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Trust-embedded coordination in supply chain information sharing

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  • Guanghua Han
  • Ming Dong

Abstract

This paper studies supply chain coordination with trust-embedded cost-sharing contract. In a two-tier supply chain, a retailer (she) and a supplier (he) make their private demand forecasting individually. The retailer places soft-orders, which are costless, non-verifiable and cancellable before shipping, to the supplier. After that, the supplier relies on the retailer’s ordering information to update his demand evaluation and prepare his capacity. How much the supplier relies on the retailer’s ordering information is specified by trust, which is a kind of psychological feeling and affected by multiple factors. When the supplier does not fully trust the retailer, he tends to prepare a conservative capacity to avoid over-production. To coordinate the supply chain, a two-stage coordination process is proposed. At the first stage, the supplier and retailer negotiate a cost-sharing rule to bind soft-orders. At the second stage, the retailer places a soft-order and decides whether or not to bind it referring to the cost-sharing rule. After that, the supplier determines his optimal production capacity. We show that the retailer and supplier value trust differently in the experimental studies. We also find that there is a threshold of negotiation power for the supply chain partners which means the supplier’s/retailer’s expected profit drops down if his/her negotiation power exceeds certain thresholds. The experimental studies also show that the proposed the two-stage coordination is effective.

Suggested Citation

  • Guanghua Han & Ming Dong, 2015. "Trust-embedded coordination in supply chain information sharing," International Journal of Production Research, Taylor & Francis Journals, vol. 53(18), pages 5624-5639, September.
  • Handle: RePEc:taf:tprsxx:v:53:y:2015:i:18:p:5624-5639
    DOI: 10.1080/00207543.2015.1038367
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    Citations

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    Cited by:

    1. Wei, Liqun & Zhang, Jianxiong & Zhu, Guowei, 2021. "Incentive of retailer information sharing on manufacturer volume flexibility choice," Omega, Elsevier, vol. 100(C).
    2. Guanghua Han & Ming Dong, 2017. "Sustainable Regulation of Information Sharing with Electronic Data Interchange by a Trust-Embedded Contract," Sustainability, MDPI, vol. 9(6), pages 1-22, June.
    3. Yen Sheng Tsai & Wei-Hsi Hung, 2023. "A low-cost intelligent tracking system for clothing manufacturers," Journal of Intelligent Manufacturing, Springer, vol. 34(2), pages 473-491, February.
    4. Hu, Xinru & Zhou, Shuiyin & Luo, Xiaomeng & Li, Jianbin & Zhang, Chi, 2024. "Optimal pricing strategy of an on-demand platform with cross-regional passengers," Omega, Elsevier, vol. 122(C).
    5. Chen, Lei & Huang, Qiuyu & Xu, Jingwen, 2024. "On the “prisoner’s dilemma” of order timing in a cross-border and co-opetitive supply chain," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 185(C).
    6. Xu, Hongyan & Liu, Xiaomin & Huang, He, 2023. "Information sharing and order allocation rule in dual-sourcing," Omega, Elsevier, vol. 114(C).
    7. Ma, Miaomiao & Meng, Weidong & Huang, Bo & Li, Yuyu, 2023. "The influence of dual credit policy on new energy vehicle technology innovation under demand forecast information asymmetry," Energy, Elsevier, vol. 271(C).
    8. Lin Chen & Jin Peng & Zhibing Liu & Ruiqing Zhao, 2017. "Pricing and effort decisions for a supply chain with uncertain information," International Journal of Production Research, Taylor & Francis Journals, vol. 55(1), pages 264-284, January.
    9. Zhiyuan Wang & Zhiqiang (Eric) Zheng & Wei Jiang & Shaojie Tang, 2021. "Blockchain‐Enabled Data Sharing in Supply Chains: Model, Operationalization, and Tutorial," Production and Operations Management, Production and Operations Management Society, vol. 30(7), pages 1965-1985, July.
    10. Chen, Pengyu & Liu, Xu & Wang, Qin & Zhou, Pin, 2022. "The Implications of Competition on Strategic Inventories Considering Manufacturer-to-Consumer Rebates," Omega, Elsevier, vol. 107(C).
    11. Ke Ma & Lichuan Wang & Yan Chen, 2017. "A Collaborative Cloud Service Platform for Realizing Sustainable Make-To-Order Apparel Supply Chain," Sustainability, MDPI, vol. 10(1), pages 1-21, December.
    12. Xiao Fu & Guanghua Han, 2017. "Trust-Embedded Information Sharing among One Agent and Two Retailers in an Order Recommendation System," Sustainability, MDPI, vol. 9(5), pages 1-18, April.
    13. Andrade, Xavier & Guimarães, Luís & Figueira, Gonçalo, 2021. "Product line selection of fast-moving consumer goods," Omega, Elsevier, vol. 102(C).
    14. Eleni-Efthymia Psychogiou & Giannis T. Tsoulfas, 2024. "Critical Factors Affecting Trust in the Wine Supply Chain in Greece: A Grey DEMATEL Approach," Logistics, MDPI, vol. 8(1), pages 1-22, February.
    15. Huan Cao & Xu Guan & Tijun Fan & Li Zhou, 2020. "The Acquisition of Quality Information in a Supply Chain with Voluntary vs. Mandatory Disclosure," Production and Operations Management, Production and Operations Management Society, vol. 29(3), pages 595-616, March.
    16. Zhang, Xumei & Zha, Xiaoyu & Dan, Bin & Liu, Yi & Sui, Ronghua, 2024. "Logistics mode selection and information sharing in a cross-border e-commerce supply chain with competition," European Journal of Operational Research, Elsevier, vol. 314(1), pages 136-151.
    17. Yu, Yugang & Zhou, Sijie & Shi, Ye, 2020. "Information sharing or not across the supply chain: The role of carbon emission reduction," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 137(C).
    18. Fu, Xiao & Tan, Hao & Tsenina, Ekaterina & Liu, Shuchun & Han, Guanghua, 2022. "Information sharing based on two-way perceptions of trust and supply chain decisions: A simulation based approach," Chaos, Solitons & Fractals, Elsevier, vol. 157(C).
    19. Wang, Qianwen & Liu, Xu & Huo, Baofeng & Zhao, Xiande, 2023. "Economic or relational first? Establishing the competitiveness of third-party logistics information sharing by devoting specific assets and mutual trust," International Journal of Production Economics, Elsevier, vol. 261(C).

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