Shipment consolidation in assembly supply chains: Delivery delay, competition dynamics and resilience analysis

Abstract

In practice, it is common for a brand to procure multiple components overseas and then assemble them into end products (even under recent threats of random shocks). Since most deliveries are conducted by maritime shipping companies and delivery delay is frequently confronted nowadays, shipment consolidation has been widely used to lower the probability of delivery delay, besides the benefit of delivery cost savings. In this paper, we investigate a multi-stakeholder system consisting of a local brand, one/two shipping companies, a global brand sourcing components overseas and two complementary component suppliers. We further develop supply chain resilience indexes to evaluate the cons and pros of the global brand's shipment consolidation strategy. We reveal that market competition plays a key role and the competition intensity has a non-monotonic effect on the global brand's production delay disadvantage and the cost-saving advantage under shipment consolidation strategy. Indeed, shipment consolidation enhances the global brand's supply chain resilience in most cases, but this strategy may be inefficient when the delivery delay probability is high. We further show that shipment consolidation can induce Pareto improvement situations for the stakeholders in the sense of supply chain resilience and profitability enhancement.