Propagation Mechanisms And Control Strategies For Bakruptcy Risk In Supply Chain Networks

The concept of supply chain management has been popular in various industries since the 1990s. By effectively coordinating and controlling the flows of material, information and capital, supply chain management can improve the operational efficiency of member firms in the supply chain. On the other hand, however, firms in a supply chain are becoming increasingly interdependent so that one firm's bankruptcy may cause other member firms to get into financial difficulties, leading to the phenomenon of bankruptcy propagation or even bankruptcy avalanche.Most of the researches in supply chain management have focused on the coordination and collaboration of the behaviors of member firms so as to improve the operational efficiency of the whole supply chain. However, problems related to impacts of various linkages between supply chain members on the occurrence and propagation of financial risks (i.e., financial distress, bankruptcy) in supply chain and methods for mitigating such risks have drawn little attention. This paper is focused on investigating mechanisms of bankruptcy occurrence and bankruptcy propagation in supply chain networks where member firms interact under various contracts, and developing strategies for reducing the risks of bankruptcy occurrence and bankruptcy propagation in supply chain networks.The organization of the thesis is as follows:The first chapter introduces the background of this thesis, and reviews the researches on bankruptcy propagation, as well as the literature in supply chain management that is related to the coordination and collaboration between supply chain members. At the end of this chapter, main contents and research methods of this thesis are described.In Chapter 2, for a simple two-echelon supply chain that consists of a manufacturer and a retailer, the impacts of the retailer's financial distress on the manufacturer's operational and financial status are firstly investigated. Then combined with the manufacturer's decision behavior, the propagation characteristics of financial distress from the retailer to the manufacturer are analyzed.In Chapter 3, the mechanisms of bankruptcy propagation in two kinds of serial supply chains (make-to-order and make-to-stock) are investigated, then, based on various supply chain coordinating contracts (e.g., buy back contract, revenue sharing contract, etc) and supply chain collaborating mechanisms (information sharing or vendor managed inventory), the methods for reducing bankruptcy occurrence and propagation in these supply chains are also proposed.In Chapter 4, we build a supply chain network that is composed of multiple manufacturers and multiple retailers to investigate the operational causes of bankruptcy occurrence and bankruptcy propagation in complex supply chain networks. Through simulation experiments, impacts of various operational parameters and decisions, such as horizontal competition among retailers, order allocation strategies of retailers, characteristics of market demand and number of retailers, on bankruptcy occurrence and bankruptcy propagation are studied.Consecutively, in Chapter 5, we further develop methods for reducing bankruptcy propagation in complex supply chain networks. By examining the effectiveness of some typical contractual incentive schemes, including quantity discount, revenue sharing, sales rebate, quantity flexibility, buy back and price discount contracts, in mitigating bankruptcy propagation, the strategies for controlling the risks of bankruptcy occurrence and bankruptcy propagation are proposed.Innovations and contributions of this thesis are briefly summarized as follows:(1) Mechanisms of bankruptcy propagation in various kinds of serial supply chains are analyzed from the operational perspective, and then the methods for reducing bankruptcy occurrence and bankruptcy propagation in serial supply chains are proposed.(2) By building a supply chain network that consist of multiple upstream manufacturers and multiple downstream retailers, impacts of various operational parameters and decisions, as well as financial parameters and decisions, on bankruptcy risk and its propagation mechanisms in complex supply chain networks are also studied.(3) Effectiveness of some typical contractual incentive schemes, including quantity discount, revenue sharing, sales rebate, quantity flexibility, buy back and price discount contracts, in mitigating bankruptcy propagation in complex supply chain networks is examined, which shed light on the control strategies for bankruptcy propagation in complex supply chain networks.