Competing manufacturers in a retail supply chain: On contractual form and coordination

It is common for a retailer to sell products from competing manufacturers. How then should the firms manage their contract negotiations? The supply chain coordination literature focuses either on a single manufacturer selling to a single retailer or one manufacturer selling to many (possibly competing) retailers. We find that some key conclusions from those market structures do not apply in our setting, where multiple manufacturers sell through a single retailer. We allow the manufacturers to compete for the retailer's business using one of three types of contracts: a wholesale-price contract, a quantity-discount contract, or a two-part tariff. It is well known that the latter two, more sophisticated contracts enable the manufacturer to coordinate the supply chain, thereby maximizing the profits available to the firms. More importantly, they allow the manufacturer to extract rents from the retailer, in theory allowing the manufacturer to leave the retailer with only her reservation profit. However, we show that in our market structure these two sophisticated contracts force the manufacturers to compete more aggressively relative to when they only offer wholesale-price contracts, and this may leave them worse off and the retailer substantially better off. In other words, although in a serial supply chain a retailer may have just cause to fear quantity discounts and two-part tariffs, a retailer may actually prefer those contracts when offered by competing manufacturers. We conclude that the properties a contractual form exhibits in a one-manufacturer supply chain may not carry over to the realistic setting in which multiple manufacturers must compete to sell their goods through the same retailer. © 2010 INFORMS.

Improving supply chain performance: Real-time demand information and flexible deliveries

In some supply chains, materials are ordered periodically according to local information. This paper investigates how to improve the performance of such a supply chain. Specifically, we consider a serial inventory system in which each stage implements a local reorder interval policy; i.e., each stage orders up to a local basestock level according to a fixed-interval schedule. A fixed cost is incurred for placing an order. Two improvement strategies are considered: (1) expanding the information flow by acquiring real-time demand information and (2) accelerating the material flow via flexible deliveries. The first strategy leads to a reorder interval policy with full information; the second strategy leads to a reorder point policy with local information. Both policies have been studied in the literature. Thus, to assess the benefit of these strategies, we analyze the local reorder interval policy. We develop a bottom-up recursion to evaluate the system cost and provide a method to obtain the optimal policy. A numerical study shows the following: Increasing the flexibility of deliveries lowers costs more than does expanding information flow; the fixed order costs and the system lead times are key drivers that determine the effectiveness of these improvement strategies. In addition, we find that using optimal batch sizes in the reorder point policy and demand rate to infer reorder intervals may lead to significant cost inefficiency. © 2010 INFORMS.

Why the World Suddenly Cares About Global Supply Chains

The global value chain (GVC) concept has gained popularity as a way to analyze the international expansion and geographical fragmentation of contemporary supply chains and value creation and capture therein. It has been used broadly in academic publications that examine a wide range of global industries, and by many of the international organizations concerned with economic development. This note highlights some of the main features of GVC analysis and discusses the relationship between the core concepts of governance and upgrading. The key dynamics of contemporary global supply chains and their implications for global production and trade are illustrated by: (1) the consolidation of global value chains and the new geography of value creation and capture, with an emphasis on China; (2) the key roles of global supermarkets and private standards in agri-food supply chains; and (3) how the recent economic crisis contributes to shifting end markets and the regionalization of value chains. It concludes with a discussion of the future direction of GVC analysis and a potential collaboration with supply chain researchers. © 2012 Institute for Supply Management, Inc.

Future requirements for and supply of ophthalmologists for an aging population in Singapore.

BACKGROUND: Singapore's population, as that of many other countries, is aging; this is likely to lead to an increase in eye diseases and the demand for eye care. Since ophthalmologist training is long and expensive, early planning is essential. This paper forecasts workforce and training requirements for Singapore up to the year 2040 under several plausible future scenarios. METHODS: The Singapore Eye Care Workforce Model was created as a continuous time compartment model with explicit workforce stocks using system dynamics. The model has three modules: prevalence of eye disease, demand, and workforce requirements. The model is used to simulate the prevalence of eye diseases, patient visits, and workforce requirements for the public sector under different scenarios in order to determine training requirements. RESULTS: Four scenarios were constructed. Under the baseline business-as-usual scenario, the required number of ophthalmologists is projected to increase by 117% from 2015 to 2040. Under the current policy scenario (assuming an increase of service uptake due to increased awareness, availability, and accessibility of eye care services), the increase will be 175%, while under the new model of care scenario (considering the additional effect of providing some services by non-ophthalmologists) the increase will only be 150%. The moderated workload scenario (assuming in addition a reduction of the clinical workload) projects an increase in the required number of ophthalmologists of 192% by 2040. Considering the uncertainties in the projected demand for eye care services, under the business-as-usual scenario, a residency intake of 8-22 residents per year is required, 17-21 under the current policy scenario, 14-18 under the new model of care scenario, and, under the moderated workload scenario, an intake of 18-23 residents per year is required. CONCLUSIONS: The results show that under all scenarios considered, Singapore's aging and growing population will result in an almost doubling of the number of Singaporeans with eye conditions, a significant increase in public sector eye care demand and, consequently, a greater requirement for ophthalmologists.