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Sustainability 2017, 9(1), 25; doi:10.3390/su9010025

Sustainability Analysis and Buy-Back Coordination in a Fashion Supply Chain with Price Competition and Demand Uncertainty

1
Sun Yat-sen Business School, Sun Yat-sen University, Guangzhou 510275, China
2
School of Business Administration, South China University of Technology, Guangzhou 510640, China
*
Author to whom correspondence should be addressed.
Academic Editors: Guowei Hua, T.C. Edwin Cheng, Feng Chen and Shouyang Wang
Received: 23 October 2016 / Revised: 27 November 2016 / Accepted: 21 December 2016 / Published: 26 December 2016
(This article belongs to the Special Issue Low Carbon Development for Emerging Markets)
View Full-Text   |   Download PDF [676 KB, uploaded 26 December 2016]   |  

Abstract

Supply chain sustainability has become significantly important in the fashion industry, and more and more fashion brands have invested in developing sustainable supply chains. We note that dual channel system comprising a brand-owned direct channel and retail outsourcing channel is quite common in the fashion industry, and in the latter, buy-back contract is popular between brands and retailers. Therefore, we build a stylized dual channel model with price competition and demand uncertainty to characterize the main properties of a fashion supply chain. Our foci are the sustainability analysis and the channel coordination mechanism. We first design a buy-back contract with return cost to coordinate the channel. We then study supply chain sustainability and examine the effect of two key influencing factors, i.e., price competition and demand uncertainty. Interestingly, we find that a fiercer price competition will lead to a more sustainable supply chain. From the perspective of supply chain managers, we conclude that (1) if managers care about environmental sustainability, fierce price competition is not a suggested strategy; (2) if managers care about economic sustainability, fierce price competition is an advantageous strategy. We also find that high demand uncertainty results in a less sustainable supply chain, in both an environmental and economic sustainability sense. View Full-Text
Keywords: supply chain sustainability; buy-back coordination; demand uncertainty; price competition; dual channel system supply chain sustainability; buy-back coordination; demand uncertainty; price competition; dual channel system
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Wang, F.; Zhuo, X.; Niu, B. Sustainability Analysis and Buy-Back Coordination in a Fashion Supply Chain with Price Competition and Demand Uncertainty. Sustainability 2017, 9, 25.

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