An Investigation of the Roles of Electronic Marketplace in the Supply Chain

Electronic marketplace (EM) has been considered lately as an alternative coordination mechanism between suppliers and buyers in a supply chain. In this paper an appropriate model for EM-based supply chain is developed in order to investigate the impact of EM on two important supply chain performance measures - total supply chain cost per sale and customer fill rate. We adopt a simulation modeling approach and conduct experiments with key factors which include auction-based coordination mechanism. In addition, supply chain effects such as demand pooling, matching and aggregation effects in procurement of parts, etc. are also considered. The results indicate that EM could bring operational benefits even though strategic and situational factors that change the magnitude of benefits may occasionally prevent EM from being successful in a supply chain.