Comprehensive gain sharing maximizing satisfaction in supply chain collaborations

Abstract

A major challenge in supply chain collaborations is the fair allocation of the coalition gain. In this paper, a comprehensive, yet simple gain sharing system with a special focus on the maximization of the parties’ satisfaction using a minimax regret approach is developed. The gain sharing system is applied to a vertical SCC including one manufacturer, one logistics service provide and one retailer in the Dutch fast moving consumer goods industry. Results identify a fair and robust gain share allocation, which maximizes the parties’ satisfaction and thus increases the probability of sustainable SCCs. We provide theoretical framework, which can be adapted, if necessary, to a particular SCC by using more practical satisfaction functions.

Keywords:

supply chain collaboration, FMCG industry, gain sharing, satisfaction, minimax regret