Decentralized supply chain planning framework for third party logistics partnership

As the complexity of a supply chain continuously increases and the importance of prompt delivery to end customers grows, an independent company, so called a third party logistics provider, to perform all or part of a manufacturer’s product distribution function has emerged. In this situation, collaboration between the manufacturer and the third party logistics provider is indispensable in order to generate a supply chain plan. However, information sharing for collaboration between two companies is getting complicated by privacy issues associated with information provided by and shared among different independent companies. In this paper, we propose a decentralized supply chain planning framework based on minimal-information sharing between the manufacturer and the third party logistics provider. Extensive computational tests have shown that the proposed approach generates a good supply chain plan in terms of total costs comparing with the ideal centralized supply chain planning approach.