Coordinating Contracts For A Third Party Logistics Service Provider And A Client Enterprise

With the globalization of businesses, the consequent competitive pressures and the constantly changing environment, many organizations have progressively sought to outsource their logistics functions as successful strategic tools. Outsourcing their logistics functions to third party logistics service providers (TPLSP), these organizations mainly gain two advantages, including reducing or saving logistics cost and improving logistics service levels. From the two perspectives, this thesis studies how to design effective contracts to coordinate the benefit conflicts between a TPLSP and a client enterprise.Firstly, under the assumption that there is a linear relative between the product price and the market demand for the client enterprise's product, a shared-savings contract is designed to coordinate the benefit conflicts in that the TPLSP and the client enterprise exert joint efforts to save logistics costs. And a dynamic game model is developed to demonstrate that the shared-savings contract makes an effective intrinsic incentive mechanism which drives both sides to exert joint efforts to save the logistics costs, and the shared-savings contract is better than a usual logistics outsource contract. In addition, a corresponding example is presented to illustrate that the shared-savings contract has good properties and high efficiency.Secondly, on the base of the former study, considering that the market demand for the client enterprise's product is influenced not only by the product price but also by the factors, such as the dominative revenue and consumption priorities of consumers and season change, the assumption that the market demand is stochastic is provided to better simulate and explain actual things. Under the assumption, the problem that how a shared-savings contract coordinates the benefit conflicts in that the TPLSP and the client enterprise exert joint efforts to save logistics costs is studied. And a dynamic game model is developed to demonstrate that the shared-savings contract can effectively coordinate the benefit conflicts, achieve a win-win outcome and improve the profit of the system. However, the effort levels of both sides, the order inventory of the client enterprise and the optimal profit of the system under the shared-savings contract cannot achieve the optimal levels under centralized making decision mode, i.e., the shared-savings contract cannot achieve full coordination. Moreover, a corresponding example is presented to illustrate the conclusions. Finally, this thesis studies the coordinating contract design problem for the TPLSP and the client enterprise with logistics service levels dependent market demand. When the market demand for the client enterprise's product is not influenced by logistics service levels that the TPLSP provides, the games between both sides lead to that the order inventory of the client enterprise under the usual logistics outsource contract is less than that under centralized making decision mode, i.e., inventory distortion problem. To resolve the problem, a properly designed revenue-sharing contract is designed. When contract parameters satisfy some conditions, the revenue-sharing contract can not only coordinate inventory distortion but also achieve full channel coordination and a win-win outcome. When the market demand is influenced by logistics service levels, the games between both sides bring that logistics service levels that the TPLSP provides and the order inventory of the client enterprise are less than those under centralized making decision mode, i.e., the distortions of inventory and logistics service levels. To resolve the problem, a properly designed combination contract with revenue-sharing and service-cost-sharing is designed. And a dynamic game model is developed to demonstrate that the combination contract can achieve full channel coordination and a win-win outcome as well as coordinate the distortions of inventory and logistics service levels. Further more, a corresponding example is presented to illustrate the good properties and high efficiency of the above coordinating contracts.