Planning, coordination and stability of supply chain networks

Abstract

Over the past quarter century, supply chain management has evolved as an interdisciplinary and attracting interests from practitioners and academia. During this period, a number of supply chain paradigms have helped transform several industries making them efficient and competitive. For instance, high technology and apparel industries have witnessed increased focus on integrated supply chains and wide-ranging collaborative efforts. Competition is no longer con ned at the rm level, but competitiveness of the entire sup- ply chain has gained significance. With the changing patterns in the market structure and the way businesses are run - for instance, globalization, customer centric decision making, shortening product life cycles, proliferation of product variety, etc. - individual rms with fragmented functions are responding by consolidating their supply chain operations in order to gain competitive advantage. In parallel, competitiveness of supply chains has ordered wide scope for researchers in diverse disciplines that include operations research, operations management, economics, marketing, and information systems, etc. The literature provides structural results and managerial insights into various supply chain practices - such as integrated planning, coordination, etc. - and related performance measures - such as robustness, efficiency, competitiveness, etc. - adopted by the supply chain members. From such studies, coordination amongst the supply chain entities has emerged as a key capability for sustained competitiveness. Coordination mechanisms in the literature, primarily, focus on dyadic supply chains. However, managing mutual inter dependencies and reducing redundancies becomes complex, yet signi cant, when the business entities are involved in collaborative e orts. In this regard, coordination among the members of the integrated supply chains and collaborative initiatives has been widely accepted as a factor of enhancing competitiveness and sustainability of the supply chains, and hence, it has become a popular area of research. In this dissertation, we study coordination related issues in a two-tier supply chain comprising of a number of producers in the bottom tier and one marketing/distribution agent at the top tier. We consider both situations - one in which this supply chain network is a monopolist and the second in which the market is competitive with other players. In addition to the coordination issues, we also examine the stability of the net- work when the members have the option of seceding from the network and compete in the market. The motivation for this work comes from Amul, the well-known cooperative of milk-producers. Our objective is to develop an analytical approach to enhance our understanding of coordination related issues outlined below. Our approach essentially consists of (i) model development to capture the key features, (ii) analysis to derive key structural results and obtain managerial insights, (iii) supplement analytical results with computational experiments to better understand the trade-o s involved. While some of our development is based on the Amul network, our approach is quite general and our results are applicable to other similar networks. For example, Independent Grocers As- sociation (IGA) - a voluntary supermarket chain comprising of a group of independent retailers, Uni ed Western Grocers Inc. - a purchasing cooperative of independent grocers, and CAP Markets in Germany - social franchisees operating as a cooperative of sheltered workshops. A common feature of all such supply chain networks is that a number of business units which are legally independent and relatively small form collaborative net- works with common branding that have stronger bargaining power in the market when compared to the individual business units in the network. We now describe in more detail the issues examined in this dissertation.