Supply chain coordination with information design

Abstract

We consider the coordination of a supplier–retailer supply chain where, in addition to classical contract considerations, a supplier decides the adoption of an information structure (IS) for the supply chain, with a higher‐quality IS allowing the supply chain parties to obtain a more accurate demand forecast. Because a wholesale price contract cannot coordinate the supply chain due to misaligned incentives of supply chain parties, we explore what common coordinating contracts in the classical coordination literature can continue coordinating the supply chain with the IS adoption. Interestingly, our analysis appears to reveal the power of simplicity: some simple classical coordinating contracts (e.g., the buy‐back and revenue‐sharing contracts), though not designed with the IS consideration, still coordinate the supply chain, whereas other more complicated classical contracts (e.g., the quantity flexibility and sales rebate contracts) fail to do so. We derive a general condition for supply chain coordination and show that any contract with a newsvendor‐like transfer payment can coordinate the supply chain.

Improving supply chain resilience from the perspective of information processing theory

“…One possible explanation for this is that, under conditions of high environmental uncertainty, directly using acquired supply chain information in the formulation of contracts is difficult (Galbraith, 1974; Tushman and Nadler, 1978; Cao and Lumineau, 2015). In the face of environmental uncertainty, firms in the supply chain can make appropriate and efficient contractual arrangements after the conditions of uncertainty have improved or at least have been partially resolved (Jia et al ., 2022). However, supply chain information acquisition only broadens the amount of information and the degree of sharing, without resolving uncertainty.…”

Research on Incentive and Coordination Strategy of Fresh Products’ Supply Chain with Delivery Time under New Retail

“…Aslani et al [35] analyze the coordination of pricing and product greenness in a dualchannel supply chain and propose a transshipment contract to coordinate pricing and greening decisions in the dual-channel supply chain. Other aspects, e.g., cost sharing contract [36,37], cost-sharing-revenue-sharing hybrid contract [38,39], buy-back contract [40], and wholesale price contract [41], are also studied. The new retail focuses on the high integration of online and offline channels.…”