Introduction Literature Review Methodology Analytical model Empirical evidence Conclusions

Optimization of Collaborative Planing andDecision Making in the Tourism Supply Chains

Pairach Piboonrugnroj, PhD

Supply Chain Economics Research Centre (SCERC),Faculty of Economics, Chiang Mai University

September 2rd , 2015

OR2015 - International Conference on Operations Research,

University of Vienna, Austria

Pairach Piboonrugnroj, PhD Supply Chain Economics Research Centre (SCERC), Faculty of Economics, Chiang Mai University

Optimization of Collaborative Planing and Decision Making in the Tourism Supply Chains

Introduction Literature Review Methodology Analytical model Empirical evidence Conclusions

Motivation

To develop a better analytical model for supply chain collaboration

Complexity in managing the multi-echelon supply chain esp.tourism

Parallel operations and multi-objective decision makings

Interdependency of the players in supply chains

Need for Analytical model to optimise the collaboration level

Pairach Piboonrugnroj, PhD Supply Chain Economics Research Centre (SCERC), Faculty of Economics, Chiang Mai University

Optimization of Collaborative Planing and Decision Making in the Tourism Supply Chains

Introduction Literature Review Methodology Analytical model Empirical evidence Conclusions

Aims

1 To explore the expected benefit of supply chain collaborationin tourism

2 To explore the empirical benefits of such collaboration

3 To identify the arena for developing a better model

Pairach Piboonrugnroj, PhD Supply Chain Economics Research Centre (SCERC), Faculty of Economics, Chiang Mai University

Optimization of Collaborative Planing and Decision Making in the Tourism Supply Chains

Introduction Literature Review Methodology Analytical model Empirical evidence Conclusions

Supply Chain Collaborations

Definition

”At least two firms in the same supply chain work together toachieve their mutual goals”(Mentzer et al., 2001; Simatupang and Sridharan, 2005).

Pairach Piboonrugnroj, PhD Supply Chain Economics Research Centre (SCERC), Faculty of Economics, Chiang Mai University

Optimization of Collaborative Planing and Decision Making in the Tourism Supply Chains

Introduction Literature Review Methodology Analytical model Empirical evidence Conclusions

The Revolution of Supply Chain Collaboration

Pairach Piboonrugnroj, PhD Supply Chain Economics Research Centre (SCERC), Faculty of Economics, Chiang Mai University

Optimization of Collaborative Planing and Decision Making in the Tourism Supply Chains

Introduction Literature Review Methodology Analytical model Empirical evidence Conclusions

The Tourism Supply Chain

Pairach Piboonrugnroj, PhD Supply Chain Economics Research Centre (SCERC), Faculty of Economics, Chiang Mai University

Optimization of Collaborative Planing and Decision Making in the Tourism Supply Chains

Introduction Literature Review Methodology Analytical model Empirical evidence Conclusions

The Tourism Supply Chain

Pairach Piboonrugnroj, PhD Supply Chain Economics Research Centre (SCERC), Faculty of Economics, Chiang Mai University

Optimization of Collaborative Planing and Decision Making in the Tourism Supply Chains

Introduction Literature Review Methodology Analytical model Empirical evidence Conclusions

Methodology

Review of the optimisation/analytical model with game theoryapproach

Review of the empirical evidence supporting the collaboration

Identify the room for improving the collaboration model

Pairach Piboonrugnroj, PhD Supply Chain Economics Research Centre (SCERC), Faculty of Economics, Chiang Mai University

Optimization of Collaborative Planing and Decision Making in the Tourism Supply Chains

Introduction Literature Review Methodology Analytical model Empirical evidence Conclusions

Two competing tourism supply chains in a tourist destination

Source: Yang et al (2008)

Pairach Piboonrugnroj, PhD Supply Chain Economics Research Centre (SCERC), Faculty of Economics, Chiang Mai University

Optimization of Collaborative Planing and Decision Making in the Tourism Supply Chains

Introduction Literature Review Methodology Analytical model Empirical evidence Conclusions

Two competing tourism supply chains in a tourist destination

Source: Yang et al (2008)

Pairach Piboonrugnroj, PhD Supply Chain Economics Research Centre (SCERC), Faculty of Economics, Chiang Mai University

Optimization of Collaborative Planing and Decision Making in the Tourism Supply Chains

Introduction Literature Review Methodology Analytical model Empirical evidence Conclusions

Sub-game perfect Nash equilibriums of TSCi

Source: Yang et al (2008)

Pairach Piboonrugnroj, PhD Supply Chain Economics Research Centre (SCERC), Faculty of Economics, Chiang Mai University

Optimization of Collaborative Planing and Decision Making in the Tourism Supply Chains

Introduction Literature Review Methodology Analytical model Empirical evidence Conclusions

Marginal profit of collaboration

Source: Yang et al (2008)

Pairach Piboonrugnroj, PhD Supply Chain Economics Research Centre (SCERC), Faculty of Economics, Chiang Mai University

Optimization of Collaborative Planing and Decision Making in the Tourism Supply Chains

Introduction Literature Review Methodology Analytical model Empirical evidence Conclusions

Empirical Findings 1Exploratory case study and focus group interviews

Information sharing between the hotel and its partners e.g.,suppliers and travel agents.

Joint team work and planning as well as investing in specificequipment or special training.

Collaboration activities could give rise to performance viabetter trust between partners.

Pairach Piboonrugnroj, PhD Supply Chain Economics Research Centre (SCERC), Faculty of Economics, Chiang Mai University

Optimization of Collaborative Planing and Decision Making in the Tourism Supply Chains

Introduction Literature Review Methodology Analytical model Empirical evidence Conclusions

Empirical Findings 2Multiple-case Study

Hotel A Hotel B Hotel C Hotel D Hotel E Hotel F

Management International Local Non- International Local Non-System Chain Chain Chain Chain Chain Chain

Destination Island Island Island Mainland Mainland Mainlanddestination destination destination destination destination destination

Location Beach City Beach Suburb Shopping ShoppingShopping area Centre area /Riverside area area

Supplier Carbonated Poultry Alcohol Carbonated Poultry Alcoholdrink drinks drinks drinks

Pairach Piboonrugnroj, PhD Supply Chain Economics Research Centre (SCERC), Faculty of Economics, Chiang Mai University

Optimization of Collaborative Planing and Decision Making in the Tourism Supply Chains

Introduction Literature Review Methodology Analytical model Empirical evidence Conclusions

Empirical Findings 2Multiple-case Study

Hotel A Hotel B Hotel C Hotel D Hotel E Hotel F

Collaborative EffortsInformation sharing High Moderate Low High Moderate HighJoint activities High High Moderate Low High HighDedicated investment High Moderate High High Moderate Moderate

Inter-firm TrustTrust belief High High Moderate Moderate High HighTrust behaviour High Moderate Low Moderate Moderate High

Logistics PerformanceOrder High High Moderate Moderate High HighDelivery High High Moderate Moderate Moderate HighForecasting High Moderate Low Low Moderate High

SatisfactionOn commitment High Moderate Moderate Moderate High HighOn performance High High Low Moderate Moderate High

Pairach Piboonrugnroj, PhD Supply Chain Economics Research Centre (SCERC), Faculty of Economics, Chiang Mai University

Optimization of Collaborative Planing and Decision Making in the Tourism Supply Chains

Introduction Literature Review Methodology Analytical model Empirical evidence Conclusions

Sample of Construct operationlisation

Collaborative Efforts (Nyaga et al., 2009)

Information Sharing

Joint Activities

Dedicated Investment

Collaborative Mechanism & Outcomes

Inter-Firm Trust (Kwon and Suh, 2004)

Logistics Performance (Simatupang and Sridharan, 2002)

Relationship Satisfaction (Nyaga et al., 2009)

Pairach Piboonrugnroj, PhD Supply Chain Economics Research Centre (SCERC), Faculty of Economics, Chiang Mai University

Optimization of Collaborative Planing and Decision Making in the Tourism Supply Chains

Introduction Literature Review Methodology Analytical model Empirical evidence Conclusions

Our Conceptual Framework

Pairach Piboonrugnroj, PhD Supply Chain Economics Research Centre (SCERC), Faculty of Economics, Chiang Mai University

Optimization of Collaborative Planing and Decision Making in the Tourism Supply Chains

Introduction Literature Review Methodology Analytical model Empirical evidence Conclusions

Multigroup analysis

Pairach Piboonrugnroj, PhD Supply Chain Economics Research Centre (SCERC), Faculty of Economics, Chiang Mai University

Optimization of Collaborative Planing and Decision Making in the Tourism Supply Chains

Introduction Literature Review Methodology Analytical model Empirical evidence Conclusions

Empirical Findings 3Questionnaire Survey

Data

Questionnaire survey

Tourism industry of Thailand

853 usable responses

Analysis Methods

Confirmatory Factor Analysis (Joreskog, 1969)

Path Analysis (Wright, 1918)

Pairach Piboonrugnroj, PhD Supply Chain Economics Research Centre (SCERC), Faculty of Economics, Chiang Mai University

Optimization of Collaborative Planing and Decision Making in the Tourism Supply Chains

Introduction Literature Review Methodology Analytical model Empirical evidence Conclusions

Confirmatory Factor Analysis 1

Survey items FactorLoadings

CFA Model 1: Collaborative efforts(Chi-square/df =1.093, CFI=0.933, TLI=0.989, NFI=0.927, RMSEA=0.051, AIC=70.040)Information sharing (α = 0.937)We inform this supplier/buyer in advance of changing needs. .926It is expected that any information, which might help the other party, will be provided. .948The parties are expected to keep each other informed about changes that may affectthe other party. .883

Joint activities (α = 0.942)My firm and this supplierhave a joint team. .921conduct joint planning to anticipate and resolve operational problems. .950make joint decisions about ways to improve overall cost efficiency. .887

Dedicated investments (α = 0.811)In building the relationship with my firm, this supplierhas invested substantially in personnel. .847has provided proprietary expertise and/or technology. .829has dedicated significant investment. .632

Pairach Piboonrugnroj, PhD Supply Chain Economics Research Centre (SCERC), Faculty of Economics, Chiang Mai University

Optimization of Collaborative Planing and Decision Making in the Tourism Supply Chains

Introduction Literature Review Methodology Analytical model Empirical evidence Conclusions

Confirmatory Factor Analysis 2

Survey items FactorLoadings

CFA Model 2: Collaborative mechanism and outcomes(Chi-square/df =1.010, CFI=0.999, TLI=0.999, NFI=0.915, RMSEA=0.017, AIC=112.455)Inter-firm trust (α =0.823)My firm can understand this supplier well. .812This supplier is genuinely concerned that we succeed. .946We trust this supplier keeps our best interests in mind. .667This supplier/buyer considers our welfare as well as its own. .520Satisfy with relationship (α = 0.900)

My firm is satisfied with this relationship in terms of:- Coordination of activities. .826- Participation in decision making. .809- Level of commitment. .977

Logistics performance (α =0 .971)This relationship hasimproved our order processing accuracy. .949improved our on-time delivery. .858increased our forecast accuracy. .919improved our order accuracy in term of product types. .964improved our order accuracy in term of product quantity. .980

Pairach Piboonrugnroj, PhD Supply Chain Economics Research Centre (SCERC), Faculty of Economics, Chiang Mai University

Optimization of Collaborative Planing and Decision Making in the Tourism Supply Chains

Introduction Literature Review Methodology Analytical model Empirical evidence Conclusions

Hypothesis TestingResult from Multiple Regression Models

Pairach Piboonrugnroj, PhD Supply Chain Economics Research Centre (SCERC), Faculty of Economics, Chiang Mai University

Optimization of Collaborative Planing and Decision Making in the Tourism Supply Chains

Introduction Literature Review Methodology Analytical model Empirical evidence Conclusions

Interaction Effects of Collaboration Efforts

-3 -2 -1 0 1 2 3

-3-2

-10

12

3

Information sharing

Inte

r-fir

m tr

ust

Low levelof Joint Activities

Moderate levelof Joint Activities

High levelof Joint Activities

-3 -2 -1 0 1 2 3-3

-2-1

01

23

Dedicated Investment

Inte

r-fir

m T

rust

Low levelof Joint Activities

Moderate levelof Joint Activities

High levelof Joint Activities

Pairach Piboonrugnroj, PhD Supply Chain Economics Research Centre (SCERC), Faculty of Economics, Chiang Mai University

Optimization of Collaborative Planing and Decision Making in the Tourism Supply Chains

Introduction Literature Review Methodology Analytical model Empirical evidence Conclusions

Follow-up Interviews

Joint activities can enhance the creditability andcomprehensibility of the information shared between supplychain.

Such activities can provide an opportunity to buildinter-person trust and personal relationship between hotelsand their supply chain partners.

Hotel managers are more likely to believe in data if they knewand trusted the person that gave them the information.

Joint activities are a necessary when firms share theirinformation with supply chain partners.

Pairach Piboonrugnroj, PhD Supply Chain Economics Research Centre (SCERC), Faculty of Economics, Chiang Mai University

Optimization of Collaborative Planing and Decision Making in the Tourism Supply Chains

Introduction Literature Review Methodology Analytical model Empirical evidence Conclusions

Analytical vs Empirical

A significant role of game theory in SCM optimisation

Analytical outcomes offer a solid solution but for a limitedpracticality due to the variable specification

Empirical evidence with statistics outcome offer more detailedframework and subjective variables (e.g., trust / transactioncost) but results are subjective, yet universal

The challenges are to include key variable such ascollaborative planning or decision making and critical factorssuch as transaction cost and trust in the analytical model (ourfuture work)

also the address the interplay between variables (interactioneffect in empirical model)

Pairach Piboonrugnroj, PhD Supply Chain Economics Research Centre (SCERC), Faculty of Economics, Chiang Mai University

Optimization of Collaborative Planing and Decision Making in the Tourism Supply Chains

Introduction Literature Review Methodology Analytical model Empirical evidence Conclusions

Acknowledgements

“The author is grateful tothe Thai Research Fund (TRF) and

Chiang Mai University (CMU)through the Young Researcher Scholarship

for financial support of this study.”

Pairach Piboonrugnroj, PhD Supply Chain Economics Research Centre (SCERC), Faculty of Economics, Chiang Mai University

Optimization of Collaborative Planing and Decision Making in the Tourism Supply Chains

Introduction Literature Review Methodology Analytical model Empirical evidence Conclusions

Thank you

Q&A

Pairach Piboonrugnroj, PhD Supply Chain Economics Research Centre (SCERC), Faculty of Economics, Chiang Mai University

Optimization of Collaborative Planing and Decision Making in the Tourism Supply Chains