Application of agency theory to collaborative supply chains

This paper describes some supply chain theory using a case study based on a large coal export supply network in Australia, namely the Hunter Valley Coal Chain. This involves the supply of coal by road and rail from some 30 mines scattered around the Hunter Valley to the Port of Newcastle for loading onto very large bulk carrying ships. Due to severe constraints on the capacity of the infrastructure involved, highly competitive adversarial and destructive relationships have evolved between the supply chain players. As a result, the supply chain is characterised by high inventory levels, delays and queues which perhaps could be lessened if the players would work together instead of competing for capacity so intensely through destructive political and economic relationships. This paper proposes Agency Theory and other organisational theories as the means of achieving more collaborative relationships between supply chain players and hence much greater supply efficiencies to the collective good of the all of the supply chain players.