Strategic information sharing in supply chain with value-perceived consumers

Information sharing is one of essential collaboration methods for building effective system-level disruption responses and communication for supply chain resilience. However, supply chain members are often reluctant to share the members' business information for fear of losing competitiveness. To facilitate the cooperation among these members, the supply chain members' should be made aware of the value of information. As a result, the purpose of this paper is to quantify the benefit of information sharing and evaluate its magnitude under various factors.

In this paper, information sharing is measured in a two-stage supply chain containing a manufacturer and a retailer. A demand function is constructed as a linear combination of a first-order autoregressive [AR(1)] process, the retail and reference prices. The values of information sharing are quantified for four scenarios: (1) no information sharing, (2) full information sharing, (3) limited information sharing and (4) partial information sharing. Based on the four scenarios, the conditions for valuable information sharing are determined. In addition, the impact of several demand parameters on the usefulness of information sharing is analyzed.

When the demand function is a pure AR(1) process (i.e. there is no impact from the retail and reference prices), information sharing is always valuable regardless of the autoregressive coefficient. Under the influence of the retail price and consumer behavior via the reference price, information sharing is not always beneficial. The boundaries for useful information sharing are analytically constructed. In addition to full information sharing, this study also quantifies the value of information under a partial sharing scheme. The results indicate that the information is more valuable as long as the information is inducible.

This study highlights several specific conditions for a beneficial information sharing agreement in consideration of consumer behaviors. These conditions enable supply chain members to design a sustainable partnership.