Horizontal collaboration in the wine supply chain planning: A Chilean case study

Abstract

The wine industry faces a highly competitive environment, making cost-effective management of the wine supply chain essential. Literature has shown that this objective can be achieved with the implementation of horizontal collaboration strategies in logistics. In this strategy, firms located at the same level of the supply chain cooperate to reduce costs, improve quality of service and mitigate environmental externalities. This paper analyses the implementation impacts of a horizontal collaboration policy in the wine supply chain. To do so, we propose a cooperative game with transferable costs, in which the characteristic function is obtained by solving a novel linear programming formulation that models the joint planning of the wine supply chain. To evaluate the benefits of collaboration, we conduct a case study involving three of Chile’s largest wineries. The results show that the use of collaborative frameworks leads to significant reductions in the logistics costs of the wine supply chain. Furthermore, we find that the grand coalition reduces the costs by 10.17% compared to the non-collaborative case. This reduction comes mainly from a decrease in the bulk wine inventory cost. We also analyse the impact of coordination costs on the savings and conduct a sensitivity analysis.