Information Exchange in the Supply Chain

Jayashankar M. Swaminathan, Norman Sadeh-Koniecpol, and Stephen Smith
tech. report CMU-RI-TR-95-36, Robotics Institute, Carnegie Mellon University, October, 1995


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Abstract
In recent years, manufacturers have taken initiatives to integrate information within their supply chains in order to provide quick response to customer needs. In this paper, we study the influence of sharing supplier capacity information (such as availiable-to-promise (ATP)) on the performance of a supply chain. We consider a supply chain in which a manufacturer orders raw materials from two alternative suppliers differing in cost and capacity. We first derive the optimal inventory policy for the manufacturer under stochastic demand. Subsequently, using simulation, we compare different information sharing scenarios. Among other results our study shows that, while information sharing is beneficial to overall supply chain performance, in can be detrimental to individual entities in the supply chain. We find that when supplier adoption costs of the information system are negligible, the more expensive supplier makes less profits under information sharing. However, it is forced to share information. When adoption costs are substantial, our results indicate that it is better for the manufacturer to have information links with fewer suppliers (a subset of potential suppliers).

Keywords
supply chain, stochastic demand, supply uncertainty, available-to-promise (ATP) information, inter-organizational system (IOS) adoption

Notes
Sponsor: ARPA
Grant ID: DACA76-89-C-0014, DAAE07-90-C-R059
Associated Center(s) / Consortia: Center for Integrated Manfacturing Decision Systems
Associated Lab(s) / Group(s): Intelligent Coordination and Logistics Laboratory
Number of pages: 34

Text Reference
Jayashankar M. Swaminathan, Norman Sadeh-Koniecpol, and Stephen Smith, "Information Exchange in the Supply Chain," tech. report CMU-RI-TR-95-36, Robotics Institute, Carnegie Mellon University, October, 1995

BibTeX Reference
@techreport{Swaminathan_1995_388,
   author = "Jayashankar M Swaminathan and Norman Sadeh-Koniecpol and Stephen Smith",
   title = "Information Exchange in the Supply Chain",
   booktitle = "",
   institution = "Robotics Institute",
   month = "October",
   year = "1995",
   number= "CMU-RI-TR-95-36",
   address= "Pittsburgh, PA",
}