Analysis of Competitiveness in Agri-Supply Chain Logistics Outsourcing: A B2B Contractual Framework
Abstract
:1. Introduction
2. Literature Review
2.1. Literature on Logistics Outsourcing in Agriculture
2.2. Literature on Competitiveness in Agri-Logistics Outsourcing
2.3. Literature on E-Agribusiness
2.4. Research Gaps
2.5. Research Questions
2.6. Contribution of This Study
3. Problem Statement and Mathematical Model
3.1. Agri-Supply Chain Problem Statement and Its Modeling
3.2. Competitiveness in Logistics Outsourcing (Market Duopoly) and Its Modeling
4. Results
4.1. Derivation of Pricing Decisions of Supply Chain Drivers
4.1.1. Derivation of the Retailer’s Price
4.1.2. Derivation of the Supplier’s Wholesale Price
4.1.3. Derivation of 3PL Firm’s Service Quality and Service Price
4.2. Competitiveness Strategies of 3PL Firms
4.2.1. Optimistic Strategy
- (a)
- Under the optimistic strategy, a unit increase in the peer firm’s strategic value regarding service quality and service price will never have a unidirectional (positive or negative) impact on thefocal 3PL firm’s market share gain.
- (b)
- Under the optimistic strategy, when thefocal firm chooses the service quality level and service price,
- (i)
- Percentile deviation of thefocal 3PL firm’s market share gain is negative with respect to the unit change of the peer’s service quality from equilibrium state.
- (ii)
- Percentile deviation of thefocal 3PL firm’s market share gain is positive with respect to the unit change of the peer’s service price from equilibrium state.
4.2.2. Pessimistic Strategy
- (a)
- Under the pessimistic strategy, a unit increase in the peer firm’s strategic value regarding service quality and service price will never have a unidirectional (positive or negative) impact on thefocal 3PL firm’s market share gain.
- (b)
- Under the pessimistic strategy, when thefocal firm chooses the service quality level and service price,
- (i)
- Percentile deviation of thefocal 3PL firm’s market share gain is positive with respect to the unit change of the peer firm’s service quality from the equilibrium state.
- (ii)
- Percentile deviation of thefocal 3PL firm’s market share gain is negative with respect to the unit change of the peer firm’s service price from the equilibrium state.
- If the peer firms are more concerned about positive changes in service quality, the focal firm must choose the pessimistic strategy over the optimistic strategy and set its service price and service quality level to satisfy Equation (24) to have a positive impact on the market share gain.
- If the peer firms are more concerned about positive changes in service price, the focal firm must choose the optimistic strategy over the pessimistic strategy and set its service price and service quality level to satisfy Equation (25) to have a positive impact on the market share gain.
4.3. Model
4.3.1. Formulation for Optimistic Approach
4.3.2. Formulation for the Pessimistic Approach
5. Numerical Illustration: A Case of the Indian Cashew Supply Chain
6. Discussion
6.1. Effect of Retailer’s Price on Retailer’s Expected Profit Function
6.2. Retailer’s Price under Equilibrium
6.3. Effect of Supplier’s Price on Supplier’s Expected Profit Function
6.4. Supplier’s Price under Equilibrium
6.5. 3PL Firm’s Service Quality under Equilibrium
6.6. Demography of 3PL Firm’s Profit
6.7. Effect of Imperfect Competitiveness in Logistics Outsourcing
6.8. Effect of 3PL Firm’s Competitiveness on Market Demand
7. Conclusions
7.1. Implications for Domestic and Global Agri-Supply Chain
7.2. Theoretical Implications
7.3. Future Research Direction
Author Contributions
Funding
Institutional Review Board Statement
Informed Consent Statement
Data Availability Statement
Acknowledgments
Conflicts of Interest
Appendix A
Parameter | Description |
---|---|
Demand for product at retailer’s e-commerce portal | |
Average price sensitivity coefficient of retailer’s portal | |
Average quality sensitivity coefficient of 3PL firm for retailer’s portal | |
Service-to-cost factor of 3PL firm | |
Post-harvesting loss of supplier | |
Production cost per unit of product | |
Transportation (includes processing and packaging also) cost per unit of product | |
Variables | Description |
Price of a unit of product at retailer’s portal | |
Supplier’s wholesale price of a unit of product to retailer | |
Service quality level of 3PL firm for product | |
Service price of 3PL firm for product | |
Market share of 3PL firm for product under pessimistic strategy | |
Market share of 3PL firm for product under optimistic strategy | |
Attribute gain of focal 3PL firm for product | |
Attribute loss of focal 3PL firm for product |
Appendix B
Appendix C
Appendix D
Appendix E
Appendix F
Appendix G
Appendix H
Appendix I
Appendix J
Post-Harvesting Loss Rate (r) | Pessimistic Strategy | Optimistic Strategy | |||||||
---|---|---|---|---|---|---|---|---|---|
Supplier’s Price | Retailer’s Price at Online Portal | Supplier’s Price | Retailer’s Price at Online Portal | ||||||
Retailers | Product 1 | Product 2 | Product 1 | Product 2 | Product 1 | Product 2 | Product 1 | Product 2 | |
0 | M1 | 1231.6532 | 946.0421 | 1706.71095 | 1329.08631 | 1203.6578 | 880.2631 | 1676.94545 | 1242.02245 |
M2 | 965.8646 | 1339.1927 | 1308.02803 | 1918.81222 | 945.0661 | 1293.1403 | 1289.05794 | 1861.33818 | |
0.05 | M1 | 1212.9148 | 916.8516 | 1714.21384 | 1300.25622 | 1201.2419 | 890.2570 | 1712.3612 | 1248.83841 |
M2 | 974.7625 | 1328.9103 | 1324.27705 | 1904.26163 | 960.6292 | 1297.6889 | 1323.19181 | 1864.17823 | |
0.1 | M1 | 1174.8636 | 907.1082 | 1708.48933 | 1334.82133 | 1207.8005 | 893.8581 | 1667.49788 | 1260.27503 |
M2 | 986.4607 | 1354.8371 | 1338.50689 | 1943.79702 | 966.8865 | 1301.5585 | 1286.42168 | 1873.09092 | |
0.15 | M1 | 1164.3150 | 889.6266 | 1674.69677 | 1283.70261 | 1191.5020 | 891.5742 | 1667.86456 | 1269.24831 |
M2 | 976.7476 | 1326.9254 | 1312.65673 | 1901.29762 | 941.2488 | 1309.1656 | 1285.48865 | 1883.52164 | |
0.2 | M1 | 1102.1656 | 846.5106 | 1664.63801 | 1301.86126 | 1188.0268 | 893.4336 | 1665.99298 | 1262.65857 |
M2 | 981.1489 | 1353.0024 | 1330.87075 | 1941.10331 | 943.6628 | 1305.3136 | 1286.11292 | 1876.3143 | |
0.25 | M1 | 1113.0299 | 867.0305 | 1650.72465 | 1269.93563 | 1193.5923 | 839.5456 | 1665.95664 | 1279.83591 |
M2 | 970.8967 | 1325.2275 | 1312.2245 | 1898.79986 | 940.3982 | 1333.3643 | 1282.85892 | 1920.25614 | |
0.3 | M1 | 1096.0496 | 862.1548 | 1640.59533 | 1263.44618 | 1183.3892 | 862.8506 | 1662.99426 | 1264.64103 |
M2 | 968.0589 | 1322.1025 | 1310.04759 | 1894.59825 | 943.4046 | 1317.2427 | 1285.48856 | 1893.80508 | |
0.35 | M1 | 996.8472 | 835.6519 | 1610.31294 | 1260.5135 | 1178.6923 | 881.1614 | 1662.30028 | 1261.3695 |
M2 | 978.9820 | 1321.6438 | 1328.87576 | 1902.74701 | 941.8146 | 1307.1055 | 1286.33532 | 1880.75061 | |
0.4 | M1 | 1010.8279 | 816.8801 | 1604.3733 | 1251.45688 | 1077.9630 | 835.1155 | 1630.40843 | 1255.35132 |
M2 | 975.7591 | 1327.9507 | 1317.51355 | 1904.92361 | 957.5685 | 1318.8989 | 1305.94862 | 1897.98407 | |
0.45 | M1 | 839.9857 | 759.2731 | 1547.05808 | 1238.36497 | 1023.3192 | 883.1981 | 1609.63952 | 1259.38752 |
M2 | 988.8145 | 1335.8572 | 1344.04579 | 1919.93997 | 961.9385 | 1306.1760 | 1312.53673 | 1878.05902 |
Post-Harvesting Loss Rate (r) | Pessimistic Strategy | Optimistic Strategy | |||||
---|---|---|---|---|---|---|---|
Supplier’s Profit | Supplier’s Profit | ||||||
Retailers | Product 1 | Product 2 | Total | Product 1 | Product 2 | Total | |
0 | M1 | 270,895.751 | 512,851.166 | 2,175,710.74 | 448,436.985 | 1,094,319.48 | 4,770,471.72 |
M2 | 129,400.702 | 1,262,563.12 | 211,374.736 | 3,016,340.52 | |||
0.05 | M1 | 457,310.927 | 385,383.42 | 1,945,147.15 | 112,237.907 | 722,598.656 | 2,899,739.11 |
M2 | 199,898.707 | 902,554.096 | 48,862.488 | 2,016,040.06 | |||
0.1 | M1 | 800,056.725 | 308,560.969 | 1,958,505.52 | 482,490.676 | 291,834.834 | 1,780,666.88 |
M2 | 307,198.409 | 542,689.419 | 218,844.267 | 787,497.103 | |||
0.15 | M1 | 361,928.366 | 442,575.137 | 1,867,548.01 | 600,392.395 | 183,087.371 | 1,505,389.3 |
M2 | 141,416.291 | 921,628.22 | 272,424.067 | 449,485.466 | |||
0.2 | M1 | 667,678.456 | 463,723.019 | 1,997,859.57 | 633,144.353 | 136,843.472 | 1,406,671.26 |
M2 | 219,339.512 | 647,118.579 | 280,667.215 | 356,016.221 | |||
0.25 | M1 | 363,642.598 | 472,420.379 | 1,860,131.2 | 634,255.68 | 145,386.802 | 129,6289.57 |
M2 | 126,391.189 | 897,677.034 | 288,798.043 | 227,849.045 | |||
0.3 | M1 | 412,428.386 | 335,871.391 | 1,527,169.14 | 554,098.177 | 92,213.6097 | 1,071,670.22 |
M2 | 138,456.677 | 640,412.683 | 241,962.747 | 183,395.683 | |||
0.35 | M1 | 982,741.65 | 123,323.906 | 1,573,089.98 | 327,940.922 | 234,277.551 | 1,254,800.06 |
M2 | 258,732.296 | 208,292.132 | 143,461.967 | 549,119.615 | |||
0.4 | M1 | 609,941.504 | 266,126.779 | 1,441,070.35 | 410,445.51 | 218,860.393 | 1,131,490.24 |
M2 | 167,517.254 | 397,484.81 | 130,946.901 | 371,237.438 | |||
0.45 | M1 | 931,367.249 | 175,305.918 | 1,489,751.72 | 457,952.697 | 147,066.791 | 1,089,169.72 |
M2 | 180,817.646 | 202,260.903 | 127,400.262 | 356,749.967 |
Post-Harvesting Loss Rate (r) | Pessimistic Strategy | Optimistic Strategy | |||||
---|---|---|---|---|---|---|---|
Retailer’s Profit | Retailer’s Profit | ||||||
Retailers | Product 1 | Product 2 | Total | Product 1 | Product 2 | Total | |
0 | M1 | 135,522.1769 | 256,658.867 | 1,238,855.89 | 224,451.7852 | 547,343.944 | 2,766,287 |
M2 | 64,759.10063 | 781,915.749 | 105,871.8323 | 1,888,619.43 | |||
0.05 | M1 | 228,127.1788 | 187,002.269 | 1,075,469.15 | 56,164.46243 | 364,132.955 | 1,705,649.89 |
M2 | 100,051.5941 | 560,288.106 | 24,472.25201 | 1,260,880.23 | |||
0.1 | M1 | 397,947.3519 | 137,219.477 | 1,024,008.3 | 236,993.225 | 145,711.403 | 983,547.024 |
M2 | 153,822.7061 | 335,018.764 | 108,727.2705 | 492,115.125 | |||
0.15 | M1 | 18,0274.534 | 204,644.253 | 1,028,220.15 | 295,978.6833 | 88,689.5419 | 801,608.175 |
M2 | 70,914.95572 | 572,386.404 | 136,562.4 | 280,377.55 | |||
0.2 | M1 | 330,723.0016 | 189,928.03 | 1,030,168.58 | 309,332.9057 | 67,659.362 | 739,807.354 |
M2 | 109,839.9277 | 399,677.625 | 140,533.2515 | 222,281.835 | |||
0.25 | M1 | 180,561.9564 | 210,736.878 | 1,012,343.28 | 309,385.5764 | 61,520.2413 | 656,239.832 |
M2 | 63,314.02495 | 557,730.417 | 144,061.6594 | 141,272.355 | |||
0.3 | M1 | 204,637.8946 | 149,533.597 | 821,717.108 | 269,863.4466 | 41,739.5014 | 546,952.053 |
M2 | 69,350.59137 | 398,195.024 | 121,208.3292 | 114,140.776 | |||
0.35 | M1 | 484,708.8979 | 52,923.8921 | 796,663.309 | 161,937.8946 | 110,420.737 | 686,997.867 |
M2 | 129,559.9788 | 129,470.541 | 71,935.88988 | 342,703.346 | |||
0.4 | M1 | 36,059.84337 | 18,618.2723 | 385,432.583 | 199,040.863 | 92,952.6335 | 588,612.925 |
M2 | 83,903.63411 | 246,850.833 | 65,575.18315 | 231,044.245 | |||
0.45 | M1 | 53,250.17882 | 32,994.1765 | 302,149.315 | 220,915.8216 | 70,619.3127 | 578,067.479 |
M2 | 90,585.79901 | 125,319.161 | 63,845.2564 | 222,687.089 |
Post-Harvesting Loss Rate (r) | Pessimistic Strategy | Optimistic Strategy | |||||
---|---|---|---|---|---|---|---|
Retailer’s Profit | Retailer’s Profit | ||||||
Retailers | Logistics 1 | Logistics 2 | Total | Logistics 1 | Logistics 2 | Total | |
0 | P1 | 2344.32792 | 21,784.4607 | 54,622.853 | 35,953.8684 | 4458.11597 | 89,308.7464 |
P2 | 2172.02034 | 28,322.0441 | 42,988.5179 | 5908.24407 | |||
0.05 | P1 | 2502.91973 | 28,562.5827 | 62,789.4058 | 9740.19619 | 2903.59997 | 27,381.9638 |
P2 | 2185.67428 | 29,538.2291 | 11,620.3255 | 3117.84221 | |||
0.1 | P1 | 2527.02065 | 36,135.0888 | 69,765.8719 | 4297.47795 | 5125.31285 | 23,257.2717 |
P2 | 2060.83307 | 29,042.9294 | 7040.66547 | 6793.81542 | |||
0.15 | P1 | 2440.18729 | 16,645.9068 | 41,837.0711 | 35,155.3971 | 4055.37147 | 71,945.7131 |
P2 | 2053.39917 | 20,697.5779 | 27,794.2945 | 4940.64997 | |||
0.2 | P1 | 3053.00164 | 29,959.815 | 60,022.2483 | 32,920.891 | 4269.85162 | 69,357.3668 |
P2 | 2448.50581 | 24,560.9259 | 25,606.8053 | 6559.81894 | |||
0.25 | P1 | 2846.34148 | 19,313.8384 | 46,111.2694 | 32,902.0298 | 7892.59764 | 75,826.402 |
P2 | 2213.60055 | 21,737.489 | 24,927.0685 | 10,104.706 | |||
0.3 | P1 | 3054.94763 | 19,178.3521 | 43175.1649 | 28,010.6209 | 4099.70827 | 58,384.0654 |
P2 | 2310.12759 | 18,631.7376 | 21,023.3311 | 5250.405 | |||
0.35 | P1 | 4589.55548 | 33,599.9382 | 62083.5917 | 19,603.1901 | 3205.76826 | 43,098.9028 |
P2 | 3675.28501 | 20,218.813 | 16,617.2513 | 3672.69305 | |||
0.4 | P1 | 3198.4965 | 19,690.9442 | 40295.3366 | 16,057.4746 | 5192.40484 | 38,934.39 |
P2 | 2394.34043 | 15,011.5555 | 11,518.0375 | 6166.47306 | |||
0.45 | P1 | 4223.82275 | 26,267.7111 | 46970.3613 | 16,367.151 | 4803.70042 | 38,286.1375 |
P2 | 2392.82206 | 14,086.0054 | 11,126.5805 | 5988.70564 |
Post-Harvesting Loss Rate (r) | Service Quality | Service Price | ||||||
---|---|---|---|---|---|---|---|---|
Logistics 1 | Logistics 2 | Logistics 1 | Logistics 2 | |||||
Product 1 | Product 2 | Product 1 | Product 2 | Product 1 | Product 2 | Product 1 | Product 2 | |
0 | 0.18695117 | 0.0959439 | 0.51385783 | 0.66219167 | 115.0251 | 71.93622 | 107.875 | 59.1422 |
0.05 | 0.16100328 | 0.10330847 | 0.66729033 | 0.519238 | 118.6484 | 71.90769 | 111.1819 | 59.73669 |
0.1 | 0.13126533 | 0.33945367 | 0.805817 | 0.96527017 | 119.9001 | 72.70315 | 107.8 | 59.3462 |
0.15 | 0.1980705 | 0.09450395 | 0.585145 | 0.48725417 | 117.7796 | 71.94719 | 93.83181 | 59.77898 |
0.2 | 0.16641063 | 0.26707217 | 0.74068767 | 0.9198495 | 118.9875 | 76.98767 | 107.8577 | 59.3345 |
0.25 | 0.213753 | 0.0915876 | 0.56700783 | 0.4615285 | 117.3212 | 71.95669 | 103.2405 | 59.80329 |
0.3 | 0.18117167 | 0.1179359 | 0.53437883 | 0.42499917 | 119.7532 | 71.95019 | 105.5556 | 59.84067 |
0.35 | 0.13699798 | 0.47904883 | 0.71703383 | 0.40195683 | 119.993 | 79.8704 | 109.1853 | 59.8753 |
0.4 | 0.17929717 | 0.24411267 | 0.62138017 | 0.5411335 | 114.9867 | 75.98735 | 101.9841 | 59.69616 |
0.45 | 0.2522585 | 0.641701 | 0.8912425 | 0.59765233 | 119.9836 | 72.87962 | 109.2622 | 59.67723 |
Post-Harvesting Loss Rate (r) | Service Quality | Service Price | ||||||
---|---|---|---|---|---|---|---|---|
Logistics 1 | Logistics 2 | Logistics 1 | Logistics 2 | |||||
Product 1 | Product 2 | Product 1 | Product 2 | Product 1 | Product 2 | Product 1 | Product 2 | |
0 | 0.16760383 | 0.02492913 | 0.841287 | 0.4571065 | 122.5029 | 71.95721 | 112.4682 | 59.34474 |
0.05 | 0.518629 | 0.0500669 | 0.58626033 | 0.6047425 | 147.3732 | 67.98373 | 105.9723 | 59.96722 |
0.1 | 0.20485017 | 0.11084555 | 0.99100783 | 0.51577833 | 82.45052 | 71.98977 | 113.17133 | 60 |
0.15 | 0.1388689 | 0.1985365 | 0.92242483 | 0.51343217 | 124.8753 | 71.97804 | 108.1135 | 59.97904 |
0.2 | 0.14540587 | 0.15560633 | 0.97947933 | 0.3313315 | 121.2831 | 72.17075 | 112.85 | 52.50528 |
0.25 | 0.11820853 | 0.57428367 | 0.83489 | 0.66354783 | 121.009 | 72.08837 | 136.6835 | 67.6978 |
0.3 | 0.14406927 | 0.35670517 | 0.837582 | 0.36617617 | 121.4455 | 74.57897 | 109.4582 | 59.33727 |
0.35 | 0.15421478 | 0.17237367 | 0.536649 | 0.549575 | 126.6876 | 71.90653 | 103.9837 | 59.75349 |
0.4 | 0.30276217 | 0.31927883 | 0.8739945 | 0.6649175 | 120.8642 | 72.44677 | 113.8763 | 60 |
0.45 | 0.35402 | 0.167042 | 0.977058 | 0.34981267 | 121.3782 | 72.24485 | 112.0153 | 55.92051 |
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Parameter | Value | |||||
---|---|---|---|---|---|---|
Demand () | W400 | W320 | ||||
Retailer R1 | 1000 | 700 | ||||
Retailer R2 | 800 | 1400 | ||||
Price sensitivity coefficient ( ) | Retailer R1 | 0.505 | ||||
Retailer R2 | 0.595 | |||||
Quality sensitivity coefficient ( ) | Logistics L1 | Logistics L2 | ||||
Retailer R1 | 17.2 | 15.8 | ||||
Retailer R2 | 16.5 | 13.6 | ||||
Service to cost factor ( ) | Logistics L1 | Logistics L2 | ||||
0.5 | 0.6 | |||||
Post-harvesting loss rate ( ) | [0–0.45] | |||||
Farming cost of product ( ) | BPP6 seed to W400 grade | VRI2 seed to W320 grade | ||||
500 | 400 | |||||
Transportation cost ( ) | Packet 1 | Packet 2 | Packet 3 | Packet 4 | ||
Logistics 1 | 80 | 65 | - | - | ||
Logistics 2 | - | - | 72 | 45 |
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De, A.; Singh, S.P. Analysis of Competitiveness in Agri-Supply Chain Logistics Outsourcing: A B2B Contractual Framework. Sustainability 2022, 14, 6866. https://doi.org/10.3390/su14116866
De A, Singh SP. Analysis of Competitiveness in Agri-Supply Chain Logistics Outsourcing: A B2B Contractual Framework. Sustainability. 2022; 14(11):6866. https://doi.org/10.3390/su14116866
Chicago/Turabian StyleDe, Arkajyoti, and Surya Prakash Singh. 2022. "Analysis of Competitiveness in Agri-Supply Chain Logistics Outsourcing: A B2B Contractual Framework" Sustainability 14, no. 11: 6866. https://doi.org/10.3390/su14116866