Supply Chain Coordination Based On Equivalent Efficiency Principle

With the development of science and technology and the change of market demand, competition between enterprises becomes increasingly fierce and gradually turned to competition between supply chains. However, enterprises in the supply chain make decisions dispersedly, their trend towards the profit cannot lead to supply chain harmonious operation. At present, the most widely used method is the contract, by changing the rules of trading between enterprises, so that the supply chain can achieve the maximum profit, while the members of enterprises can achieve optimal efficiency. However, the development trajectory of the contract shows that there are very few links between contracts, and many contracts have strong trade characteristics. Therefore, as the environment of supply chain becomes more and more complex, enterprises become aimless in the choice of the contract, moreover, the more complex the structure of the supply chain, the more difficult the application of the contract. Therefore, this paper developed a new perspective to the study of supply chain coordination from the perspective of equivalent efficiency principle.Firstly, this paper analyzed the adequacy of using equivalent efficiency principle to achieve supply chain coordination from the basic model of the secondary supply chain. We studied contract coordination process and results of the four representative contracts(wholesale price contract, revenue sharing contract, buy back contract and quantity flexibility contract), we learned that the contract is the analysis of enterprise and supply chain from the point of view of maximum profit, got the important parameter when member enterprises and the whole supply chain achieve maximum profit at the same time, such as optimal quantity and optimal wholesale price. Meanwhile, the supply chain is in a state of coordination when the production efficiency of supply chain members is equal according to equivalent efficiency principle, we also obtained important parameters by making the production efficiencies of the enterprise equal. Then, we found that the coordination result of equivalent efficiency principle is exactly the same as that of contract by comparing the parameters, which proved that equivalent efficiency principle is correct in the coordination of supply chain.Secondly, this paper analyzed the application of equivalent efficiency principle in the three-stage supply chain and the multi-stage supply chain. Also we tried to compare the parameters from the application of revenue sharing contract in the coordination of three-stage supply chain and the coordination of the three-stage supply chain through equivalent efficiency principle, Then, we researched on the efficiency characteristics of two-stage and three-stage supply chain coordination, extended the application of equivalent efficiency principle to K-stage supply chain coordination.Finally, this paper studied that the existing supply chain network coordination methods is transforming the optimization problem into a variational inequality problem, and then solve the problem by using modified projection method and so on. But we can directly list the equation by using the idea of equivalent efficiency principle. We analyzed the two ideas by examples, and obtained equilibrium solutions, and the solutions are the same. Therefore, equivalent efficiency principle showed a great advantage in the complex supply chain network.The study in this paper added a new idea of equivalent efficiency principle to the field of supply chain coordination. It not only enriched the research content in the field of coordination, but also provided a more effective and practical method for complex supply chain coordination.