A Numerical Study on the Effects of Trust in Supplier Development

Abstract

Supplier development constitutes one of the current tools to enhance supply chain performance. While most literature in this context focuses on the relationship between manufacturers and suppliers, supplier development also provides an opportunity for distinct manufacturers to collaborate in enhancing a joint supplier. This article proposes a model for the optimization of such joint supplier development programs, which incorporates the effects of trust in the manufacturer-to-manufacturer relationship. This article uses a model-predictive formulation to obtain optimal supplier development investment decisions to consider the strong dynamics of the markets. Thereby, the model is designed to be highly customizable to the needs and requirements of different companies. We analyzed the price development related to Mercedes’ A-Class cars and the cost development in the automotive sector over the last ten years in Germany. According to the obtained result, the proposed model shows a sensible behavior in including trust and its effects in supplier development, even when just applying a set of generalized rules. Moreover, the numeric experiments showed that aiming for a balanced mix of optimizing revenue and trust results in the highest revenue obtained by each partner.

Evolution Mechanism of Public–Private Partnership Project Trust from the Perspective of the Supply Chain

“…The moral hazard coefficient reflects the speculative behavior, wherein one party of the supply chain opts for active cooperation while the other party chooses negative cooperation. When the moral hazard coefficient is high, if one party of the cooperative entity chooses a positive cooperation strategy, the other party may engage in opportunistic behavior, leading to a negative market environment [50]. This study further concludes that an increase in the moral hazard coefficient of investment companies has a stronger negative impact on partnerships within the PPP supply chain.…”