منابع محلی و سیستم واکنش سریع مد: اثرات مالیات بر رد پای کربن

Quick response (QR) system is a well-established industrial practice in fashion apparel. It aims at enhancing inventory management by reducing lead time. In addition to employing a faster delivery mode, QR can be achieved by local sourcing (instead of offshore sourcing). This paper analytically studies how a properly designed carbon footprint taxation scheme can be imposed on a QR system to enhance environmental sustainability via employing a local manufacturer by offsetting the probable higher total logistics and production costs. By examining both the single-ordering and the dual-ordering QR systems, we illustrate how the carbon footprint taxation scheme affects the optimal choice of sourcing decision. Our analytical findings reveal that a properly designed carbon footprint taxation scheme by governing body not only can successfully entice the fashion retailer to source from a local manufacturer, but it can also lead to a lower level of risk for the fashion retailer. A mean-risk improving scenario hence results and it provides a significant incentive to convince the fashion retailer to support the idea of joining QR when the carbon footprint tax is in place.

Environmental sustainability is receiving more and more public awareness all around the globe (Nagurney and Yu, 2012). There are many reports and scientific studies which indicate that the world is facing very serious environmental problems (see Lee, 2011). This issue is especially prominent in industries such as fashion apparel because the fashion supply chain is known to create all kinds of pollutants (de Brito et al., 2008, Caniato et al., 2012, Lo et al., 2012 and Perry, 2012). Measures to stop environmentally unsustainable production, distribution and consumption are hence necessary (see Song and Leng, 2012 for the discussions on carbon trading quota, tax and other related sustainability measures). Among these measures, a recent proposal is to impose carbon footprint tax1 (Larsen et al., 2012) as a kind of environmental protection tax on business operations. One idea of this kind of carbon footprint tax is to penalize companies on environmental-unfriendly “long-distance” production and distribution via increasing the tax on them (Gemechu et al., 2012). For example, if a fashion retailer chooses to source its merchandise from manufacturers located far away from the retail market (i.e., offshore sourcing), the corresponding long shipping distance will incur a substantial carbon footprint tax. Thus, the presence of this kind of carbon footprint tax helps entice the fashion retailers to source from nearby manufacturers and this will directly lead to reduced pollutants and help enhance environmental sustainability. On the other hand, in the fashion industry, in order to cope with the ever changing demand driven by the volatile fashion trend in the market, quick response (QR) has been a well-established practice for over two decades (Choi and Chow, 2008). The idea of quick response is to cut lead time and respond fast to market changes. With a reduced lead time, quick response helps to match market demand and supply better and this will directly reduce the amount of product leftover as well as the need of markdown and salvage of the unsold products. In addition to the implementation of versatile information systems (Choi and Sethi, 2010), many QR programs also employ local/nearby manufacturers as suppliers because this strategy can ensure a timely inventory supply in response to market demand changes. From this perspective, a QR program with sourcing from local manufacturers is also a program which is environmentally friendly in the sense that the required carbon footprint in shipping is much reduced compared to the sourcing scheme from far-away offshore manufacturers. Motivated by the industrial practice of QR in fashion apparel and the proposal of carbon footprint taxation scheme, this paper analytically studies how a properly designed carbon footprint taxation scheme can be imposed into a QR system to enhance environmental sustainability by offsetting the probable higher total logistics and production costs in employing local supplier. By examining both the single-ordering and the dual-ordering QR systems, we illustrate how the carbon footprint taxation scheme affects the optimal choice of sourcing decision. Our analytical findings reveal that a well-designed carbon footprint taxation scheme by governing body not only can successfully entice the fashion retailer to source from the local supplier, but it can also help to lower the level of risk for the fashion retailer. A mean-risk improving scenario hence results and it provides a significant incentive to convince the fashion retailer to support the idea of participating in QR in the presence of carbon footprint tax. The organization of the rest of this paper is given as follows. Section 2 presents a concise literature review. Section 3 shows the basic analytical QR model with Bayesian forecast updating and carbon footprint taxation scheme. Section 4 describes the findings and analytical results for the case with single ordering. Section 5 presents the dynamic inventory policy and insights for the case with dual ordering flexibility. Section 6 concludes the paper with a discussion on future research. To enhance exposition, all proofs are relegated to Appendix A.

We studied in this paper the implementation of carbon footprint tax on a QR system. Following the literature, we constructed the formal Bayesian forecast updating model. We then explored the optimal inventory policies to achieve the inventory service level target under the single ordering and dual ordering cases, respectively. For each case, we first investigated the analytical condition in which the fashion retailer will employ solely the local manufacturer as the supplier without the carbon footprint tax. We then explored the revised analytical situation under which the fashion retailer will source from the local manufacturer. We further conducted a risk analysis via studying the variance of profit under the QR system. Our analytical results indicate that: (i) When there is no carbon footprint tax, the choice on selecting the local manufacturer as the sourcing mode depends on the costs difference as well as the benefit of forecast update under QR; despite being possible, the likelihood of sourcing solely from the local manufacturer is low when there is no carbon footprint tax. (ii) In the presence of the carbon footprint tax, the fashion retailer will easily be enticed to employ the local manufacturer as the sole sourcing mode because the respective analytical conditions can easily be satisfied. (iii) From risk perspective, when the carbon footprint tax is present, the fashion retailer can reduce its level of risk by choosing to source from the local manufacturer under QR. This risk reduction effect (as a percentage) is also proven to the same as the demand uncertainty reduction effect for the single ordering scenario. For future research, in addition to the use of carbon footprint tax, one can also examine the issue with carbon quota and the corresponding probable trading mechanism in an open market for green shipment control. It will give further insights on how different measures can be imposed to improve environmental sustainability. To be specific, Song and Leng (2012) examined the carbon quota and trading schemes by using the newsvendor model setting. Similar analysis can be conducted in future research.