Extending Demand-and-Capacity Sharing by Collaborative Negotiations

Supply network resilience and responsiveness have become a critical topic due to multiple global supply network disruptions in recent years, ranging from natural to human-made hazards, e.g., earthquakes, the COVID-19 pandemic, and piracy in the Gulf of Africa. This research addresses two key aspects of overcoming these challenges: information sharing and supply network trust. Supply network participants need to be willing to share information in time and be able to anticipate and respond appropriately to disruptions. After introducing an extension to the Collaborative Auction Protocol (CAP), we present its framework, application, and validation. Next, we explore Demand-and-capacity sharing in supply networks, building on prior research (Yoon and Nof, 2010; Ajidarma et al., 2022). Demand-and-capacity sharing was chosen as an implementation test for CAP research. One critical gap in the demand-and-capacity sharing protocol is the focus on timely demand fulfillment. There is a need for collaborative negotiations to uphold timely deliveries with economic efficiency. To address this, the study proposes developing a framework for Collaborative Negotiations in Demand-and-Capacity Sharing to enhance supply network efficiency and prevent opportunistic behavior. Finally, the improved CAP is evaluated through numerical examples and compared to the baseline and the first stage of CAP implementations. Results indicate that incorporating the supply network incentive factor enhances CAP’s effectiveness in facilitating collaborative negotiations within supply networks.