasizes that solving environmental problems requires extensive technological change. On the other hand, due to higher prices the market push is weaker. Regulatory factors are therefore designed to stimulate environmental innovations. The relative influence of these three categories on project performance is investigated on the basis of a sample of 128 German collaborative energy innovation projects in the development phase using a scale-based approach and structural equation modeling at the firm level. The results confirm the importance of supply side factors followed by demand side factors. In contrast to literary assumptions, R&D subsidies played no significant role.

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