Collaborative planning with benefit balancing in Dynamic Supply Loops

The paper discusses collaboration and cooperation in supply networks and presents a planning mechanism whose assumptions are motivated by the automotive industry. The mechanism called Dynamic Supply Loops (DSL) is decentralized, warrants local planning autonomy and works with a relatively simple information exchange protocol between immediate partners in a supply chain. By balancing the benefit of cooperation between the partners, DSL also provides incentive to give up local optima against a globally more beneficial solution. DSL is open to embed standard planning techniques and novel incentive schemes alike. Simulation results on a multi-echelon multi-period model show that DSL outperforms traditional upstream planning and facilitates channel coordination.