Publication Type

Journal Article

Version

submittedVersion

Publication Date

11-2023

Abstract

Problem definition: With the rapid growth of the gig economy, on-demand staffing platforms have emerged to help companies manage their temporary workforce. This emerging business-to-business context motivates us to study a new form of supply chain coordination problem. We consider a staffing platform managing an on-demand workforce to serve multiple firms facing stochastic labor demand. Before demand realization, each individual firm can hire permanent employees, whereas the platform determines a compensation rate for potential on-demand workers. After knowing the realized demand, firms in need can request on-demand workers from the platform, and then, the platform operator allocates the available on-demand workforce among the firms. We explore how to maximize and distribute the benefits of an on-demand workforce through coordinating self-interested parties in the staffing system. Methodology/results: We combine game theory and online optimization techniques to address the challenges in incentivizing and coordinating the online workforce. We propose a novel and easily implementable fill rate-based allocation and coordination mechanism that enables the on-demand workforce to be shared optimally when individual firms and the platform operator make decisions in their own interest. We also show that the proposed mechanism can be adapted to the cases when contract terms need to be identical to all firms and when actual demand is unverifiable. Managerial implications: The proposed contract mechanism is in line with the performance-based contracting commonly used in on-demand staffing services. Our results suggest that under an appropriately designed performance-based mechanism, individual firms and the platform operator can share the maximum benefits of on-demand staffing.

Keywords

on-demand staffing, capacity pooling, capacity allocation, supply chain coordination

Discipline

Operations and Supply Chain Management | Strategic Management Policy

Research Areas

Operations Management

Publication

Manufacturing and Service Operations Management

Volume

25

Issue

6

First Page

2216

Last Page

2232

ISSN

1523-4614

Identifier

10.1287/msom.2021.0327

Publisher

Institute for Operations Research and Management Sciences

Copyright Owner and License

Authors

Additional URL

https://doi.org/10.1287/msom.2021.0327

Download

Share

COinS