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Optimal operational strategies of supply chain under financing service by a 3PL firm

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  • Shuai Huang
  • Zhi-Ping Fan
  • Xiaohuan Wang

Abstract

As an innovative mode of supply chain finance, financing service offered by a third part logistics (3PL) firm has been practiced over the recent years. This paper investigates the optimal operational strategies of the supply chain system consisting of a supplier, a capital-constrained retailer and a 3PL firm. In this study, we compare the optimal operational strategies under both decentralised and centralised decisions, and put forward the supply chain coordination condition when the 3PL firm offers financing service. Several important results are achieved. First, the supplier’s wholesale price strategy has obvious influence on the decisions of the retailer and the 3PL firm. Second, the retailer’s ordering quantity under 3PL financing service is more than that without any financing service; and it can exceed the ordering quantity of a well-funded retailer, if and only if the supplier’s wholesale price and the 3PL’s interest rate meet certain conditions. Finally, we find that under 3PL financing service, the profit of supply chain can achieve Pareto improvement, and the wholesale price contract may realise profit maximisation and channel coordination in the supply chain system under certain condition.

Suggested Citation

  • Shuai Huang & Zhi-Ping Fan & Xiaohuan Wang, 2019. "Optimal operational strategies of supply chain under financing service by a 3PL firm," International Journal of Production Research, Taylor & Francis Journals, vol. 57(11), pages 3405-3420, June.
    • Handle: RePEc:taf:tprsxx:v:57:y:2019:i:11:p:3405-3420
    DOI: 10.1080/00207543.2018.1534017
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    Cited by:

    1. Wang, Kai & Lin, Jun & Liu, Guoquan & Liu, Qi, 2022. "Strategic introduction of logistics retail and finance under competition and channel spillover," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 165(C).
    2. Rath, Sambit Brata & Basu, Preetam & Govindan, Kannan & Mandal, Prasenjit, 2024. "Platform vs. 3PL financing: Strategic choice of lending model for an e-tailer under operational risk," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 184(C).
    3. Hua, Shengya & Sun, Shuxiao & Liu, Zhongyi & Zhai, Xin, 2021. "Benefits of third-party logistics firms as financing providers," European Journal of Operational Research, Elsevier, vol. 294(1), pages 174-187.
    4. Xiao Hu & Kaifang Fu & Zhixiang Chen & Zhijiao Du, 2022. "Decision-Making of Transnational Supply Chain Considering Tariff and Third-Party Logistics Service," Mathematics, MDPI, vol. 10(5), pages 1-20, February.
    5. Liu, Jie & Yang, Yang & Yu, Yugang, 2021. "Ordering and interest rate strategies in platform finance with an overconfident and commerce retailer," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 153(C).
    6. Pan, Xiongfeng & Li, Mengna & Wang, Mengyang & Zong, Tianjiao & Song, Malin, 2020. "The effects of a Smart Logistics policy on carbon emissions in China: A difference-in-differences analysis," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 137(C).
    7. Wang, Jing & Wang, Kai & Li, Xiang & Zhao, Ruiqing, 2022. "Suppliers’ trade credit strategies with transparent credit ratings: Null, exclusive, and nonchalant provision," European Journal of Operational Research, Elsevier, vol. 297(1), pages 153-163.
    8. Yongming Zhang & Weida Chen, 2022. "Optimal production and financing portfolio strategies for a third‐party remanufacturing supply chain with capital constraint," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(7), pages 3072-3094, October.
    9. Daehyeon Park & Doojin Ryu, 2023. "E‐commerce retail and reverse factoring: A newsvendor approach," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 44(1), pages 416-423, January.
    10. Huang, Shuai & Fan, Zhi-Ping & Wang, Ningning, 2020. "Green subsidy modes and pricing strategy in a capital-constrained supply chain," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 136(C).
    11. Nafiseh Fallahi & Ashkan Hafezalkotob & Sadigh Raissi & Vahidreza Ghezavati, 2023. "Cooperation and coopetition among retailers-third party logistics providers alliances under different risk behaviors, uncertainty demand and environmental considerations," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 25(6), pages 5597-5633, June.

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