The Effects of Information Sharing Strategies on Supply Chain Performance

This paper studies the effects of information sharing strategies on supply chain performance. We first consider four common types of information sharing strategies for a supply chain of a single product: (1) order information sharing where every stage of the supply chain only knows the orders from its immediate downstream stage; (2) demand information sharing where every stage has full information about consumer demand; (3) inventory information sharing where each stage shares its inventory levels and demand information with its immediate upstream stage; and (4) shipment information sharing where every stage shares its shipment data with its immediate upstream stage. Our results indicate that information sharing improves supply chain performance of overall inventory cost and fill rate when demand variability is low. We also show that different information sharing strategies affect different performance measures differently and may worsen some performance metrics when demand variability is high. We then find that a hybrid information sharing strategy, which uses the demand information sharing policy in the distribution network while using the inventory information sharing policy in the supplier network, is a better strategy to improve the overall performance of a supply chain of customizable products when the variability of demand mix is high. Index TermsInformation sharing, supply chain management, value of information, stochastic demand, product mix variability.