COORDINATION MECHANISMS IN SUPPLY CHAIN WITH THIRD PARTY LOGISTICS OUTSOURCING

Winda Narulidea; Oki Anita Candra Dewi

Proceedings of ICLT 2017

COORDINATION MECHANISMS IN SUPPLY CHAIN WITH THIRD PARTY LOGISTICS OUTSOURCING

Winda Narulidea; Oki Anita Candra Dewi

Universitas Internasional Semen Indonesia; Universitas Internasional Semen Indonesia

International Conference on Logistics & Transport 2017, Bangkok, Thailand, pp. 130-136

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Abstract

Purpose: By making logistics outsourcing decision, companies have been able to improve the logistics performance, maintain focus on core business, and minimize distribution cost. However in decentralized condition, there is only limited control of the third party logistics service provider (TPLSP), whose logistics service performance affect the products availability, quality, price, and market share. The paper aim to develop the model of coordination mechanisms in supply chain with third party logistics outsourcing. Design/methodology/approach: Revenue sharing contracts are developed in the proposed model to coordinate the supply chain consisting of a manufacturer, a TPLSP, and multiple retailers. Moreover the incentive and penalty scheme are implemented in accordance to the supply chain logistics service performance, so the risks and the necessary costs could be allocated to all players. Findings: To increase the desirability level of the contracts for all players, we should determine the contracts parameter so that all entities could obtain higher profit than in decentralized conditions chain and win-win condition can be achieved. Originality/value: The paper provides new model of coordination mechanism in supply chain with logistics outsourcing and offers the incentive and penalty scheme into the basic model of revenue sharing contracts.

Keywords

Coordination mechanism; Logistics outsourcing; Revenue sharing contracts; Supply chain

Citation

Winda Narulidea; Oki Anita Candra Dewi (2017). COORDINATION MECHANISMS IN SUPPLY CHAIN WITH THIRD PARTY LOGISTICS OUTSOURCING. Proceedings of the International Conference on Logistics & Transport (ICLT 2017), Bangkok, Thailand, pp. 130-136.