Research On The Incentive Mechanism Of Supplier In Supply Chain Quality Management

In 21^st century, the competitive environment of enterprises has been changed greatly. It is a challenge to the traditional quality management modes. So supply chain quality management mode comes into being, and has shown its great competency and superiority. Supply chain quality management is an integral management idea which emphasizes on collaboration, namely the quality of product and service needs all members of supply chain to guarantee and carry out together. Owing to division of ownership, while member enterprise in supply chain is pursuing common quality goal, some conflicts of local interest still exist. Manufacturer as core enterprise must set up effective restraint and incentive mechanism so as to coordinate the relationship with supplier, and improve the efficiency of quality management. Therefore the design of supplier's incentive mechanism is a key issue. This paper is focused on supplier's incentive question from quality warranty contract and reputation. The former as explicit incentive mechanism can restrain the supplier's behavior effectively and produce negative incentive. The latter as implicit incentive mechanism can make the supplier obtain long-term interests and produce positive incentive. In the design of quality warranty contract, this paper is different from the past study in which not only the supplier takes unobserved action, but also the supply and the manufacturer each do, and proves that optimal contracts exist. The results offer the theory reference to negotiate for supply contract. The study on reputation is not merely confined to play between the supplier and the manufacturer in infinitely repeated games. Moreover, in finitely repeated games with incomplete information, it is proved that there exists reputation implicit incentive mechanism, some conditions for effective incentive are derived, and the design methods of reputation mechanism are presented. The conclusions provide the theory support for possibility and certainty of establishing partnership among enterprises in supply chain.