Coordination Mechanism of Supply Chain considering the Bullwhip Effect under Digital Technologies

Abstract

The bullwhip effect (BWE) and stochastic demand coexist in supply chain operation management, which leads to a lower performance. In recent years, with the development of blockchain, cloud computing, big data, and other digital technologies (DTs), many enterprises hope to use them to weaken the BWE and improve profits. This paper focuses on improving the application level of DTs in the supply chain through coordination for enhancing the performance. We consider a supply chain with one-supplier-one-retailer and coordinate it with the cost-sharing contract and revenue-cost-sharing contract (the improved contract). We find out that the retailer and supplier did not always have the willingness to use DTs to alleviate the BWE. Even if they have the intention to use DTs, their ideal application level is not the same. After coordination, both the application level of DTs and the performance of the supply chain are improved, and we find that the improved contract has a better coordination effect. Finally, we validate our model by numerical simulation.