Multi-party coordination in sustainable supply chain under consumer green awareness

The rapid growth of the green market in recent years has motivated manufacturing companies to operate carbon abatement schemes for better sustainability. This paper investigates sustainability coordination among three major supply chain parties in the context of consumer green awareness by applying a Stackelberg game model. Instead of considering the manufacturer as the only party to operate carbon management schemes, this paper examines a model in which both the supplier and the manufacturer embark on green investment under make-to-order production. Meanwhile, the retailer considers the influence of green consumers on the demand rate and determines the order quantity for the manufacturer. This paper analyses the sustainability and profit-ability performance of the supply chain under centralised and decentralised scenarios, and applies the quantity discount and cost-sharing contracts to improve supply chain performance. It is shown that greener markets are more profitable and Pareto improvement can be achieved for all parties under a quantity discount contract. High investment cost hinders the company from achieving a higher emission reduction level. Further, increased consumer green awareness can motivate companies to achieve a higher emission reduction level, but not always lead to improved total carbon emission reductions resulting from the increase in product demand caused by green awareness. It also shows the importance of involving suppliers in green investment, due to their high carbon emission during the component production processes. The findings of this research provide theoretical support for supply chain parties to achieve better coordination in balancing profitability and carbon abatement. (c) 2021 Elsevier B.V. All rights reserved.