Information Sharing In Supply Chains

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Information Sharing In Supply Chains

• 18.11.2008
• Ogan Yigitbasioglu (PhD)

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The Era of Information TechnologyWhat happened?

• For decades, companies have been investing into
  computer based information systems (IS)
• -gtINFORMATION TECHNOLOGY

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The increasing role of IT in companies

• IT is used to better manage processes
• for manufacturing and inventory control
• MRP,
• MRP II,
• .
• and for business processes all together
• ERPS

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Why all this?

• The strive at operational excellence
• (to reduce costs, to increase profits, better
  quality, more speed, etc.)
• Is it possible to succeed on your own as a
  company?
• Is a company a standalone entity?

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The supply chain perspective

• A company is usually part of a supply chain
• A company has suppliers and customers
• (Transaction Cost Theory explains the size of
  the company)
• External factors to the company are as important
  as internal factors! (if not more)

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Why is it good to collaborate in the supply chain?

• There is uncertainty
• (e.g. customer demand, suppliers, technology,
  competitor actions..)
• How to combat uncertainty?
• More flexibility, more buffers, or more
  collaboration (information sharing)?
• What is cheaper?

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Benefits of collaboration

• To reduce uncertainty (supplier, customer and
  environmental)
• To estimate demand better
• -to prevent the bullwhip effect (Forrester,
  1958)
• Synergies in RD
• .

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Supply Chain Collaboration Practices

• Demand Collaboration
• Joint Inventory Planning
• Vendor Managed Inventory
• Logistics Coordination
• Joint Capacity Planning
• Joint Production Planning
• Joint Goal and Target Setting
• Collaborative Research and Design
• Collaborative Planning, Forecasting and
  Replenishment
• Open book accounting

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The supporting IT

• Spurred by the era of e-commerce (and the
  Internet)
• The emergence of numerous software solutions
• SAP, Manugistics (now JDA), i2, ORACLE, IBM,
  etc. that facilitate collaboration.
• this all requires information sharing in the
  supply chain

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Research on Interorganizational Information
Systems

• Earlier research (pre e-commerce era) focused on
  the use of EDI -gt reduction of manual work,
  search costs, etc. (Bakos 1991, Cash and
  Konsynski 1985, ..)
• -focus on the exchange of operational data (not
  planning information)
• Research on sharing demand forecast information
  and inventory -gt better supply quality, supplier
  responsiveness, etc. (Larson and Kulchitsky 2000,
  Petersen et al. 2005, )
• Research on supplier integration Saeed et al.
  (2005) -gt reduced transaction costs and lead time
  uncertainty

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More research on collaboration

• Research on collaborative planning (Petersen et
  al. 2005, Bagchi and Larsen 2005) -gt positive
  effect on inventory turns, lead times, order fill
  rate, production flexibility, etc..)
• Research on effective SCM -gt positive effect on
  ROI and competitive advantage (Li et al. 2006)
• Research on e-collaboration tools in the supply
  chain (Cassivi et al. 2004) -gt improved resource
  and output performance, and more flexibility.

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Also some counter arguments to information sharing

• Information sharing is not enough but the
  coordination of activities is crucial (Disney et
  al. 2004)
• There is no value of information sharing as
  companies can use their own business intelligence
  to estimate demand (Graves 1999)

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Information Sharing in SF/SWEYigitbasioglu
(2008) n119 (SF), n102 (SWE)
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Implications of information sharing

• Increases trust
• Supply chain as a competitive advantage
• (competition between supply chains as opposed to
  companies)
• (Resource based view of the company, social
  capital (Coleman 1988))
• Risks???
• -gt Opportunism

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So

• Information sharing is beneficial
• Information sharing is risky
• So, what are the factors that might explain the
  level of information shared between companies?

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Explanatory Factors

• The urgency to reduce costs (competitive
  pressures)
• Power (dependency)
• The risk of opportunism
• The level of uncertainty
• ......