Home Article

Manufacturer Encroachment, and Overview, with New Results for Non-Exclusive Reselling Channels

2018-06-13

Venue: Room 1102, Library & Information Center Building C, Zijingang Campus


Speaker:

Stephen M. Gilbert is a Professor of Operations Management at the McCombs School of Business at the University of Texas at Austin, where he is the Chair of the Department of Information, Risk, and Operations Management. Professor Gilbert holds a B.S. in Industrial Engineering from the University of Michigan, a M.S. in Industrial Engineering from Stanford, and a Ph.D. in Operations Management from the Sloan School of Management at M.I.T.  

His current research focuses on issues of coordination in supply chains especially in the presence of strategic consumers.  His publications have appeared in Operations Research, Management Science, Marketing Science, Production and Operations Management, IIE Transactions, European Journal of Operational Research, and elsewhere.  Currently he serves as an Associate Editor for Management Science, as a Senior Editor for POMS. In addition, he is a past President of the MSOM Society of INFORMS.

Abstract: 

Manufacturer encroachment is the practice of a manufacturer selling through a reseller as well as through a direct channel. The talk will provide an overview of the research that has been done on this topic, nearly all of which has focused on settings in which the reselling channel sells only the product of the encroaching manufacturer. It will also include new results for a setting in which the reseller has the ability to sell the product of another manufacturer. It turns out that this outside option for the reseller can dramatically alter the interactions between a manufacturer and the reseller. For instance, the reseller's benefit from the development of a direct channel disappears when the product substitutability exceeds a threshold. In addition, we find that the non-encroaching manufacturer can benefit from her rival's direct channel.  Finally, we find that even when the encroaching manufacturer’s direct channel is more efficient than the reseller’s channel, the encroaching manufacturer will nevertheless continue to sell through the reseller when there is a highly substitutable product available.