On Supply Chain Incentive Alignment: Insights from a cash supply chain and a trucking service supply chain

This dissertation presents a framework for describing, a process for identifying, and a model for evaluating misalignments in the supply chain when varying elements such as structure, processes, and management components. The developed approach makes it possible to address and improve the alignment of supply chain structures, processes, and management components. To further increase knowledge of how to improve the alignment in supply chains, two specific models were developed for choosing contract types and governance structures in the trucking service supply chain including shipper, forwarders, and carriers. These models extend the first approach with detailed insights that can be used to align incentives in the trucking service supply chain, which contributes to the overall research purpose. When studying the Swedish cash supply chain and its structure, processes, and management components, particular focus was directed on three major design changes: centralization of central bank storage facilities, eliminating returns to central bank storage facilities, and providing interest compensation at depots. By analyzing these changes using a network flow model, results showed that centralization from two to one central bank storage facility led to unintended increases in transportation costs and risk, while eliminating returns to central bank storage facilities led to increased transportation flow, larger shipment sizes, and larger risk, but reduced transportation costs. Furthermore, results showed that providing interest compensation to private depots led to reduced transportation costs as well as risk. From studying a trucking service supply chain, a performance-based contract type was found to align incentives between a large Swedish grocery retailer and its forwarders by relieving the forwarders of coordination responsibility. This meant that they could improve trucking cost utilization and thereby reduce their price to the shipper, and still improve their profitability. Further, a cooperative governance structure utilizing a profit-sharing mechanism was found to align incentives between forwarders and carriers, which meant increased service frequency, reduced service price, and increased chain profit