Dynamic Quality Models and Games in Digital Supply Chains

Inhaltsverzeichnis

1. Frontmatter

2. Chapter 1. New Dynamic Models for Quality Management in Digital Supply Chains

   Pietro De Giovanni

   Abstract

   This chapter reviews the differential equations used most frequently in the literature to investigate dynamic quality models. Two major quality dimensions have been studied: design and conformance quality. Although these two quality dimensions have received extensive attention in the past, we have identified some serious limitations with them, most likely linked to the current digital transformation. We provide suggestions for how to enrich the current models with new ingredients linked to the digital transformation (e.g., Industry 4.0 technologies). Therefore, we provide new research avenues to further investigate quality in Digital Supply Chains.

3. Chapter 2. Digitalization in Supply Chain Quality Management: The Power of Knowledge Creation

   Pietro De Giovanni

   Abstract

   This chapter demonstrates the benefits that supply chains and operations management acquire when quality management is investigated dynamically within the context of digital transformation. To do so, we link the benefits of investing in quality as a matter of decreasing the marginal production cost. For example, design quality allows firms to design more efficient products, translating into cheaper goods for consumers. We adopt a knowledge accumulation and management approach, which is typical of digital transformation. For example, artificial intelligence systems have the characteristic of learning. This process can be managed through a dynamic equation characterized by memory and depending on the quality investments. Therefore, the design quality dynamics play the role of knowledge accumulator. The results attained are of significance for both practitioners and theorists. The chapter shows the economic benefits obtainable when considering quality management as a digital supply chain issue and further reveals the effectiveness of investigating it by means of dynamic tools.

4. Chapter 3. Digitalization, Quality, and Supply Chain Cooperation

   Pietro De Giovanni

   Abstract

   This chapter considers a Digital Supply Chain with a single manufacturer and a single retailer, where both advertising and quality contribute to the build-up of the consumers’ goodwill to purchase digital goods. Investments in quality allow the manufacturer to produce and sell smart, connected, and autonomous goods. In a non-cooperative scenario, the retailer controls the price and the advertising while the manufacturer controls the design quality efforts. Although improving quality contributes positively to goodwill, it also increases production costs, resulting in a reduction of the manufacturer’s profit. In a cooperative scenario, the manufacturer supports the retailer’s advertising while abandoning the design quality improvement strategy. Therefore, the manufacturer prefers to invest less in digital supply chain applications and move to traditional cooperation on advertising. We investigate the conditions under which a cooperative program is beneficial when such a trade-off occurs. Our results show that a cooperative program is always successful if operational inefficiency is high. When the operational inefficiency and the quality effectiveness are both low, a cooperative program only benefits the retailer. In the ideal situation of high quality effectiveness and low operational inefficiency, both players prefer to focus on digital transformation tools rather than investing in advertising strategies.

5. Chapter 4. Digital Supply Chain Through IoT, Design Quality, and Circular Economy

   Pietro De Giovanni

   Abstract

   We consider a digital closed-loop supply chain (CLSC) single Original Equipment Manufacturer (OEM) and a single retailer. The OEM opts for the adoption of either a value or a waste-stream approach to closing the loop, while optimally deciding the wholesale price and the design quality strategies; the retailer focuses on marketing strategies and optimally controls her price. The quality expenditures contribute to knowledge created over the digital Supply Chain (SC) regarding the design quality performance, which plays a dual role leading to higher sales and returns’ residual value as well as to higher marginal production costs and lower return rate. The OEM solves this dual trade-off by evaluating the convenience of adopting either a waste-stream approach or a value-stream approach. In the former case, it makes no investments in any circular economy programs; in the latter case, he controls the return rate by investing in IoT technology within the context of circular economy programs. Our findings suggest that the shift from a waste to a value-stream approach leads to a payoff-Pareto-improving situation in a decentralized CLSC: Because the game is played á la Stackelberg, a separation occurs between operational strategies and the market size, which is determined by the pricing strategy. In contrast, this shift is not always convenient in a centralized CLSC, where the decision maker solves the trade-offs that quality entails only when the passive return rate and/or the remanufacturing efficiency are sufficiently high.

6. Chapter 5. Smart Contracts and Blockchain for Supply Chain Quality Management

   Pietro De Giovanni

   Abstract

   This chapter proposes a digital transformation game of supply chain quality management being inspired by the food supply chain, with a focus on the ham industry. Consumers’ willingness to visit a retailer’s store and purchase ham of a certain brand (goodwill) depends on the difference between the product quality and the consumers’ reference quality as well as on price. In the ham industry, both quality and price determine consumers’ purchasing intentions while firms agree on the best contractual configuration to adopt by choosing between either a wholesale price contract (WPC) or a revenue sharing contract (RSC). The parameter contracts are defined through a blockchain technology, which finds the best way to coordinate a supply chain. Also, the blockchain ensures the product quality, visibility, and traceability. Our findings demonstrate that supply chain coordination depends on three major ingredients: the consumers’ quality evaluation, the price impact on the stock of goodwill, and the sharing agreement that firms negotiate. When the first two are inactive, firms coordinate through an RSC in most of the cases, whose parameters are defined by a blockchain, leading to the use of smart contracts. Instead, when consumers’ evaluation and/or the price impact on goodwill play a role, the RSC seldom leads to coordination and the firms’ preferences change completely. In fact, the firms’ strategies become more short-term oriented, focusing on sales rather than the accumulation of goodwill. Although the RSC leads to lower prices and larger sales, it considerably lowers the firms’ profits, highlighting serious doubts about its possible application in some supply chain contexts, although a blockchain technology is used.

7. Chapter 6. Conclusions and Future Research Directions

   Pietro De Giovanni

   Abstract

   This chapter briefly describes the path that reader made when reading this book. It leaves some additional reflections and inspirations on how to carry out modern research in quality management by capturing all advantages and drawbacks of digital transformation in Supply Chain management.

8. Backmatter