Coordination in a composite green-product supply chain under different power structures

• Published in: Industrial management + data systems 2020-06, Vol.120 (6), p.1101-1123
• Main Authors: Lou, Gaoxiang, Lai, Zhixuan, Ma, Haicheng, Fan, Tijun
• Format: Article
• Language: English
• Subjects: Clean energy; Computer simulation; Contracts; Coordination; Costs; Decision making; Environmental impact; Environmental performance; Game theory; Green products; Income distribution; Information systems; Literature reviews; Manufacturers; Manufacturing; Mathematical models; Optimization; Product development; Production capacity; Profits; Raw materials; Suppliers; Supply chain management; Supply chains
• ISSN: 0263-5577; 1758-5783
• DOI: 10.1108/IMDS-10-2019-0532

PurposeThe purpose of this paper is to find the optimal power structure that drives green practices in the supply chain and coordinate the costs and benefits of green practices in supply chain under different power structures.Design/methodology/approachThis paper developed a supply chain of one supplier and one manufacturer, in which the supplier and the manufacturer are responsible for the “greening” of products. Then, the game theory modeling method is used to explore the influence of different power structures on green practices in the supply chain. Finally, the authors developed a green cost-sharing contract made by the leader; regarding optimal supply chain profits and green performance, the proposed contracts and the non-coordination situation are compared and tested by a numerical simulation.FindingsThe increase of the green practice difficulty of any member in the supply chain will not only reduce the greenness of products at that stage but will also reduce the green investment of the supply chain partner. Becoming a channel leader does not necessarily mean being more profitable than being a follower, and when the green practice difficulty of the leader is less than a certain threshold, ceding dominant power to the follower may benefit both sides. A green cost-sharing contract made by the leader is not necessarily beneficial to all enterprises.Originality/valueThis paper helps to better understand the role of the power relation in realizing the industry's green goals and helps decision-makers to achieve win-win cooperation by adjusting power relations and optimizing green cost-sharing contracts.