Third Party Support and Risk Costs in Supply Chain Coordination

2021 ◽  
Author(s):  
Kurt A. Masten
Keyword(s):  
Supply Chain ◽  
Supply Chain Coordination ◽  
Third Party ◽  
Party Support

Supply Chain Coordination for E-Commerce: Risk Penalty vs. Flat Rate

2021 ◽  
Author(s):  
Ju Myung Song ◽  
Yao Zhao
Keyword(s):  
Supply Chain ◽  
Information Asymmetry ◽  
Risk Sharing ◽  
Supply Chain Coordination ◽  
Wholesale Price ◽  
Problem Definition ◽  
Third Party ◽  
Common Belief ◽  
Shipping Industry ◽  
Flat Rate

Problem definition: We study the coordination of an E-commerce supply chain between online sellers and third party shippers to meet random demand surges, induced by, for instance, online shopping holidays. Academic/practical relevance: Motivated by the challenge of meeting the unpredictable demand surges in E-commerce, we study shipping contracts and supply chain coordination between online sellers and third party shippers in a novel model taking into account the unique features of the shipping industry. Methodology: We compare two shipping contracts: the risk penalty (proposed by UPS) and the flat rate (used by FedEx), and analyze their impact on the seller, the shipper, and the supply chain. Results: Under information symmetry, the sophisticated risk penalty contract is no better than the simple flat rate contract for the shipper, against common belief. Although both the risk penalty and the flat rate can coordinate the supply chain, the risk penalty does so only if the shipper makes zero profit, but the flat rate can provide a positive profit for both. These results represent a new form of double marginalization and risk-sharing, in sharp contrast to the well-known literature on the classic supplier-retailer supply chain, where risk-sharing contracts (similar to the risk penalty) can bring benefits to all parties, but the single wholesale price contract (similar to the flat rate) can achieve supply chain coordination only when the supplier makes zero profit. We also find that only the online seller, but not the shipper, has the motivation to vertically integrate the seller-shipper supply chain. Under information asymmetry, however, the risk penalty brings more benefit to the shipper than the flat rate, but hurts the seller and the supply chain. Managerial implications: Our results imply that information plays an important role in the shipper’s choices of shipping contracts. Under information symmetry, the risk penalty is unnecessarily complex because the simple flat rate is as good as the risk penalty for the shipper; moreover, it is better for the seller-shipper coordination. However, under information asymmetry, the shipper faces additional shipping risk that can be offset by the extra flexibility of the risk penalty. Our study also explains and supports the recent practice of online sellers (e.g., Amazon.com and JD.com), but not shippers, to vertically integrate the supply chain by consistently expanding their shipping capabilities.

The Role of Information Technology in Supporting Supply Chain Coordination of Logistics Services Providers

2011 ◽  
pp. 113-144 ◽  
Author(s):  
Pietro Evangelista
Keyword(s):  
Supply Chain ◽  
Supply Chain Coordination ◽  
Third Party ◽  
Service Market ◽  
Adoption Of Technology ◽  
Dynamic Markets ◽  
Logistics Service ◽  
Supply Chain Efficiency ◽  
Ict Adoption ◽  
Information And Communication

For companies competing in highly dynamic markets, coordination is considered a fundamental component for achieving a higher level of supply chain efficiency. Information and communication technology (ICT) is essential enabler of supply chain coordination and synchronization. The focus of this chapter is on the analysis of ICT adoption in small third-party logistics service providers (3PLs) as prerequisite for improving supply chain coordination. On the basis of evidences emerging from a questionnaire survey carried out on the Italian logistics service market, the chapter analyses ICT usage and the factors inhibiting and facilitating the adoption of technology for supply chain coordination and integration of small 3PLs. A number of implications are derived from the research and managerial perspectives.

The effect of institutional innovations on food chain governance: a case study on the shifting role of the German QS system from certification to supply chain coordination

2009 ◽  
Vol 9 (2) ◽  
pp. 89-103 ◽  
Author(s):  
Jan Bahlmann ◽  
Achim Spiller
Keyword(s):  
Supply Chain ◽  
Supply Chain Coordination ◽  
Spot Market ◽  
Division Of Labour ◽  
Third Party ◽  
Meat Industry ◽  
Recent Developments ◽  
Certification Standard ◽  
Alternative Means

In many European countries such as the Netherlands, France and Germany there is high division of labour in the red meat sector. In response to emerging demands for the meat industry, such as seamless traceability, increased food safety and animal welfare, the need for coordination across the stages is increasing. However, a trend towards vertical integration cannot be observed. Especially in price-competitive markets in which the production requirements are less specific, the spot market still seems to be advantageous in efficiency and costs. Largely unnoticed in research and practice, recent developments in the German meat market indicate an institutional change, allowing the maintenance of spot market structures by assigning various coordination tasks to an independent third party – the QS Qualität und Sicherheit GmbH. This association was originally founded in 2001 by shareholders from the whole of the agribusiness sector to develop a certification scheme. QS has since become the leading certification standard for the German meat industry. Based on coordination theory and empirical findings, a case study of QS GmbH was carried out. Various non-traditional certification activities that are more properly classified as functions of supply chain coordination were identified. In general, the development of QS can be considered as an institutional innovation in supply chain coordination. It demonstrates an alternative means for spot market oriented meat supply chains to deal with increasing uncertainties in the market.

Logistics, Information Technology, and Retail Internationalisation

2011 ◽  
pp. 257-276 ◽  
Author(s):  
Constatine A. Bourlakis ◽  
Michael A. Bourlakis
Keyword(s):  
Information Technology ◽  
Supply Chain ◽  
Competitive Advantage ◽  
Supply Chain Coordination ◽  
Third Party ◽  
Technology Strategy ◽  
Strategic Information ◽  
Logistics Network ◽  
Logistics Strategy ◽  
Strategic Impact

In the present work we suggest the notion of the strategic information technology competitive advantage and its potential strategic impact upon a retailer’s organisational supply chain coordination. The existence of a logistics strategy and an information technology strategy constitute two functions that offer the platform for retail firms to “internalise” the effective management of the supply chain by converting it to a coordination competitive advantage. The latter depends upon the ability of the retail firms to transform a logistics strategy and an information technology strategy into what the authors call strategic logistics and strategic information technology. We also argue that logistics and information technology can assist a retailer to form a “logistics network” with third-party firms in the supply chain, with the aim to capture and to protect to the full the differential returns generated via the internalisation of the supply chain activities. The coordination competitive advantage owned by the retailer enhances retail change in domestic and in international markets, as the retailer enters foreign markets via a similar network of third party and its own account logistics operations, giving rise to new retail organisation schemes, such as the international strategic retail network.

scholarly journals Fresh Agricultural Products Supply Chain Coordination and Volume Loss Reduction Based on Strategic Consumer

2020 ◽  
Vol 17 (21) ◽  
pp. 7915
Author(s):  
Fang Qiu ◽  
Qifan Hu ◽  
Bing Xu
Keyword(s):  
Supply Chain ◽  
Service Providers ◽  
Supply Chain Coordination ◽  
Sensitivity Coefficient ◽  
Agricultural Products ◽  
Third Party ◽  
Agricultural Product ◽  
Loss Reduction ◽  
Volume Loss ◽  
Supply Chain System

The reduction of fresh agricultural product volume loss throughout the supply chain system is of high importance due to their perishable nature and impact on society, the economy, and environment. In this paper, three models for two-stage pricing, coordination, and volume loss reduction of the supply chain where third-party logistics service providers and retailers act as a Stackelberg leader and a follower for fresh agricultural products are developed, taking into account both volume loss during transport and quality loss in retail in the presence of strategic consumers. The following results are drawn from the contract for sharing revenues and service costs: (1) The supply chain achieve coordination and the products are healthier for consumers; (2) the coordination leads to a reduction in the three types of volume losses simultaneously only if the lowest marginal costs of the supply chain occur under certain conditions; and (3) the increase in the service sensitivity coefficient, the increase in the freshness discount coefficient under certain conditions, the decrease in the consumer benefit discount coefficient under certain conditions, and the decrease in the price sensitivity coefficient lead to an increase in the profit of the supply chain and a reduction in the three types of volume losses.

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