A production-distribution coordinating model for third party logistics partnership

Recently, independent third party logistics providers who perform all or part of the firm's product distribution function allow many manufacturers to focus on its core competencies rather than on the distribution expertise. In this situation, collaboration between a manufacturer and a third party logistics provider is indispensable for successful production-distribution coordination. However, while information must be shared between them for coordination purpose, they hope to communicate with each other using minimum proprietary information regarding their own business. For efficient coordination of this type of supply chain, a new decentralized coordinating model based on minimum information sharing is proposed. This decentralized coordinating model is implemented on a multi-agent system. The preliminary result with a numerical example shows a very promising performance of the proposed model, when compared with that of an ideal centralized model.