Dynamic and Seamless Integration of Production, Logistics and Traffic by Eberhard Abele Manfred Boltze & Hans-Christian Pfohl

Author:Eberhard Abele, Manfred Boltze & Hans-Christian Pfohl
Language: eng
Format: epub
Publisher: Springer International Publishing, Cham

Research Background

Revenue-Sharing Contracts in Business Relationships

The focus of the chapter is the setting of actors in the area of production, logistics and traffic which are already in a business relationship. Within this relationship, the logistician fulfils the task assigned by the customer (here production) (Wilding and Juriado 2004). So, a very important point in the business relationship is the trust of the partners in the binding commitment they arranged. Knemeyer and Murphy noted that a higher level of trust in the relationship exhibits a significantly higher perception of the operational performance (Knemeyer and Murphy 2004) Reciprocal investments are often part of an effective logistics service relationship (Lambert et al. 1999).

In this context, revenue-sharing contracts can be used to share information for an enhanced performance (Rhee et al. 2010). Revenue-sharing contracts were first introduced in the video rental industry in the 1990s. Due to a lower purchase price including a simple reward agreement (revenue share) with the film producers, the rental company Blockbuster was able to stock more films. As a result, they increased their turnover and both of them benefited from the revenue-sharing agreement (Cachon and Lariviere 2001). In comparison, the familiar sounding gain sharing used in employment relationships comprises a variety of incentives for a performance-based reward (Welbourne and Mejia Gomez 1995). Mostly, the literature concerning revenue-sharing contracts is focused on the coordination of supply chains (Cachon and Lariviere 2005; Giannoccaro and Pontrandolfo 2004; Yao et al. 2008b). The main topic of the papers is the design of the contracts. Especially, the wholesale price and the retailers’ profit quota are continuously addressed as the content of these contracts (Dana and Spier 2001; Giannoccaro and Pontrandolfo 2009). An obstacle to deploy the full capability of the revenue-sharing contracts is the reluctant disclosure of information (Giannoccaro and Pontrandolfo 2009). So, the information sharing among the fields of PLT is crucial in the business relationship. In this research field, numerical operation models are commonly used as the main method regarding revenue sharing (Rhee et al. 2010; Lakhal 2006). To describe the strategic choice behaviour, the game theory, in terms of e.g. Stackelberg, is also applied (Chakravarty and Werner 2011; Yao et al. 2008a). Even more important is that there is marginal empirical evaluation of the application of the revenue-sharing contracts in the literature. Mostly, the buyer and supplier relationship is analysed in the papers (Rhee et al. 2010; Cachon and Lariviere 2005). Regarding logistics, just one publication was ascertained, which deals with the revenue share (Liu et al. 2013).

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