Study On Profit Allocation Mechanism And Economic Cooperative Relationship In Downstream Supply Chain

Nowadays, many enterprises implement supply chain management strategy to gain more profits and sustainable competitive advantage. But the fact is that joining into the cooperative supply chain is not necessary to achieve the Win-Win results. Because the problems of who have the more channel power, and how to allocate the cooperative profit in supply chain are not solved, which have more effect on the stability and evolution of supply chain. However, the existed theory and practice about the profit allocation mechanism and economic cooperative relationship in supply chain haven't become the consolidate system and there are many meaningful knowledge in these fields to research. The paper aims to find out an approach and mechanism about cooperative profit allocation and the theory of economic cooperative economic relationship in downstream supply chain to improve the stability and development of the supply chain.Firstly, the role and position of core enterprise in the process of the backward members to form the supply chain is analyzed, and the economic cooperative economic relationships of core enterprise, non-core enterprise and other members in supply chain are discussed. Meanwhile, the elements which have an effect on the position of core enterprise in supply chain and the influence path to economic cooperative economic relationship are studied. Then the economic relationships of channel power, channel confliction and cooperative members in distribution channel are discussed. The definition, characteritics and role of profit allocation mechanism are studied.Secondly, the general model of economic cooperative economic relationship of the two-level members in downstream "bidirectional and principal & subordinate" Supply Chain is set up and solved using game theory. And based on this, the change trend and scope of the profit allocated and other parameters caused by the change of parameters in economic cooperative relationship are discussed. At last, we illustrate the model through a case and an example to testify its feasibility and validity.Thirdly, on the basis which basic requirements of the profit distribution mechanism have been satisfied, the model of cooperative profit allocation mechanism is developed for the members in the downstream supply chain. The model of profit allocation mechanism consists of two main parts: the first is the structural coefficient of profit allocation, which is the main allocation playing a role of "quality change"; the second is the operational coefficient of profit allocation, which is divide of the rebate an feedback coefficient based on the different situation playing a role of "quantity change". Then the function relations among the operational, profit and rebate distribution (feedback coefficient) are revealed in the end. And the process of cooperative profit allocation is proposed.Fourthly, economic analysis has been made to the cost improvements of the downstream members in supply chain. The paper discusses the degree of effect which its (the downstream members in supply chain) cost changes take to the downstream members, overall profits of the supply chain and related variable parameters, and conduct a comparative analysis; and the external effects caused by the cost improved are discussed. At last, the strategy of reducing of supply chain operating costs and improving the efficiency and effectiveness of supply chain is given. The reasons why the core members try their best to support other members to decrease the cost are discussed.Finally, a scientific and rational cooperative profit distribution model and its cooperative profit distribution mechanism model are developed for the members in the downstream "multi-directional and principal-subordinate" three-level supply chain. The variety rules of the profit allocation coefficient of manufacturers, wholesalers, retailers and the entire distribution channels are further studied. The value of profit transferred is work out, and all the models are illustrated through an example to testify their feasibility and validity. Through the comperative, the fact is proposed that with the same condition, the longer of the supply chain is, the more complexity of supply chain management, the more important of cooperation in supply chain, the extend to decrease cost and achieve profit is larger.