Abstract:

In the supply chain system comprising an Original Equipment Manufacturer （OEM）， an Original Design Manufacturer （ODM）， and a Contract Manufacturer （CM）， a multi-party game model based on competitive-cooperative relationships is developed to address upstream supply risks and determine equilibrium decisions. Furthermore， the impacts of economies of scale and brand advantage on supply chain management strategies are explored. The research findings indicate that even in the presence of supply risks， the CM can squeeze the profits of ODM， while the OEM can achieve profit gains through upstream competition. When the supply from the CM is disrupted， the ODM with weaker OEM brand advantage may choose to participate in end-market competition to further enhance profits. However， when the brand advantage of the OEM is significant， the ODM may focus on upstream supply to mitigate competition in the end market. Nevertheless， economies of scale have heterogeneous impacts on the profits of ODM and OEM， and manufacturers should be cautious of the potential negative effects that economies of scale may bring. It is noteworthy that the decision-making of ODM and OEM remains in a “lose-lose” situation， where the OEM as “follower” can only rely on measures such as brand advantage to ensure own profit realization， while the ODM’ decision can achieve a “win-win” outcome for both itself and social welfare. Not only a comprehensive understanding of the impact of supply risks on diversified procurement is provided but also the influence of supply disruptions on firm decision-making is explored. It offers strategic guidance for firms on decision-making in risk-operating environments and provides theoretical analysis for policy management departments in addressing supply risks and enhancing social welfare.

Key words: supply risks, supply disruption, large-scale economy, co-opetition game