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| Schemes to Align Supply Chain Members' Incentives for the Investment of RFID Technology: Revenue Sharing vs. Wholesale Price Negotiation |
| YU Mingqian1, LUO Jianwen1, YANG Huixiao2 |
1.Antai College of Economics and Management, Shanghai Jiao Tong University
2.School of Management, Zhejiang University of Technology |
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Abstract: Most existing research shows that supply chain members' incentives to employ Radio-Frequency Identification (RFID) technology are perfectly aligned. They assume that both the wholesale prices before and after RFID adoption can be freely set in the same way. Yet, the members of supply chains may reach an exogenous wholesale price before adopting RFID technology. We study a supply chain with a single manufacturer (she) and a single retailer (he). The members can adopt some incentive alignment schemes, such as sharing the sales revenue (RS), renegotiating the wholesale price (WR), or using both incentive policies (B). Our results show that under both WR and B, investing in RFID technology can bring win-win results for both firms when the manufacturer holds moderate negotiating power and the cost of RFID tags is low, but firms' incentives for RFID investment are not always aligned. Besides, when the initial wholesale price is high enough, if the negotiation power of the manufacturer is strong enough, both the manufacturer and the retailer prefer WR to N and B to RS. When the initial wholesale price is low, if the negotiation power of the manufacturer is moderate, both parties prefer RS to WR. Finally, if the negotiation power of the manufacturer is strong, the profit of the supply chain system under B is higher than that under WR; if the bargaining power of manufacturer is medium or low, the profit of supply chain system under B or WR is higher than that under N and RS.
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Received: 05 January 2022
Published: 15 August 2022
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2022, Vol. 42 
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