Value Capture: Aligning Supply Chain Partners

Enver Yücesan
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Enver Yücesan: INSEAD

Chapter 6 in Competitive Supply Chains, 2023, pp 117-151 from Springer

Abstract: Abstract In the absence of a formally defined command-and-control structure across the extended enterprise whereby each stakeholder optimizes her own local decisions, the key consequence of the lack of supply chain coordination is the bullwhip phenomenon, the amplification of volatility along the network; that is, the increase in variability as one moves upstream farther and farther away from the final market. This is driven by the lack of transparency across the chain, creating information delays and distortions, and non-negligible lead times, limiting the responsiveness of the network. Through a simple model that promotes risk-based thinking, this chapter quantifies the value of flexibility proposes contractible incentives to achieve alignment across the independent members of a supply chain. Incomplete contracts that must be designed in the presence of supply uncertainty are also discussed.

Keywords: Bullwhip phenomenon; Newsvendor model; Incentive design; Incomplete contracts (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-031-19975-2_6

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DOI: 10.1007/978-3-031-19975-2_6

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