Quick response in fast fashion omnichannel: exploring cost sharing effect

Abstract

Facing the rapid value decline issue in the fast fashion product (FFP) industry, improving quick response (QR) capability will allow a FFP supply chain to deliver products to customers faster and capture more value. On this basis, the value compensate through QR effort and the coordination strategy for a FFP supply chain in an omnichannel context is investigated. Characterizing the regularity of product value attenuation and also QR effort as the key decision variable in a FFP omnichannel, five differential game theoretical decision models are formulated, solved and compared, including: (i) without cost sharing model under a decentralized decision; (ii) manufacturer-led unilateral cost sharing model under a decentralized decision; (iii) retailer-led unilateral cost sharing model under a decentralized decision; (iv) bilateral cost sharing under a decentralized decision; (v) bilateral cost sharing model under a coordination decision. The corresponding numerical and sensitivity analyses are conducted on a calibrated real-world fast fashion product, and have found that, in order to achieve higher total profit, a cost sharing contract mechanism is better than a without cost sharing contract mechanism; a bilateral mechanism is better than a unilateral mechanism; and a coordination mechanism is better than a decentralized mechanism. The theoretical themes developed in this study imply that FFP omnichannel practitioners should put more resource and energy in coordinating their QR efforts in the supply chain. Importantly, they should collaborate closely to confine the cost of QR effort investment through a smart selection of the right QR technologies and a better utilization of these technologies to develop and support a highly sense-and-respond supply chain operation method.