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中国科技论文在线
Collaboration Mechanism in Complex Product Supply
Chain Innovation#
LIU Liang, LIU Xuepeng, SUN Jizhao, Qi Ershi
*
5
(Economics and Management School, Tinjin University, Tianjin 300072)
Foundations: Doctoral Scientific Fund Project of the Ministry of Education of China (20120032110035)
Abstract: Based on analyzing the research status for supply chaincoordination mechanism, this paper
put forward a risk-sharing collaborative development model for complex product manufacturers and
suppliers, through which both can improve the operational efficiency of the entire supply chain under
appropriate mode of incentives and benefits distributions. Relevant effective conclusions were drawn 10
via simulation.
Key words: Complex Product; Innovation; Collaboration Mechanism; Supply Chain
0 Introduction
Many studies on the innovation of complex product system are about technology innovation. 15
However, with the increasing concern on supply chain management, researches on innovation
performance from the aspect of supply chain collaboration have drawn the attention. Often,
collaboration innovation has a clear target, definite cooperation term and specific cooperation
rules, based on the common interests of partners and the premise of resources sharing [1].
Researches on the mechanism of collaboration focus on the game mechanism and trust 20
mechanism of cooperation among enterprises, and attach great importance to the role of
communication and information sharing in supply chain collaboration. In addition, studies on the
impact of corporate culture and senior leadership on enterprise collaboration are also involved.
Malon & Growston related collaboration to a process of coordination the relationship of
management behaviors, which includes resource sharing, task allocation, manufacturer - customer 25
relationship, production capacity design, etc [2]. Pasternack proposed to coordinate the whole
supply chain through the wholesale-price contract and buy-back contract [3]. Cachon &
M．Lariviere put forward the revenue sharing contract between the supplier and the retailers,
namely retailers should give part of the revenue to the suppliers [4]. Robert B, Handfield &
Christian Beehtal studied on the issues of trust in the supply chain, and set up a model which 30
pointed out that the buyers’ dependence and the suppliers’ human capital investment would be
positively related to the improvement of the responsiveness for supply chain [5]. As for the role of
suppliers in product development, Ragatz et al. analyzed the benefits that the involvement of
supplier integration in the new product development would bring under uncertain conditions [6].
Wynstra et al. pointed out that there were two reasons for the suppliers to involve in the new 35
product development. Firstly, manufacturers realized the important position of purchasing and
supplier management in the enterprise strategy. And secondly, product innovation and research
and development were of great significance for the competitiveness of enterprises [7].
This paper aims to seek for appropriate collaboration modes for the enterprises of supply
chain nodes, for the sake of complex product system innovation. It firstly presents the 40
collaboration process of complex product innovation which suppliers participates in and analyzes
the role of the supply chain upstream and downstream enterprises in the whole process of
production innovation system. Then appropriate collaboration modes for the enterprises of supply
chain are proposed. Finally, the model for innovative supply chain collaboration is simulated and
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tested via Anylogic software. 45
1 Modeling of complex product supply chain collaboration pattern
We propose four assumptions for the mechanism which are outlined as below.
Assumption 1: Define as a one-dimension effort variable, showing the effort degree of
subcontractors in development work. The larger the variable, the harder the subcontractors are.
The output function is demonstrated as . In the function, 10 << denotes the 50
coefficient of the subcontractors’ development abilities, which are decided by their technology,
equipment, human resources and so on; is the endogenous variable determined by uncertain
external factors, which are assumed to follow normal distribution with the mean value of zero and
variance of
2 , therefore EE ， 2VVa arr 。
Assumption 2: Integrative developers motivate subcontractors via sharing agreement which 55
is described as s . In this function, s denotes the rewards of subcontractors,
and denotes the fixed rewards of subcontractors (having nothing to do with ). Besides,
denotes the share of outputs that are allocated to subcontractors, meaning that the subcontractors’
rewards increase volumes when the total output increase one volume. In addition,
0 means subcontractors assume no risks, while 1 means subcontractors assume all 60
risks.
Assumption 3: Assume the negative utility of the subcontractors’ effort equals the money
cost, and 2
2
1
c baa , in which 0>b denotes the coefficient of effort cost. The larger the
value of b , the larger the negative utility the effort degree a will cause. It is negatively related
with the development ability of subcontractors, namely that the higher the ability of 65
subcontractors’ development ability, the lower their action cost ac will be.
Assumption 4: It is assumed that integrative developers are risk-neutral while subcontractors
are risk-averse. Besides, the utility function of the former one has constant characteristics
risk-averse, .
e , in which is the absolute risk-averse volume and is the
actual income. 70
Since complex product manufactures are risk-neutral, under the condition of
s , the expected utility of manufactures equals the expected income, so we have
a )1(EsE (1)
Complex product manufactures seek for the maximization of the expected utility function by
choosing the values of and . However, they often face two constraints from the side of 75
subcontractors. One is participation constraint, . that the expected utility subcontractors obtain
can’t be lower than their reserve utility. The other one is incentive constraint, . that all that
complex product manufactures hope can only be realized through the subcontractors’ activities for
maximal utility.
(1) Participation constraint 80
Subcontractors accept the contract provided by complex product manufactures, and during
the process of product development it is inevitable to invest resources and effort cost. Therefore,
the actual income of subcontractors can be described as
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中国科技论文在线
2
2
1
cs baa (2)
The expected income of subcontractors is described as 85
2
2
1
baE (3)
The definite equivalent income of subcontractors is described as
22222
2
1
2
1
2
1
baE (4)
The
22
2
1
is the risk cost of subcontractors and when 0 , the risk cost is zero.
We use as the reserve income level of subcontractors, so if the definite equivalent 90
income is lower than , they will not accept the contract. Therefore, the participant constraint of
the subcontractors is described as
222
2
1
2
1
: baaIR (5)
（2）Incentive constraint
Since subcontractors are rational, they choose to act for the maximization of their benefits. 95
In other words, they choose to maximize their definite income by maximizing
22222
2
1
2
1
2
1
baaE . Take the derivative with respect to ,
so we have
ab
E
22
2
1
(6)
When 0 ab , the definite income of subcontractors reaches the maximum level, . 100
b
a
. Complex product manufacturer motivates the subcontractors to act for the good of itself
by maximizing their definite income. So the incentive constraint for subcontractors is described as
b
aIC
: (7)
Therefore, the problem faced by the complex product manufacturer is transferred to seek for
the maximal solution of the expected utility function under the participation constraint and 105
incentive constraint, which is to maximize the following problem by selecting , ,
)1(max
,,
a
(8)
b
aICbaaIRts
:,
2
1
2
1
:.. 222
2 Model solution
The incentive mechanism model will be solved under the following two conditions 110
respectively.
Condition 1: Information symmetry between complex product manufacturer and
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中国科技论文在线
subcontractors
Under this condition, complex product manufacturer can observe the effort level of
subcontractors and meanwhile, all levels can be achieved by satisfying the compulsory 115
contract with participation constraint. Therefore, it is the participation constraint which plays the
role instead of the incentive constraint. By involving the participation constraint in the objective
function, the problem can be re-expressed as below
222
,, 2
1
2
1
max ba
a
(9)
Take the first derivative with respect to , ，and derive the optimal condition： 120
0, **
b
a (10)
Take the above results into the subcontractor's participation constraint, so it is obtained as
b
ab
22
1 22** (11)
This is praetor optimal contract. Since it is assumed that complex product manufacturer is
risk-neutral and the subcontractors are risk-averse, praetor optimal risk-sharing requires that the 125
subcontractors assume no risk, namely 0* . The subcontractor's fixed income paid by the
complex product manufacturer equals to the subcontractor's reservation wages plus cost of their
efforts.
Condition 2: Information asymmetry between complex product manufacturer and
subcontractors 130
The condition of Information asymmetric means that the complex product manufacturers
can't observe the subcontractor's effort level . Under this condition, the praetor optimal contract
can’t be achieved, since the subcontractors will choose to take actions to maximize their definite
equivalent income. In other words, when 0 , . the subcontractors’ income has nothing to
do with the output, the subcontractors will choose 0a , rather than
b
a
. So when the 135
information between the complex product manufacturer and subcontractors are asymmetric, the
incentive constraint will effect. Take the participation constraint IR and incentive constraint IC
into the objective function, the optimization problem faced by the complex product
manufacturer is re-expressed as
bb 22
1 2222
2
max (12) 140
Take the first derivative with respect to , and derive the optimal condition as below
0
22
2
>
b
(13)
The optimal values of and a is solved as
0
2
2
222
624
>
bb
b
(14)
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中国科技论文在线
222
3
bb
a
(15) 145
In conclusion, in order to make the best incentive contract, the complex product manufacturer
should consider the problem in the perspective of subcontractors and hold the collaboration
concept of win-win. In other words, they should design the contract within the participation
constraint and the incentive constrain.
3 Simulation results and analysis 150
This part analyzes the reliability and authenticity by acquiring relevant dada during the
simulation process in real time, as is shown in figure 1.
Figure 1 Simulation results of productRate and sub_1_Dem in real time
In figure 1, the red line shows the pattern of the customers’ satisfaction changes. Under the 155
condition that innovation ability and the risk indexes of the subcontractors are at the optimal
degree, and the effort degree of the subcontractors is 50% and the users’ demand satisfaction is
about 70%. In addition, with the change of time, the customer satisfaction firstly increases
dramatically and then gently. Finally it stabilizes at the maximum level. This generally accords
with the actual process of the users’ satisfaction changes regulation. 160
By adjusting the parameters, including the innovative ability, technical level of the
subcontractors, and speed and accuracy of information transmission, we can analyze the influence
of different factors on the customer satisfaction. This can help to improve the supply chain
structure in order to better serve the complex product enterprises' innovation activities. In the
process of simulation, it is feasible to set up customer satisfaction standards to regulate the 165
enterprise innovation goals. And if the simulation result does not reach the standards, the measures
of modifying the users’ demand, adding new ideas and modifying interest distribution and
incentive mechanism can be adopted to improve customer satisfaction.
4 Conclusion
Under the globalization trend and the intense market competition, the supply chain 170
collaboration has become a focus in the field of supply chain. This paper elaborately studies on the
coordination mechanism and performance of the complex product supply chain on the basis of the
analysis of supply chain collaboration management.
Specifically, this paper first constructs a complex product supply chain model. This model is
proposed on the basis of the analysis of the complex product innovation process. Over the 175
organizational structure, the whole supply chain system is established with the integration
developer as the core, the subcontractors and the end users as the supporting point and the end
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中国科技论文在线
users’ demands as the goal. Under the leadership of the integration developer, the users’ demands
are conversed into actual products, and at the same time the economic and social benefits are
achieved. 180
Secondly, this paper analyzes the collaboration mechanism of the complex products supply
chain system. From the two aspects of information sharing mechanism and incentive mechanism,
this paper explores the influences that the supply chain collaboration mechanism has on the
innovation performance of the supply chain. By analyzing the characteristics, we try to seek for
the most appropriate supply chain model and innovation mechanism for the complex products 185
system.
Finally, the models are simulated with Anylogic software. Based on simulation process of
system dynamics, the supply chain cooperation model and the processes of information sharing
mechanism and incentive mechanism are simulated. This shows the overall situation of the supply
chain operation and provides references and basis for the optimization and innovation of supply 190
chain model.
References
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[2] Malone, ThomasW, Crowston, Kevin. The Interdisciplinary Study of Coordination[J]. ACM Computing 195
Surveys, 1994, (1): 87-120.
[3] Pastemack B. Option pricing and returns policies for perishable commodities [J]. Marketing Science, 1985, (4):
166-176.
[4] Cachon G.,M. Lariviere. Supply Chain Coordination with Revenue-Sharing Contracts: Strengths and
Limitations [J]. Management Science, 2005, (1): 30-44. 200
[5] Robert B, Handfielda and Christian Bechtel. The role of trust and relationship structure in improving supply
chain responsiveness [J]. Industrial Marketing Management, 2002, (4): 367-382.
[6] Ragatz, ., Handfield, ., Scannell, .. Success Factors for Integrating Suppliers into New Product
Development[J]. Journal of Product Innovation Management, 1997, (3): 190-202.
[7] Wynstra F, Axelsson B, Weele A V. Driving and enabling factors for purchasing involvement in product 205
development [J]. European Journal of Purchasing & Supply Management, 2000, (6): 129-141.
复杂产品供应链创新的合作机制
刘亮，刘学鹏，孙际钊，齐二石 210
（天津大学经管学院，天津 300072）
摘要：通过分析供应链协调机制的现状，本文提出了复杂产品生产商和供应商风险分担协作
发展的模型。在合适的激励和利润分配模式下，该模型可以改善整个供应链的运作效率。通
过仿真本文得到了相关的有效结论。
关键词：复杂产品；创新；协调机制；供应链 215
中图分类号：F270
