Making supply chains resilient — A combinatorial auctions approach to capacity sharing in collaborative supply chains
Resilience is critical
In today's complex supply chains, managing changes and disruptions are critical to ensure the flow of products from raw materials to the consumer. As we have seen with the COVID-19 pandemic, large disruptions can have significant impact on supply chains, however, smaller variations in supply and demand affect efficiency and sustainability of operations as well. These include seasonal variations and gradual shifts in demand, failure of production facilities, and reduced production capacity, e.g., due to labour shortages, etc. As supply chains become more complex the likelihood of variations and disruptions affecting the flow of products increases. To efficiently manage uncertainty, resilience needs to be built in as an inherent part of supply chains.
In the automotive industry, the usage of common parts is accelerated by the increase in the demand for electric vehicles, mass customisation, and the introduction of car sharing services. This reduces the need for parts inventory and the lead time of supply of parts. Traditionally, however, transactions between parties in the supply chain (suppliers and buyers) are governed by bilateral contracts. These contracts provide security and make it easier to plan ahead according to fixed schedules ensuring stable and predictable production quantities. However, they also make it difficult to adjust to changing demands or a reduction in supply capacity.
