Supply Chain Coordination Mechanism Design: Consensus Planning Protocol Meets Vickrey-Clarke-Groves Mechanism

2026-05-15

AI Summary

This study addresses the inefficiencies and incentive misalignment arising from information asymmetry in retailer–supplier collaborative optimization by proposing a distributed supply chain coordination framework that integrates the Vickrey–Clarke–Groves (VCG) mechanism with the Consensus Planning Protocol (CPP). This work presents the first synthesis of VCG and CPP, ensuring dominant-strategy incentive compatibility and system-wide efficiency even in high-dimensional decision environments. To enhance retailers’ payoff properties, an activity-based fee mechanism is incorporated into the framework. The resulting CPP-VCG coordination mechanism offers a theoretically grounded, implementable solution for multi-agent joint decision-making in supply chains, achieving both computational tractability and strong incentive compatibility.

Abstract

This paper introduces the theoretical framework for combining Vickrey-Clarke-Groves (VCG) mechanisms with the Consensus Planning Protocol (CPP) to enable truthful and efficient collaboration between a retailer and vendors to lower joint Cost to Serve. We demonstrate how this integration preserves both dominant-strategy incentive compatibility and efficiency in high-dimensional environments. We further introduce an activity fee design to improve its revenue property for the retailer while maintaining the mechanism's desirable properties. This CPP-VCG framework serves as the theoretical foundation for designing collaborative mechanisms to coordinates distributed, agent-based optimization between retailers and suppliers.

Problem

• Supply Chain Coordination
• Vickrey-Clarke-Groves Mechanism
• Consensus Planning Protocol
• Incentive Compatibility
• Cost to Serve

Innovation

• Vickrey-Clarke-Groves mechanism
• Consensus Planning Protocol
• supply chain coordination
• incentive compatibility
• activity fee design