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- Status: Published
In the first chapter, SBT contracts are analyzed through the lens of Agency Theory. By focusing on unique inventory ownership and risks considerations resulting from retailers managing supplier-owned inventory without bearing the cost of inventory shrinkage, the effect of SBT on inventory shrinkage is examined empirically using a data set from a packaged bakery manufacturer. The results show that inventory shrinkage tends to be higher under SBT contracts compared to traditional vendor-managed inventory (VMI) contracts. The study highlights a potential loss in efficiency in food supply chains reflected in higher shrinkage under SBT contracts.
The second chapter aims to identify conditions under which SBT contracts could be mutually beneficial for retailers and suppliers. Using stylized game theoretic models involving a retailer and a supplier of a product with limited shelf life, the study finds that, while inventory shrinkage may be amplified under SBT contracts compared to VMI contracts due to the decreased retailer’s incentive to manage inventory at the store, SBT could help suppliers minimize inventory overage and underage under high demand uncertainty. The integrative potential for SBT contracts, thus, lies in the trade-off between inventory shrinkage and forecasting accuracy.
In the third paper, the role of bargaining power on the performance of SBT contracts is examined. Based on the bargaining literature, it is hypothesized that perceptions of bargaining power can be reshaped in the bargaining process through concession tactics. The results of a negotiation experiment show that, while powerful retailers do tend to have the upper hand in negotiating SBT contracts, weak suppliers could ameliorate or even overcome retailer power by offering services as a concession in a way that the product-service bundle improves the value of their offerings in the eyes of the retailers.
This research project dives deep into the current aluminum can shortage in the craft beer industry. More specifically, this paper will explore how aluminum cans became the dominant beer package compared to glass bottles, give a brief comparison of the environmental and taste benefits of aluminum cans and glass bottles, determine what caused the current excess in demand for aluminum cans, and show how this shortage is currently affecting the brewing industry. Due to the unprecedented increase in demand for packaged beer and supply chain issues caused by the coronavirus pandemic, projections indicate that can manufacturers will not be able to meet industry demand for another three to four years. Although it may seem like an easy option for breweries to switch to packaging their beer in glass bottles until aluminum cans become more readily available, many breweries do not have this ability because they do not own a bottling machine. Cans are better for the environment and the taste of the beer than glass bottles, so most breweries bought only a canning machine to package their products. Because of this, however, many small breweries recently have been unable to package their products due to their inability to purchase cans from large can manufacturers. Considering this, this paper will also investigate potential beer packaging substitutes for aluminum and glass that could be implemented both now and in the coming years so breweries can still produce products during the current shortage and any that may occur in the future. However, a shortage caused by a worldwide pandemic, and the policy response that led to an excess in consumer demand that cannot be met by the current supply chain infrastructure, is not unique to the brewing industry. Therefore, the purpose of this research is to understand how supply chain induced shortages created by the coronavirus pandemic can affect an industry and how firms can work creatively to analyze options and overcome these obstacles.