Seminar – Supply Chain Management through Cascading

Dr Feryal Erhun, Cambridge Judge Business School

This study focuses on contracting for a three-tier supply chain consisting of a buyer, tier one supplier, and tier two sub-supplier where disruptions of random length occur at tier two. As is common in many supply chains, the buyer has a direct relationship with the tier one supplier but not the tier two sub-supplier; that is, the buyer has limited supply chain visibility. Both the supplier and sub-supplier can reserve emergency capacity prior to observing the disruption to protect the supply chain from the disruption. The study looks at how the buyer and the supplier can guarantee that the correct level of emergency capacity is built prior to the disruption. Due to two types of inefficiencies – a special form of double-marginalisation and the substitution effect – the supply chain is misaligned in its decentralised form. Although the lack of visibility prevents the buyer from directly contracting with the sub-supplier to eliminate these inefficiencies, they can still coordinate the supply chain through cascading, for example, contracting with the supplier, who in turn contracts with the sub-supplier. Despite supply chain coordination, the supplier benefits from the buyer’s limited supply chain visibility.

Collaborative work with Dr Georg Schorpp and Professor Hau Lee.

Speaker bio

Dr Feryal Erhun is Reader in Operations Management Cambridge Judge Business School, University of Cambridge. Feryal’s research interests are in the topic of supply chain management, including risk management in supply chains, new product transitions, and supply contracts. Her current research also includes studies healthcare operations.

Dr Erhun is a strong proponent of practice-based research. In collaboration with Intel Corporation, her research group has designed a decision-support system for optimising capital investment decisions for firms in capital-intensive industries. This work has been selected as one of the finalists in the 2012 Edelman competition and Feryal has been inducted as an Edelman Laureate. She is also a recipient of 2006 NSF CAREER Award.

Feryal serves on the editorial boards of Manufacturing and Service Operations Management and Production and Operations Management. She received her PhD in Business Administration, with a concentration in Production and Operations Management from the Graduate School of Industrial Administration, Carnegie Mellon University in 2002. She holds a BS and a MS in Industrial Engineering from Bilkent University.