On Contractual Periods in Supplier Development

Titelangaben

Worthmann, Karl ; Braun, Philipp ; Proch, Michael ; Schlüchtermann, Jörg ; Pannek, Jürgen:
On Contractual Periods in Supplier Development.
In: IFAC-PapersOnLine. Bd. 49 (2016) Heft 2 . - S. 60-65.
ISSN 2405-8963
DOI: https://doi.org/10.1016/j.ifacol.2016.03.011

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Abstract

We consider supplier development within a supply chain consisting of a single manufacturer and a single supplier. Because supplier development usually requires relationship-specific investments, firms need to protect themselves against partner opportunism. Even though contracts are viewed as the primary formal means of safeguarding transactions, they also entail certain risks, e.g., a lack of flexibility, particular in a dynamic and uncertain business environment. Thus, we propose a receding horizon control scheme to mitigate possible contractual hazards while significantly increasing the overall supply chain profit. Our findings are illustrated by a numerical example.