More firms than ever before are disclosing provenance of their products, results of product testing, and suppliers’ labor-practice compliance with western norms in annual reports, sustainability reports, and press releases, besides making it available on third-party websites. The problem remains however that companies find collecting and disclosing such information not only to be costly and complicated, but also do not understand the benefits. To motivate further research on supply chain transparency, we first report recent examples of companies providing supply chain transparency. We also present potential benefits of supply chain visibility and supply chain transparency separately for the company. While terminology has not yet been standardized, this paper distinguishes visibility – managers’ efforts to learn more about operations upstream in their supply chains – from supply chain transparency, by which we mean a company disclosing information to consumers, investors, and other stakeholders about compliance to consumerexpected norms in its supply chain operations and products. Finally, we propose some topics for research on supply chain transparency arranged by stakeholder.
{"title":"Research Opportunities in Supply Chain Transparency","authors":"M. Sodhi, Christopher S. Tang","doi":"10.1111/POMS.13115","DOIUrl":"https://doi.org/10.1111/POMS.13115","url":null,"abstract":"More firms than ever before are disclosing provenance of their products, results of product testing, and suppliers’ labor-practice compliance with western norms in annual reports, sustainability reports, and press releases, besides making it available on third-party websites. The problem remains however that companies find collecting and disclosing such information not only to be costly and complicated, but also do not understand the benefits. To motivate further research on supply chain transparency, we first report recent examples of companies providing supply chain transparency. We also present potential benefits of supply chain visibility and supply chain transparency separately for the company. While terminology has not yet been standardized, this paper distinguishes visibility – managers’ efforts to learn more about operations upstream in their supply chains – from supply chain transparency, by which we mean a company disclosing information to consumers, investors, and other stakeholders about compliance to consumerexpected norms in its supply chain operations and products. Finally, we propose some topics for research on supply chain transparency arranged by stakeholder.","PeriodicalId":369181,"journal":{"name":"Operations Strategy eJournal","volume":"60 6 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-06-04","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"130370692","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This chapter presents some recent developments in retail promotions. We first discuss the different types of promotion used in retail, and then survey the related literature. We next formulate the promotion optimization problem for multiple items. This formulation is directly motivated from practice, holds for general demand models, and can incorporate the relevant business rules. We discuss how this formulation captures important economic factors in the context of retail. We then present an efficient approximate solution approach by using a discrete linearization method that allows the retailer to solve large-scale instances within seconds. We next report a beginning-to-end application of the entire process of optimizing retail promotions. We divide the process in five steps that the retailer needs to follow; from collecting and aggregating the data to computing future promotion decisions. Finally, we discuss the potential impact of using data analytics and optimization for retail promotions. We convey that in our tested examples (calibrated with real data), using the promotions suggested by our model can yield a 2-9% profit improvement.
{"title":"Promotion Optimization in Retail","authors":"Maxime C. Cohen, G. Perakis","doi":"10.2139/ssrn.3194640","DOIUrl":"https://doi.org/10.2139/ssrn.3194640","url":null,"abstract":"This chapter presents some recent developments in retail promotions. We first discuss the different types of promotion used in retail, and then survey the related literature. We next formulate the promotion optimization problem for multiple items. This formulation is directly motivated from practice, holds for general demand models, and can incorporate the relevant business rules. We discuss how this formulation captures important economic factors in the context of retail. We then present an efficient approximate solution approach by using a discrete linearization method that allows the retailer to solve large-scale instances within seconds. We next report a beginning-to-end application of the entire process of optimizing retail promotions. We divide the process in five steps that the retailer needs to follow; from collecting and aggregating the data to computing future promotion decisions. Finally, we discuss the potential impact of using data analytics and optimization for retail promotions. We convey that in our tested examples (calibrated with real data), using the promotions suggested by our model can yield a 2-9% profit improvement.","PeriodicalId":369181,"journal":{"name":"Operations Strategy eJournal","volume":"43 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2018-05-01","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"117134724","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Pub Date : 2017-06-20DOI: 10.1002/9781119138341.CH8
J. Morrison, Rogelio Oliva
In this chapter, we show how the tools and principles of system dynamics facilitate the integration of operations management and behavioral sciences. At its core, system dynamics develops process-based theories that explicitly examine the interactions between the physical and institutional structures of operational systems and the behavioral decision rules of the agents in those systems. We first describe the system dynamics perspective on decision-making in dynamic environments. We then present a set of guiding principles to formulate behavioral decision making and describe the methods used by system dynamists to gather data to formulate those decision rules. We used two detailed formulation examples from operational contexts to show how the formal representation of the decision-making process was used to gain operational insights through simulation and formal analytical techniques. The chapter concludes exploring potential areas of future research in behavioral operations leveraging the strengths of system dynamics.
{"title":"Integration of Behavioral and Operational Elements Through System Dynamics","authors":"J. Morrison, Rogelio Oliva","doi":"10.1002/9781119138341.CH8","DOIUrl":"https://doi.org/10.1002/9781119138341.CH8","url":null,"abstract":"In this chapter, we show how the tools and principles of system dynamics facilitate the integration of operations management and behavioral sciences. At its core, system dynamics develops process-based theories that explicitly examine the interactions between the physical and institutional structures of operational systems and the behavioral decision rules of the agents in those systems. We first describe the system dynamics perspective on decision-making in dynamic environments. We then present a set of guiding principles to formulate behavioral decision making and describe the methods used by system dynamists to gather data to formulate those decision rules. We used two detailed formulation examples from operational contexts to show how the formal representation of the decision-making process was used to gain operational insights through simulation and formal analytical techniques. The chapter concludes exploring potential areas of future research in behavioral operations leveraging the strengths of system dynamics.","PeriodicalId":369181,"journal":{"name":"Operations Strategy eJournal","volume":"28 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-06-20","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"124850533","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Jiayi Joey Yu, Christopher S. Tang, Z. Shen, X. Chen
On-demand ride services (e.g., Uber) receive praises from consumers and investors. However, governments in the United States and Europe are challenging these innovative services by raising legal concerns over labor laws, unfair pricing, and consumer safety. At the same time, the Chinese government is facing a dilemma. On one hand, the Chinese government wants to support these innovative startups as examples of its "mass entrepreneurship and innovation" initiative launched in 2015. On the other hand, the Chinese government needs to ensure the survival of the traditional taxi industry that supports millions of taxi drivers. Facing with this dilemma, we develop a two-period dynamic game that captures the strategic interactions of multiple stakeholders (i.e., the government, an on-demand ride service company, independent drivers, taxi drivers, and passengers). Our analysis reveals that, without government regulation, the on-demand ride service platform can drive the traditional taxi industry out of the market. Also, relative to no regulation and complete ban, we show that the Chinese government's new regulatory framework provides a better balance of multiple objectives (e.g., business and job creation, viability of taxi service, consumer welfare, environmental and traffic issues, and labor welfare) across multiple stakeholders. Also, by adopting a unified modeling framework, we find that the government's optimal policy that maximizes the total social welfare depends on the taxi's price and the relative emphasis that the government places on multiple stakeholders. Particularly, our model provides a justification for the Chinese government's new regulations: imposing some basic regulations is a balanced approach to support the new business and to ensure the sustainability of the traditional industry.
{"title":"Should On-Demand Ride Services Be Regulated? An Analysis of Chinese Government Policies","authors":"Jiayi Joey Yu, Christopher S. Tang, Z. Shen, X. Chen","doi":"10.2139/ssrn.2990209","DOIUrl":"https://doi.org/10.2139/ssrn.2990209","url":null,"abstract":"On-demand ride services (e.g., Uber) receive praises from consumers and investors. However, governments in the United States and Europe are challenging these innovative services by raising legal concerns over labor laws, unfair pricing, and consumer safety. At the same time, the Chinese government is facing a dilemma. On one hand, the Chinese government wants to support these innovative startups as examples of its \"mass entrepreneurship and innovation\" initiative launched in 2015. On the other hand, the Chinese government needs to ensure the survival of the traditional taxi industry that supports millions of taxi drivers. Facing with this dilemma, we develop a two-period dynamic game that captures the strategic interactions of multiple stakeholders (i.e., the government, an on-demand ride service company, independent drivers, taxi drivers, and passengers). Our analysis reveals that, without government regulation, the on-demand ride service platform can drive the traditional taxi industry out of the market. Also, relative to no regulation and complete ban, we show that the Chinese government's new regulatory framework provides a better balance of multiple objectives (e.g., business and job creation, viability of taxi service, consumer welfare, environmental and traffic issues, and labor welfare) across multiple stakeholders. Also, by adopting a unified modeling framework, we find that the government's optimal policy that maximizes the total social welfare depends on the taxi's price and the relative emphasis that the government places on multiple stakeholders. Particularly, our model provides a justification for the Chinese government's new regulations: imposing some basic regulations is a balanced approach to support the new business and to ensure the sustainability of the traditional industry.","PeriodicalId":369181,"journal":{"name":"Operations Strategy eJournal","volume":"43 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-06-16","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"125511989","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Green Marketing has evolved special implications in the modern market. Green indicates purity by means of quality, fair price and worthy in dealings. Green marketing focus to market ecofriendly products to satisfy the needs and wants of customers. It adopts innovative techniques of product modification, dynamic product processes, maintaining sustainability and diversified ways of advertising etc. The vision of Green marketing is doing business along with protecting ecological environment. Present day customers need to be socially responsible by consciously working for the cause of environmental protection. The business based on modern trends have created global pressure upon employers to be environmental friendly. Now, more companies aim to produce consumer and Industrial Goods which are less hazardous to the environment. Every company eventually shifting towards becoming green to enjoy the early mover advantages offered by regulating bodies. Green Marketing ensures long run sustainability and profitability. It is multi beneficial with reduced cost, encourage accessibility to new markets with competitive advantage, increase morale of employee for being a part of environmental cause, satisfies the customer with health products and services. This paper is descriptive in nature and the data are collected from secondary sources like, text books, journal publications, company reports and websites. This paper analyse the implications of green marketing in the Indian business scenario by analysing different Green Business organisations listed in the Go Green Directory published by Eco-Deaz and ranked in the newsweek 2016.
{"title":"Green Marketing Initiatives to Meet Consumer Demands and Sustainable Development-Challenges and Opportunities","authors":"A. Akhil, Pradeep M.D.","doi":"10.2139/ssrn.2980017","DOIUrl":"https://doi.org/10.2139/ssrn.2980017","url":null,"abstract":"Green Marketing has evolved special implications in the modern market. Green indicates purity by means of quality, fair price and worthy in dealings. Green marketing focus to market ecofriendly products to satisfy the needs and wants of customers. It adopts innovative techniques of product modification, dynamic product processes, maintaining sustainability and diversified ways of advertising etc. The vision of Green marketing is doing business along with protecting ecological environment. Present day customers need to be socially responsible by consciously working for the cause of environmental protection. The business based on modern trends have created global pressure upon employers to be environmental friendly. Now, more companies aim to produce consumer and Industrial Goods which are less hazardous to the environment. Every company eventually shifting towards becoming green to enjoy the early mover advantages offered by regulating bodies. Green Marketing ensures long run sustainability and profitability. It is multi beneficial with reduced cost, encourage accessibility to new markets with competitive advantage, increase morale of employee for being a part of environmental cause, satisfies the customer with health products and services. This paper is descriptive in nature and the data are collected from secondary sources like, text books, journal publications, company reports and websites. This paper analyse the implications of green marketing in the Indian business scenario by analysing different Green Business organisations listed in the Go Green Directory published by Eco-Deaz and ranked in the newsweek 2016.","PeriodicalId":369181,"journal":{"name":"Operations Strategy eJournal","volume":"28 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-06-03","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"127933866","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
The process capability studies have significant impact in investigating process variation which is important in achieving product quality characteristics. Its indices are to measure the inherent variability of a process and thus to improve the process performance radically. The main objective of this paper is to understand capability of the process being produced within specification of the soft drinks processing unit, a premier brands being marketed in India. A few selected critical parameters in soft drinks processing: concentration of gas volume, concentration of brix, torque of crock has been considered for this study. Assessed some relevant statistical parameters: short term capability, long term capability as a process capability indices perspective. For assessment we have used real time data of soft drinks bottling company which is located in state of Chhattisgarh, India. As our research output suggested reasons for variations in the process which is validated using ANOVA and also predicted Taguchi cost function, assessed also predicted waste monetarily this shall be used by organization for improving process parameters. This research work has substantially benefited the organization in understanding the various variations of selected critical parameters for achieving zero rejection.
{"title":"Assessment of Process Capability: The Case of Soft Drinks Processing Unit","authors":"Kottala Sriyogi","doi":"10.2139/SSRN.3060367","DOIUrl":"https://doi.org/10.2139/SSRN.3060367","url":null,"abstract":"The process capability studies have significant impact in investigating process variation which is important in achieving product quality characteristics. Its indices are to measure the inherent variability of a process and thus to improve the process performance radically. The main objective of this paper is to understand capability of the process being produced within specification of the soft drinks processing unit, a premier brands being marketed in India. A few selected critical parameters in soft drinks processing: concentration of gas volume, concentration of brix, torque of crock has been considered for this study. Assessed some relevant statistical parameters: short term capability, long term capability as a process capability indices perspective. For assessment we have used real time data of soft drinks bottling company which is located in state of Chhattisgarh, India. As our research output suggested reasons for variations in the process which is validated using ANOVA and also predicted Taguchi cost function, assessed also predicted waste monetarily this shall be used by organization for improving process parameters. This research work has substantially benefited the organization in understanding the various variations of selected critical parameters for achieving zero rejection.","PeriodicalId":369181,"journal":{"name":"Operations Strategy eJournal","volume":"110 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-06-02","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126372234","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Currently, in the economic literature on project management, issues of investment project management are most widely considered. Project management in modern management is also devoted to a lot of publications and scientific research. At the same time, the scientific literature mainly examines the individual forms and tools of regular monitoring of the company's project activity, and the opportunities for their combination and interaction are not fully disclosed. In our opinion, the first step towards solving this problem can be the definition of the concept of "regular monitoring mechanism" in relation to the project activities of the company. Although the concept of a "regular monitoring mechanism" for project activities has not been clearly defined in the economic literature, it is often found in corporate governance. The "regular monitoring mechanism" for project management can be defined as a set of tools, as well as rules through which systematic monitoring is carried out, oriented to the analysis and evaluation of the implementation and results of the project activities of the company. An effective project management system consists of: project management methodology, regular monitoring of key indicators, optimal organizational structure, use of modern informatization tools, clear allocation of responsibility and authority.
{"title":"Development of Monitoring System of Project Activity of Financial Organization","authors":"L. Spankulova, A. R. Kerimbaev","doi":"10.2139/ssrn.2964425","DOIUrl":"https://doi.org/10.2139/ssrn.2964425","url":null,"abstract":"Currently, in the economic literature on project management, issues of investment project management are most widely considered. Project management in modern management is also devoted to a lot of publications and scientific research. At the same time, the scientific literature mainly examines the individual forms and tools of regular monitoring of the company's project activity, and the opportunities for their combination and interaction are not fully disclosed. In our opinion, the first step towards solving this problem can be the definition of the concept of \"regular monitoring mechanism\" in relation to the project activities of the company. Although the concept of a \"regular monitoring mechanism\" for project activities has not been clearly defined in the economic literature, it is often found in corporate governance. The \"regular monitoring mechanism\" for project management can be defined as a set of tools, as well as rules through which systematic monitoring is carried out, oriented to the analysis and evaluation of the implementation and results of the project activities of the company. An effective project management system consists of: project management methodology, regular monitoring of key indicators, optimal organizational structure, use of modern informatization tools, clear allocation of responsibility and authority.","PeriodicalId":369181,"journal":{"name":"Operations Strategy eJournal","volume":"23 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2017-05-07","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131432909","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
This paper studies the strategy of sharing inventory information for a firm that sells two vertically differentiated products. The seller has private information on the aggregate inventory level and the inventory composition of two product variants. The seller credibly and discretionarily discloses inventory information to customers either fully or partially, i.e., disclosing the exact inventory of each product variant, the aggregate inventory level, or no information to customers. Customers form expectations of future availability and make rational purchasing decisions accordingly. In the disclosure literature, discretion usually leads to an unraveling result: sellers who learn favorable market information opt to disclose it, making full disclosure the equilibrium. This paper shows that aggregate inventory disclosure, i.e., partial disclosure, can be instead sustained as an ex post equilibrium. We demonstrate that inventory information aggregation arises when there is an ex post desire to reduce supply–d...
{"title":"Sharing Aggregate Inventory Information with Customers: Strategic Cross-Selling and Shortage Reduction","authors":"Ruomeng Cui, Hyoduk Shin","doi":"10.2139/ssrn.2716522","DOIUrl":"https://doi.org/10.2139/ssrn.2716522","url":null,"abstract":"This paper studies the strategy of sharing inventory information for a firm that sells two vertically differentiated products. The seller has private information on the aggregate inventory level and the inventory composition of two product variants. The seller credibly and discretionarily discloses inventory information to customers either fully or partially, i.e., disclosing the exact inventory of each product variant, the aggregate inventory level, or no information to customers. Customers form expectations of future availability and make rational purchasing decisions accordingly. In the disclosure literature, discretion usually leads to an unraveling result: sellers who learn favorable market information opt to disclose it, making full disclosure the equilibrium. This paper shows that aggregate inventory disclosure, i.e., partial disclosure, can be instead sustained as an ex post equilibrium. We demonstrate that inventory information aggregation arises when there is an ex post desire to reduce supply–d...","PeriodicalId":369181,"journal":{"name":"Operations Strategy eJournal","volume":"20 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2016-07-15","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"126738026","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Recent platforms, like Uber and Lyft, offer service to consumers via "self-scheduling" providers who decide for themselves how often to work. These platforms may charge consumers prices and pay providers wages that both adjust based on prevailing demand conditions. For example, Uber uses a "surge pricing" policy, which pays providers a fixed commission of its dynamic price. With a stylized model that yields analytical and numerical results, we study several pricing schemes that could be implemented on a service platform, including surge pricing. We find that the optimal contract substantially increases the platform's profit relative to contracts that have a fixed price or fixed wage or both, and although surge pricing is not optimal, it generally achieves nearly the optimal profit. Despite its merits for the platform, surge pricing has been criticized because of concerns for the welfare of providers and consumers. In our model, as labor becomes more expensive, providers and consumers are better off with surge pricing because providers are better utilized and consumers benefit both from lower prices during normal demand and expanded access to service during peak demand. We conclude, in contrast to popular criticism, that all stakeholders can benefit from the use of surge pricing on a platform with self-scheduling capacity. The e-companion is available at https://doi.org/10.1287/msom.2017.0618 .
{"title":"The Role of Surge Pricing on a Service Platform with Self-Scheduling Capacity","authors":"Gérard P. Cachon, Kaitlin M. Daniels, R. Lobel","doi":"10.2139/ssrn.2698192","DOIUrl":"https://doi.org/10.2139/ssrn.2698192","url":null,"abstract":"Recent platforms, like Uber and Lyft, offer service to consumers via \"self-scheduling\" providers who decide for themselves how often to work. These platforms may charge consumers prices and pay providers wages that both adjust based on prevailing demand conditions. For example, Uber uses a \"surge pricing\" policy, which pays providers a fixed commission of its dynamic price. With a stylized model that yields analytical and numerical results, we study several pricing schemes that could be implemented on a service platform, including surge pricing. We find that the optimal contract substantially increases the platform's profit relative to contracts that have a fixed price or fixed wage or both, and although surge pricing is not optimal, it generally achieves nearly the optimal profit. Despite its merits for the platform, surge pricing has been criticized because of concerns for the welfare of providers and consumers. In our model, as labor becomes more expensive, providers and consumers are better off with surge pricing because providers are better utilized and consumers benefit both from lower prices during normal demand and expanded access to service during peak demand. We conclude, in contrast to popular criticism, that all stakeholders can benefit from the use of surge pricing on a platform with self-scheduling capacity. \u0000 \u0000The e-companion is available at https://doi.org/10.1287/msom.2017.0618 .","PeriodicalId":369181,"journal":{"name":"Operations Strategy eJournal","volume":"21 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2016-06-14","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"131299949","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
Inter-connect standards increase choices; e.g., in cardiac pacemakers, the IS-1 standard enables the “pulse generator” from six manufacturers to be combined with the “lead set” from the other five to add up to thirty additional mixed-brand pacemakers. However, observed assortment additions are much smaller, which poses a puzzle since manufacturers in extant models welcome such additions to reduce price competition and increase variety. Instead, conflict with the value-added resellers (VARs) who create, and carry these additions is commonplace. We extend the literature with our analytical model that shows VARs limit the number and composition of additions to gain better upstream terms. This conflict is exacerbated when “keystone” components are relatively more decisive in influencing customer choices, so their exclusion from an addition represents a larger loss. Our empirical study of the multi-billion dollar auto paint refinish market finds assortment additions consistent with our predictions. We conclude with discussing the role of channel support programs to ameliorate these conflicts.
{"title":"Understanding Value-Added Resellers' Assortments of Multi-Component Systems","authors":"Sourav Ray, M. Bergen, G. John","doi":"10.2139/ssrn.2551059","DOIUrl":"https://doi.org/10.2139/ssrn.2551059","url":null,"abstract":"Inter-connect standards increase choices; e.g., in cardiac pacemakers, the IS-1 standard enables the “pulse generator” from six manufacturers to be combined with the “lead set” from the other five to add up to thirty additional mixed-brand pacemakers. However, observed assortment additions are much smaller, which poses a puzzle since manufacturers in extant models welcome such additions to reduce price competition and increase variety. Instead, conflict with the value-added resellers (VARs) who create, and carry these additions is commonplace. We extend the literature with our analytical model that shows VARs limit the number and composition of additions to gain better upstream terms. This conflict is exacerbated when “keystone” components are relatively more decisive in influencing customer choices, so their exclusion from an addition represents a larger loss. Our empirical study of the multi-billion dollar auto paint refinish market finds assortment additions consistent with our predictions. We conclude with discussing the role of channel support programs to ameliorate these conflicts.","PeriodicalId":369181,"journal":{"name":"Operations Strategy eJournal","volume":"40 1","pages":"0"},"PeriodicalIF":0.0,"publicationDate":"2016-06-09","publicationTypes":"Journal Article","fieldsOfStudy":null,"isOpenAccess":false,"openAccessPdf":"","citationCount":null,"resultStr":null,"platform":"Semanticscholar","paperid":"132765930","PeriodicalName":null,"FirstCategoryId":null,"ListUrlMain":null,"RegionNum":0,"RegionCategory":"","ArticlePicture":[],"TitleCN":null,"AbstractTextCN":null,"PMCID":"","EPubDate":null,"PubModel":null,"JCR":null,"JCRName":null,"Score":null,"Total":0}
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