The general method of coordinating studies consists of two stages. First of all, we start from a central decision-maker with complete information that solves the problem. The result is a first solution linked to the system-wide performance objective. In a second step, we examine the decentralized problem and design a contract protocol that approaches, or even achieves, the performance of the former. Channel coordination theory aims to support performance optimization by developing provisions to coordinate the different objectives of the partners. These are called coordination mechanisms or systems that control the flow of information, materials (or services) and financial assets along chains. Generally speaking, a contracting system should include the following: Channel coordination (or supply chain coordination) aims to improve the performance of the supply chain by agreeing on each company`s plans and objectives. It typically focuses on inventory management and order decisions in distributed business-to-business environments. Channel coordination models can include multi-tier inventory theory, multiple decision makers, asymmetric information, as well as current manufacturing paradigms such as mass adaptation, short product life cycles, outsourcing, and delayed differentiation. The theoretical basis of coordination is mainly based on contract theory. The problem of channel coordination was first modelled and analysed in 1992 by Anantasubramania Kumar.  The relationship can be temporary or permanent.
In the temporary case, one- or two-time models, or even an auction mechanism, are usually used. But coordination is even more important in ongoing relationships, where planning is usually in the process of rolling. To coordinate a permanent offer relationship, the learning effect must be taken into account, that is, the players intend to learn the private information and behavior of the other. In this type of contract, the supplier offers to buy back the remaining obsolete inventory at a reduced price. This supports the allocation of stock risk among partners. A variant of this contract is the backup contract, in which the customer makes a preliminary forecast and then makes an order smaller or equal to the planned quantity. If the order is lower, it will also have to pay a proportional penalty for the balance of the obsolete inventory. Buyout agreements are widely used in the press, book, CD and fashion industries.
One of the main characteristics of coordination is the balance of power of the players. Power is influenced by several factors, such as. B.dem the process know-how acquired, the number of competitors, the value-added ratio, market access and financial resources. The application of certain auction mechanisms is also an instrument often used to coordinate the plans of different decision-makers. . . .