Better to Bend than to Break: Sharing Supply Risk Using the Supply-Flexibility Contract

Published Online:https://doi.org/10.1287/msom.2020.0886

References

  • Alstom Transport (2009) Parts supply services to optimize your maintenance performance. Accessed April 27, 2020, https://www.alstom.com/our-solutions/services/parts-and-repairs-guaranteeing-optimal-spares-availability.Google Scholar
  • Bassok Y , Anupindi R (2008) Analysis of supply contracts with commitments and flexibility. Naval Res. Logist. 55(5):459–477.CrossrefGoogle Scholar
  • Cachon GP (2003) Supply chain coordination with contracts. Supply Chain Management: Design, Coordination and Operation , Handbooks in Operations Research and Management Science, vol. 11 (Elsevier, Amsterdam), 227–339.CrossrefGoogle Scholar
  • Cachon GP (2004) The allocation of inventory risk in a supply chain: Push, pull, and advance-purchase discount contracts. Management Sci. 50(2):222–238.LinkGoogle Scholar
  • Cachon GP , Lariviere MA (2005) Supply chain coordination with revenue-sharing contracts: Strengths and limitations. Management Sci. 51(1):30–44.LinkGoogle Scholar
  • Chemama J , Cohen MC , Lobel R , Perakis G (2018) Consumer subsidies with a strategic supplier: Commitment vs. flexibility. Management Sci. 65(2):681–713.LinkGoogle Scholar
  • Dada M , Petruzzi NC , Schwarz LB (2007) A newsvendor’s procurement problem when suppliers are unreliable. Manufacturing Service Oper. Management 9(1):9–32.LinkGoogle Scholar
  • Department of Energy and Climate Change (2013) Electricity market reform: Update on terms for the contracts for difference. Accessed April 27, 2020, https://bit.ly/2N9kbvG.Google Scholar
  • Eckerd A , Girth AM (2017) Designing the buyer–supplier contract for risk management: Assessing complexity and mission criticality. J. Supply Chain Management 53(3):60–75.CrossrefGoogle Scholar
  • Elliott RF (2009) The effectiveness of various contractual approaches. AMPLA Annual Conf. (November 4), accessed April 27, 2019, https://feg.com.au/feature/paper-for-ampla-conference-2009.Google Scholar
  • Farahani MH , Dawande M , Gurnani H , Janakiraman G (2018) Better to bend than to break: Sharing supply risk using the supply-flexibility contract. Preprint, submitted March 19, 10.2139/ssrn.3143238.Google Scholar
  • Federgruen A , Yang N (2009) Optimal supply diversification under general supply risks. Oper. Res. 57(6):1451–1468.LinkGoogle Scholar
  • Feng Q , Jia J , Shanthikumar JG (2019) Dynamic multisourcing with dependent supplies. Management Sci. 65(6):2770–2786.LinkGoogle Scholar
  • Feng Q , Shi R (2012) Sourcing from multiple suppliers for price-dependent demands. Production Oper. Management 21(3):547–563.CrossrefGoogle Scholar
  • Gümüş M , Ray S , Gurnani H (2012) Supply-side story: Risks, guarantees, competition, and information asymmetry. Management Sci. 58(9):1694–1714.LinkGoogle Scholar
  • Gurnani H , Shi M (2006) A bargaining model for a first-time interaction under asymmetric beliefs of supply reliability. Management Sci. 52(6):865–880.LinkGoogle Scholar
  • Haksoz C , Kadam A (2008) Supply risk in fragile contracts. MIT Sloan Management Rev. 49(2):7–8.Google Scholar
  • Heyes W (2008) Honest broker solves supply problems. EMT WorldWide (March 26), http://www.epdtonthenet.net/article/14675/Honest-broker-solves-supply-problems.aspx.Google Scholar
  • Hughes N (2014) Court unseals documents in GT Advanced case, Apple says it “bent over backwards” to help sapphire supplier. Apple Insider (November 7), https://bit.ly/2kalZIQ.Google Scholar
  • Kalkanci B , Chen K-Y , Erhun F (2011) Contract complexity and performance under asymmetric demand information: An experimental evaluation. Management Sci. 57(4):689–704.LinkGoogle Scholar
  • Lariviere MA , Porteus EL (2001) Selling to the newsvendor: An analysis of price-only contracts. Manufacturing Service Oper. Management 3(4):293–305.LinkGoogle Scholar
  • Li T , Sethi SP , Zhang J (2013) Supply diversification with responsive pricing. Production Oper. Management 22(2):447–458.CrossrefGoogle Scholar
  • Li T , Sethi SP , Zhang J (2017) Mitigating supply uncertainty: The interplay between diversification and pricing. Production Oper. Management 26(3):369–388.CrossrefGoogle Scholar
  • Menon M (2013) Coal India, NTPC to sign fuel supply pacts as quality row cools. Reuters (July 16), http://reut.rs/149fO7Y.Google Scholar
  • Özer Ö , Wei W (2006) Strategic commitments for an optimal capacity decision under asymmetric forecast information. Management Sci. 52(8):1238–1257.LinkGoogle Scholar
  • Sanders B (2014) GTAT-Apple agreement: Evolution of a fiasco. New Hampshire Business Review (December 11), https://www.nhbr.com/gtat-apple-agreement-evolution-of-a-fiasco/.Google Scholar
  • Song Y , Ray S , Li S (2008) Structural properties of buyback contracts for price-setting newsvendors. Manufacturing Service Oper. Management 10(1):1–18.LinkGoogle Scholar
  • Tang CS , Yin R (2007) Responsive pricing under supply uncertainty. Eur. J. Oper. Res. 182(1):239–255.CrossrefGoogle Scholar
  • The New Indian Express (2017) Coal supply to NALCO as per contract. Accessed April 27, 2020, https://goo.gl/Bcsgfg.Google Scholar
  • Tinney G (2016) We need to talk about risk and construction procurement. Engineers Journal (November 15), http://www.engineersjournal.ie/2016/11/15/we-need-to-talk-about-risk/.Google Scholar
  • Tomlin B (2006) On the value of mitigation and contingency strategies for managing supply chain disruption risks. Management Sci. 52(5):639–657.LinkGoogle Scholar
  • Tomlin B (2009a) Disruption-management strategies for short life-cycle products. Naval Res. Logist. 56(4):318–347.CrossrefGoogle Scholar
  • Tomlin B (2009b) Impact of supply learning when suppliers are unreliable. Manufacturing Service Oper. Management 11(2):192–209.LinkGoogle Scholar
  • Tsay AA , Lovejoy WS (1999) Quantity flexibility contracts and supply chain performance. Manufacturing Service Oper. Management 1(2):89–111.LinkGoogle Scholar
  • U.S. Securities and Exchange Commission (2006) Form of corn supply agreement. Accessed April 27, 2020, https://www.sec.gov/Archives/edgar/data/1370183/000119312506191648/dex1 09.htm.Google Scholar
  • U.S. Department of Agriculture (2001) U.S. fresh fruit and vegetable marketing: Emerging trade practices, trends, and issues—Contracts. Accessed April 27, 2020, https://www.ers.usda.gov/webdocs/publications/41227/32240_aer795e_002.pdf?v=0.Google Scholar
  • Wang Y , Gilland W , Tomlin B (2010) Mitigating supply risk: Dual sourcing or process improvement? Manufacturing Service Oper. Management 12(3):489–510.LinkGoogle Scholar
  • Yang Z , Aydın G , Babich V , Beil DR (2009) Supply disruptions, asymmetric information, and a backup production option. Management Sci. 55(2):192–209.LinkGoogle Scholar
  • Yang Z , Aydın G , Babich V , Beil DR (2012) Using a dual-sourcing option in the presence of asymmetric information about supplier reliability: Competition vs. diversification. Manufacturing Service Oper. Management 14(2):202–217.LinkGoogle Scholar
INFORMS site uses cookies to store information on your computer. Some are essential to make our site work; Others help us improve the user experience. By using this site, you consent to the placement of these cookies. Please read our Privacy Statement to learn more.