The influences of demand disruption on logistics service supply chain coordination: A comparison of three coordination modes

Abstract

There are few studies on the influences of demand disruption on logistics service supply chain (LSSC) coordination in previous literature. Therefore, this paper will discuss an LSSC consisting of a logistics service integrator (LSI) and two functional logistics service providers (FLSPs) with demand disruption. LSI procures the same kind of logistics service capacity from these two FLSPs, sets a unified price and then sells to service market. The demand depends on retail price and service effort level. As different FLSPs may achieve different effort levels, which bring them different order quantities, there is competition on effort level between them. With all these conditions considered, three coordination modes (i.e. decentralized decision-making mode, supplier alliance decision-making mode and centralized decision-making mode) are established and compared. On this basis, demand disruption is taken into consideration and the corresponding decision changes are observed. Some interesting findings are obtained. For example, from the view of service effort level, supplier alliance decision-making mode makes FLSPs achieve lower effort level than decentralized decision-making mode does; from the view of decision robustness, when demand disruption occurs frequently, decisions made under supplier alliance decision-making mode changes less than those made under decentralized decision-making mode. At last, model application is deployed to verify the conclusions with a practical case of SND Logistics Company in China.