Framework for cost-benefit-sharing in logistics networks

In this paper we present a comprehensive approach for an incentive-system in business- networks based on system-wide evaluation and distribution of costs and benefits. Among the most current trends in the Automotive Industry-networks are slow changes in the OEM's bargaining-power: formerly the OEM was the focal company but now suppliers are becoming increasingly powerful. We are convinced that OEM needs innovative coordination-mechanisms to cope with this development. Such a coordination-mechanism must be suited to coordinate polycentric and heterarchic organizations, encourage cooperative decision-making and create Win-Win-situations. We propose Cost-Benefit-Sharing in an integrated framework as such a coordination-mechanism. Cost-Benefit-Sharing is a systematic and system-oriented incentive-system that motivates companies in a network to participate in joint projects that do not benefit them directly. According to the systems idea, these projects must not be feasible for each individual company but feasible for the entire system. Then incentives can be provided for companies that do not benefit directly from these improvements. This reasoning leads to the development of an integrated framework for Cost-Benefit-Sharing. This paper first describes the requirements for the Cost-Benefit-Sharing-system. From this foundation we develop a two-level model for Cost-Benefit-Sharing. It consists of two main components, a structural and an operational module. Both are required to institutionalize the network and to execute the CBS-process. The stuctural level provides an institutional frame for the network. The network is no longer an informal, virtual organisation, but becomes a business entity with defined inputs and outputs. The detailled proceses and calculations for the CBS-process make up the operational level.