Supply Chain Coordination in Buyer Centric
ARTICLE IN PRESS
Int. J. Production Economics 92 (2004) 113–124
Supply chain coordination in buyer centric B2B electronic markets
Charles X. Wanga,*, Michel Benarochb a School of Management, State University of New York at Buffalo, Buffalo, NY 14260, USA b School of Management, Syracuse University, Syracuse, NY 13210, USA Received 1 September 2002; accepted 1 September 2003
Abstract While over the past 4 years more than 1000 B2B electronic markets that cater to a wide spectrum of industries have been established, many of them have already disappeared. This reality can be explained by several factors, two of which we think are important: the transaction fees that owners of these markets charge participants, and the supply chain coordination mechanisms that these markets do (or actually do not) facilitate. In this paper, we take the viewpoint of supply chain coordination to analyze the decision of suppliers and buyers to do or not do business in electronic markets while selling perishable products with random demand. r 2003 Elsevier B.V. All rights reserved.
Keywords: Electronic markets; Newsvendor model; Supply chain contracts; Returns policy
1. Introduction Recently we have seen the fast development of Business-to-Business (B2B) e-commerce. Jupiter Communications estimates that by 2005, the expected online B2B transactions of goods in the US would amount to $6.3 trillion out of a total of $15.1 trillion. Internet-based electronic markets (emarkets) play a particularly important role in B2B e-commerce; they are expected to produce an online transaction volume of over $6 trillion by 2004 (Bermudex et al., 2000). Currently there are over 1000 established B2B e-markets catering to a wide spectrum of industries such as aerospace,
*Corresponding author. Tel.: +1-716-645-3412; fax: +1716-645-6117. E-mail address: cxwang@buffalo.edu (C.X. Wang).
agriculture, apparel, automotive parts, energy and chemicals, high technology, food and beverages,
Int. J. Production Economics 92 (2004) 113–124
Supply chain coordination in buyer centric B2B electronic markets
Charles X. Wanga,*, Michel Benarochb a School of Management, State University of New York at Buffalo, Buffalo, NY 14260, USA b School of Management, Syracuse University, Syracuse, NY 13210, USA Received 1 September 2002; accepted 1 September 2003
Abstract While over the past 4 years more than 1000 B2B electronic markets that cater to a wide spectrum of industries have been established, many of them have already disappeared. This reality can be explained by several factors, two of which we think are important: the transaction fees that owners of these markets charge participants, and the supply chain coordination mechanisms that these markets do (or actually do not) facilitate. In this paper, we take the viewpoint of supply chain coordination to analyze the decision of suppliers and buyers to do or not do business in electronic markets while selling perishable products with random demand. r 2003 Elsevier B.V. All rights reserved.
Keywords: Electronic markets; Newsvendor model; Supply chain contracts; Returns policy
1. Introduction Recently we have seen the fast development of Business-to-Business (B2B) e-commerce. Jupiter Communications estimates that by 2005, the expected online B2B transactions of goods in the US would amount to $6.3 trillion out of a total of $15.1 trillion. Internet-based electronic markets (emarkets) play a particularly important role in B2B e-commerce; they are expected to produce an online transaction volume of over $6 trillion by 2004 (Bermudex et al., 2000). Currently there are over 1000 established B2B e-markets catering to a wide spectrum of industries such as aerospace,
*Corresponding author. Tel.: +1-716-645-3412; fax: +1716-645-6117. E-mail address: cxwang@buffalo.edu (C.X. Wang).
agriculture, apparel, automotive parts, energy and chemicals, high technology, food and beverages,
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