New research proposes a new contract scheme for the vaccine supply chain that could reduce patient wait time and late delivery of the flu vaccine.
In the research, recently accepted by the journal Manufacturing & Service Operations Management, Fuqiang Zhang and his partners propose a new solution called a Buyback and Late Rebate (BLR) contract.
Both buybacks (returns for time sensitive products) and rebates on late shipments have been used separately in an attempt to alleviate the flu vaccine negative feedback loop, with limited success. Zhang said the combined incentive approach will make a big difference in fixing the supply chain gaps.
“If you use buyback and late rebate separately, they don’t solve the whole problem,” Zhang said. “We found that combining these two incentive contract terms, we optimize the supply chain’s performance and maximize its efficiency.”
Zhang and his co-authors believe that the combination of 100-percent buyback and rebates on late shipments would motivate retailers to commit to larger orders, which in turn would lead manufacturers to commit to greater and more prompt production. The negative feedback loop would be broken, and a steady, reliable flow of vaccine would be available, to the benefit of manufacturers, retailers, and patients.