The concept of coordination

The decentralised coordination will be achieved by a market based negotiation of incentives for delivery reliability. The negotiation mechanism is based on three figures:

•   internal value proposition of the in time delivery
•   internal capacity situation of the supplier
•   the market value of delivery reliability

Dependent on the individual customer-supplier-relationship different order transaction processes are common. These different relationships have to be taken into account for the negotiation process of incentives. For example large companies like ABB or Siemens, which supply fundamental components for most of the companies of the machinery and equipment industry. They have a catalogue of mostly standardised or modularised components, which can be ordered via their own web-shop. For these products an individual negotiation of an incentive is not realistic for smaller companies because of the missing market power. On the other side every equipment manufacturer has his own supplier park of smaller companies for sheets and other highly individualised products. In these cases a stronger incentivation of delivery reliability is feasible.

Therefore two different ways of pricing will be developed and implemented for inTime:

On the one hand an individual negotiation mechanism for highly critical parts and company-near suppliers ensures a non-hierarchical coordination. In addition the common market price which is broadly accepted and transparent to everyone may support the individual negotiation process.

On the other hand for many parts, the individual negotiation of incentives will be too time-consuming. The delivery reliability of these parts can be secured by using the standard market price.

These pricing mechanisms will ensure a dynamic levelling of demands and offers regarding capacity. It therefore leads to a smoothing of turbulences inside the network. With inTime, customers can ensure the delivery reliability via the market priced incentive.