Benefits of information sharing with supply chain partnerships

Abstract

The power of information technology can be harnessed to help supply chain members establish partnerships for better supply chain system performance. Supply chain partnerships can mitigate deficiencies associated with decentralized control and reduce the “bullwhip effect”. This study illustrates the benefits of supply chain partnerships based on information sharing. For a decentralized supply chain comprising a manufacturer and a retailer, we derive the members’ optimal inventory policies under different information sharing scenarios. We show that increasing information sharing among the members in a decentralized supply chain will lead to Pareto improvement in the performance of the entire chain. Specifically, the supply chain members can reap benefits in terms of reductions in inventory levels and cost savings from forming partnerships with one another. A case study is provided for illustration.

Exploring how inter-organizational relational benefits affect information sharing in supply chains

“…The path coefficients of both groups were separately analyzed using a multiple group analysis, assuring that the model's goodness of fit is similar for both. For the R&D collaboration group, the fit indices were acceptable (v 2 …”

“…By making greater information available and sharing it among supply chain members such as suppliers or subcontractors, a manufacturing firm can make better decisions on ordering, production planning, and capacity allocation so that the supply chain dynamics can be optimized [1]. Information sharing plays a key role in a supply chain since it can help firms to achieve specific objectives and benefits in terms of reductions in total costs and inventories to maximize profits [2,3] and enhance supply chain performance [4]. Because it enhances the competitive advantage of the supply chain as a whole, inter-organizational information sharing in a supply chain has thus become a common practice [5][6][7].…”

The role of top management in supply chain management practices

“…Information sharing among the supply chain members is an important prerequisite for collaboration (Lee and Whang, 2000;Xu and Dong, 2004;Yu et al, 2001) and has a great impact on the performance in the supply chain (Barratt 2004). The general reason for this statement is that information sharing among supply chain members can reduce different kinds of uncertainties that cause higher costs.…”

“…The general reason for this statement is that information sharing among supply chain members can reduce different kinds of uncertainties that cause higher costs. Yu et al (2001) explain the logic behind this: "While every single member [of the supply chain] has perfect information about itself, uncertainties arise due to a lack of perfect information about other members. To reduce uncertainties, the supply chain member should obtain more information about other members.…”

“…As stated in chapter 4.4.3, information sharing is a prerequisite for collaboration and has a great impact on performance in the supply chain. The underlying basic explanation for this statement is that access to information can reduce uncertainties in the supply chain (Yu et al, 2001). An increased frequency of information sharing can help to reduce uncertainty and dampen the Bullwhip effect, and thereby reduce the need for e.g.…”