The impact of product characteristics and innovativeness on the benefits of collaboration

Abstract

Horizontal collaboration is a promising avenue to improve the efficiency of logistical operations. However, the benefits strongly depend on the degree of fit between partners. In this paper, we analyse the impact of the partners’ product characteristics on those benefits, focusing on their innovativeness. Companies supplying functional versus innovative products have different requirements in supply chain efficiency and responsiveness, which impacts the benefits that can be reached with a given partner. To assess the collaborative benefits, we use a location-inventory model accounting for the partners’ individual interests and the costs revealing the responsiveness level of the supply chain (facilities, transportation, cycle inventory, safety stocks and stock-outs). The model offers a set of Pareto-optimal solutions balancing the partners’ costs to support the selection and negotiation process. Finally, we perform numerical experiments in which the partners supply products with identical or different levels of innovativeness and with various demand volumes, leading to valuable managerial insights on the impact of product characteristics on collaborative benefits.