Chunxing Fan

Optimal business policies for a supplier–transporter–buyer channel with a price-sensitive demand

As the third party logistics partners (carriers) taking a more and more significant role in supply chain practices and customer service performance improvement, there is an emerging need for the studies on optimal channel coordination policies for business processes involving not only supplier and buyer (retailer), but also transportation partners. In this paper, we explicitly add a transportation partner with concave cost functions into the analysis for supplier–buyer channel coordination policies, and analyse the impact of coordination and pricing policies on supply chain profitability. The market demand is assumed to be a decreasing convex function of buyers selling price (x), D(x)=d/x2. Under this assumption, we quantify the improvement on total supply chain profitability when moving from a non-cooperative environment to a fully cooperative environment, and show that the joint annual profit of three partners in a cooperative environment can be at least twice of what may be achieved by three independently operated companies in a leader–follower business game. While in a real-world business environment, a perfect collaboration is hard to achieve, this result can be used to provide a quick estimation on the upper bound on the budget for profit sharing or discount offers among the supply chain partners.

Managing dependence in logistics outsourcing relationships: evidence from China

As third-party logistics (3PL) plays an increasingly important role in businesses, managing dependences between 3PL providers and users has become critical for business success. Drawing on the resource dependency theory (RDT), we propose that logistics integration and interorganisational relationships are two effective approaches for 3PL users to cope with their dependence on 3PL providers and to achieve better financial performance. The model was empirically tested using data collected from 134 3PL users in China. The results show that both inter-organisational relationships and integration and their interplay effectively carry the positive influence of dependence on financial performance. We also find that while both interorganisational relationships and integration are effective for Chinese-controlled 3PL users to leverage their dependence on 3PL providers for financial performance improvement, foreign-controlled 3PL users rely solely on interorganisational relationships to manage their dependence.

A framework of supplier selection of Integrative Logistics Providers

In order to tackle intensifying competition, more companies feel, it is necessary to outsource their logistics activities to logistics service providers. However, many logistics service providers can only offer a limited scope of services. To simplify managerial complexity, a growing number of companies seek to reduce their logistics service supplier base and thus prefer integrative logistics service providers ((ILSP), also called fourth-party logistics) which provide a broader range of services. However, ILSP may not internalise all logistics businesses and thus they have to outsource their contracts again to other third-party logistics providers. This study aims to build a framework through which the ILSP can decide which logistics service providers should be used. The framework was tested and refined using survey data from China. Furthermore, an innovative method, combining analytical hierarchy process and linear programming, was proposed to assess logistics service providers. A case study was conducted using this method. This study represents a pioneer study of ILSP in China and provides valuable insights for ILSP.

A Characterization of Lower-Tier Supplier Visibility Practices in Supplier Relationship Management

This study explores industry perspectives on lower-tier supplier visibility (LTSV) with respect to various supplier stratifications. According to the analysis of our survey data collected from 74 companies and interviews with 19 industry executives from 15 companies, we found that companies with LTSV system are willing to expand their LTSV process to its suppliers that are of lesser overall importance rather than the traditional practice of restricting such requirement to suppliers with very high level of overall importance (i.e. strategic suppliers). Our findings also show that minimizing supply chain risks (MSCR) and ensuring supply performance (ESP) are primary motivations for companies to engender LTSV. Furthermore, we found that companies adopting LTSV process for strategic and collaborative suppliers focus on MSCR, but on ESP for custom suppliers. These findings contribute to the literature of supplier relationship management (SRM) on lower-tier supplier management and also provide a guideline for the industry to create appropriate LTSV strategies.

Re-examining the structure of supplier stratification matrix: a focus on differential value and relationship

This paper explores current empirical practice in supplier stratification management, focusing on how suppliers are stratified and how to manage these supplier segments differentially by using common evaluation criteria. Using information gathered through interviews of senior managers of supplier relationship management from 15 companies and extensive literature search, this paper proposes a new framework on supplier stratification that addresses the weakness in existing stratification conceptualisation. A survey was also conducted to evaluate the relative importance placed on different evaluation criteria when evaluating different supplier segments. Factor analysis reveals that all these evaluation criteria are indeed determined by two factors: purchasing value and relationship. Our analyses further show that, for purchasing value: strategic suppliers have the highest value, followed in decreasing order by custom, collaborative, and finally commodity suppliers. For relationship: strategic suppliers are distinctly the most important segment, followed by collaborative and custom suppliers, and finally commodity suppliers.