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3469. WHO LEADS THE WAY? BUYER VS. SUPPLIER INITIATIVES IN SUPPLY CHAIN CARBON FOOTPRINT REDUCTION
Invited abstract in session WB-24: Carbon Regulation, stream Sustainable Supply Chains.
Wednesday, 10:30-12:00Room: 83 (building: 116)
Authors (first author is the speaker)
| 1. | Elif Kuscu
|
| Sustainable Operations Management, University of Zurich | |
| 2. | Özgen Karaer
|
| Industrial Engineering, Middle East Technical University | |
| 3. | Tarkan Tan
|
| Sustainable Operations Management, University of Zurich |
Abstract
We study two supply chain models: (i) Buyer-Led Supplier Development and (ii) Supplier-Led Supplier Development, which are consisting of a buyer and a supplier. We analyze which player should initiate the carbon footprint reduction efforts in the supply chain under a scope 3 emission tax by using different levers. The supplier, as the producer, may invest to reduce the product carbon footprint. The buyer, as the downstream partner, may incentivize the supplier through supplier development initiatives. In the buyer-led model, the buyer offers a wholesale price premium rate contingent on improvement, and the supplier decides her carbon footprint reduction efforts accordingly. In the supplier-led model, the supplier offers sharing the carbon footprint reduction investment cost and the buyer decides the improvement level. We compare these two models and gain insights into their effectiveness under varying market conditions. Our results show that carbon footprint reduction is guaranteed if the supplier takes the lead, however, a wider range of improvement opportunities occur when the buyer initiates the reduction effort.
Keywords
- Supply Chain Management
- Game Theory
- OR in Sustainability
Status: accepted
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