Multi-Channel Supply Chain Management in the E -Business Era
Chiang, Wei-Yu
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Permalink
https://hdl.handle.net/2142/84513
Description
Title
Multi-Channel Supply Chain Management in the E -Business Era
Author(s)
Chiang, Wei-Yu
Issue Date
2002
Doctoral Committee Chair(s)
James D. Hess
Chhajed, Dilip
Department of Study
Business Administration
Discipline
Business Administration
Degree Granting Institution
University of Illinois at Urbana-Champaign
Degree Name
Ph.D.
Degree Level
Dissertation
Keyword(s)
Economics, Commerce-Business
Language
eng
Abstract
The objective of this thesis is to provide conceptual frameworks for supply chain related issues in addressing multi-channel management problems in the e-business era. First, we develop a model to conceptualize the impact of customers' attitudes toward direct versus traditional shopping on supply chain design. Customers' acceptance of the web-based channel can be weak enough that a vertically integrated manufacturer-distributor would not engage in direct sales, but strong enough that an independent manufacturer would open its own direct channel to compete with the retailers. Specifically, we construct a price-setting game between a manufacturer and its profit-maximizing independent retailer. We find that direct marketing helps the manufacturer improve overall profitability of the channel by reducing the degree of inefficient price double-marginalization. While created and operated by the manufacturer to constrain the retailer's pricing behavior, the web-based direct channel may not always be detrimental to the retailer and can function as a channel coordination mechanism which makes both entities better off. Then, as understanding customers' acceptance of the web-based channel appears crucial for multi-channel management, we propose a multi-attribute attitude model to investigate the customers' attitudes toward the web stores relative to the traditional brick-and-mortar retail stores. We conduct an empirical survey and find that in general, products are less acceptable at the web stores than at the traditional store. We also find that non-student shoppers appear to be more positive toward online shopping. Nevertheless, the results from our survey indicate that the gender effect and the experience effect on customers' attitudes toward the web stores are not statistically significant. Finally, we present an inventory model based on queuing theories and define a cost structure which captures the inventory-related operational costs to evaluate the performance a two-echelon dual-channel supply system. Several insightful results are generalized from the parametric analysis based on the theoretical model developed. We also examine the performance of two other possible channel strategies: retail-only and direct-only strategies. Computational outcomes indicate that the dual-channel outperforms the other two channel strategies in most cases, and the cost reductions realized by the flexibility of the dual-channel system could be very significant.
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