IoT-enabled delivery time guarantee in logistics outsourcing and efficiency improvement

Abstract

Industrial Internet of Things (IoT) technologies have been widely implemented in today’s logistics operations to reduce the handling time and improve service efficiency. This enables a firm to promise a delivery time (PDT) when selling products, which improves customer satisfaction and enhances the firm’s brand image. However, the costly PDT logistics service should be seriously evaluated when the market competition is intensified to aggravate the firm’s cost concern. In a competitive decentralized framework, this paper investigates the value of IoT-enabled PDT quotation in a brand’s logistics outsourcing decisions. We develop three-stage optimization models and show that the brand’s production quantity and equilibrium profit exhibit non-monotonic relationships to the competition intensity degree. Given a moderate competition intensity degree, the brand developing IoT and quoting PDT suffers from imbalanced payoffs between PDT cost-saving and sales volume expansion. This distorts the PDT cost and hence, investing in the IoT-enabled logistics system might not be beneficial. This paper contributes to the existing literature by examining the impact of heterogeneous logistics service incorporating the PDT quotation on traditional quantity competition within a dual-channel supply chain.

KEYWORDS:

• IoT-enabled-PDT-quotation
• logistics outsourcing
• service system optimization
• game theory
• efficiency improvement

Acknowledgments

The authors are grateful to the editor and reviewers for their helpful comments.  Jianhua Zhang is the co-first author and Zihao Mu is the corresponding author.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Additional information

Funding

This work was supported by National Natural Science Foundation of China: [72125006].

Notes on contributors

Baozhuang Niu

Baozhuang Niu received his Ph.D. degree in Operations Management from the Hong Kong Polytechnic University in 2011. He is currently a Full Professor at the School of Business Administration, South China University of Technology, Guangzhou, China. His research interests include co-opetitive supply chain and cross-border operations. He has published 12 top journal papers including MSOM (2 papers), POM (7 papers), and TRB (3 papers), among other peer-review journal papers till now.

Jianhua Zhang

Jianhua Zhang is currently working toward the Ph.D. degree in Management Science and Engineering with the School of Business Administration, South China University of Technology, Guangzhou, China. His research interests include technology-driven supply chain, co-opetitive supply chain, and innovation. His paper has appeared in the International Journal of Production Research.

Zihao Mu

Zihao Mu received his Ph.D. degree in Management Science and Engineering from the South China University of Technology in 2022. He is currently an Associate Professor at the School of Management, Northwestern Polytechnical University, Xi’an, China. His research interests include global operations, supply chain sustainability, and operations-finance interface. His papers have appeared in journals such as the International Journal of Production Economics, the International Journal of Production Research, the IEEE Transactions on Engineering Management, and the Transportation Research Part E: Logistics and Transportation Review.