Information Sharing in the Supply Chain - Literature review Example

INFORMATION SHARING IN THE SUPPLY CHAIN Student’s Name Course Professor’s Name University City (State) Date Information Sharing in the Supply Chain The information sharing within a company is critical because it influences the supply chain performance that leads to high revenues and margins. Lotfi et al. (2013, p.298) stated that the sharing of information allows survivability of the business and enable the integration of the supply chain management. Notably, in the current world, there is the advancement in the systems of communication which has, in turn, facilitated the sharing of information. Furthermore, the international act of sharing information amongst the supply chains s moderated by the introduction of long-term connections and coordination that allow the companies to gain the competitive advantage. Interestingly, despite the knowledge of how the information sharing is significant, companies, countries, individuals, and departments lack to share the information (Martínez-Jurado and Moyano-Fuentes 2014, p. 134). The act of the exchange of information within the supply chain has very many significant benefits, and at the same time, there are costs that are involved. The manufacturing sector plays a very vital role in the economic development. Unfortunately, to thrive in the current world, the manufacturers need to find a way to cooperate on the global platform. Lotfi et al. (2013, p. 300) observed that indeed these businesses need to share information among each other’s and most importantly the up-to-date. Notably, there are also many hardware and software that are expected to make the working possible by sending and receiving information. However, it is the individuals that are involved at the jobs that determine whether or not the sharing of information is successful. The global market requires that firms work together as partners rather than individuals so that they can be aware of what to offer the consumers all over the world (Zhou et al. 2014, p. 627). In short, these companies whichever part they are situated in the world require information sharing. Exchange of information is the art and science of passing the useful data from one system, individuals, the organization to another. For the process to be successful, the interested participants need to figure out, how, when, what, and whom to tell the information so as the process to be successful. Answers give a way of efficiency since costs are reduced while the responses are accurately given (Denolf et al. 2015, p.19). The information sharing is similar to knowledge sharing and integration. As a result in the supply chain, there are many ways to which exchange of information is facilitated. The techniques are business, logistics, tactical, strategic amongst others (Ramanathan 2014, p. 215). In the recent times, the impact of the knowledge sharing is very significant in the supply chain through the Information Technology (IT). Evidently, the ability to coordinate and integrate the supply chain management (SCM) by use of the IT has created different models amongst the academic researchers. Consequently, all the studies conclude that an efficient supply chain is as a result of successful information sharing. As the exchange of information increases so do the certainty from consumers, who buy from the company (Stevens and Johnson 2016, p. 19). On the other hand, (Stevens and Johnson 2016, p. 21) observed that the technology and sharing of information are the key aspects when it comes to coordination amongst the participants in the supply chain. Apparently, the researchers comment that the today’s competition is not about the companies but rather the supply chains that enable distribution of the end products and the raw materials within the companies. In short, if a supply chain has an efficient information sharing system, then the company is likely to achieve success and competitive advantage over their competitors. Upstream and Downstream Information Sharing In the current and last decade information has been significant and has the facilitator of the most decisions that are made within the supply chain opportunities and possibilities so as to improve the efficiency of the supply chains. Information is power since it helps unwrap the complex business environment through the decision making. However, the performance and response of the information system are critically dependent on the members’ coordination (Kache et al. 2017, p. 13). The technologies such as the Enterprise Resource Planning (ERP) systems are just vessels of transferring information from one member and could not be successful if the participants do not co-ordinate (Cui et al. 2015, p. 2807). Furthermore, there is the abundance of information within each industry which primarily impacts the coordination of the supply chain. The downstream and upstream information sharing is critical, for instance, if the downstream participants share the information of what they know to the upstream distributors it enables the supply chain to be efficient. Theoretical Frameworks of Information Sharing Various theories represent the process of exchanging information. Engel (2015, p. 33) describes the agency theory as a social interaction that enables the principal and the agents to solve their problems. In this case, it is either the principal who contradicts with the agent desires or verifying whatever the agent is doing on their behalf. Mostly, this theory works well when dealing with the employer and employee relationships. At this point, it discusses the economic activities and separates the two by ownership power. In the case of the supply chain, the agent and significant relationship occur between powerful supply chain partners; the agent is strong while the principal is the weaker partner (Inderfurth, Sadrieh, and Voigt 2013, p.411). The theory utilizes factors such incentive alignment, management coordination, governance among other issues when it comes to discussing the supplier relationships. In this case, the theory expounds the relationship through internal antecedents such as how the organization can use incentives to foster the integration of the supply chain. In short, the agency theory brings out the supplier partners as both agent and principal while conducting a particular business transaction. The other theory that can describe information sharing with a supply chain is the transaction cost theory which deals mostly with the contractual part. This approach works at the micro-level, thereby, analyzing the importance of the contracts and their asset specificity to understand the different reactions. It is the theory that one can identify the distinct forms of costs such as bargaining, decision making, information, and policing costs among others (Engel 2015, p. 34). In SCM, the transaction cost theory enables firms to determine whether or not to outsource the activities or do it themselves. With the ability to identify the most critical forms of values such as the asset specify, the theory can bring out the opportunistic behavior (Montoya-Torres and Ortiz-Vargas 2014, p. 347. In short, the transaction cost theory utilizes the rationality, assumptions, and other risks to create opportunism, long-term relationships among other relationships within a supply chain management. Apparently, the game theory is better situated in analyzing the supplier relationship by using the symmetry and magnitude of the knowledge exchanged. It utilizes the bargaining power to show how the information sharing affects the supply chain members. For instance, if the producer does not know what the consumers want they will end up producing the wrong products that will ultimately ruin their market from the retailers then. Nevertheless, the game theory is more appropriate while discussing the supply chain performance (Engel 2015, p. 23). Consequently, the resource-based view describes the intangible and tangible assets which are limited, hard, original, and long-term. In short, the resources within a company are the strategic assets that determine the competitive advantage of the firm. The resource-based view and the transaction cost theory enable calculation of the specific assets that allow the company to have the competitive edge over its competitors (Costantino et al. 2014, p. 6). Supply Chain MAP The efficiency of the information sharing is achieved through identifying the value chain of a particular product. Kembro and Näslund (2014, p. 179) investigated the importance of exchange of information and at the same time identified some gaps and opportunities that were associated with the supply chains. Accordingly, the researchers found out that there is the significant seller-buyer relationship to facilitate the process. Kembro and Näslund (2014, p. 181) uses Figure 1 to show the different ways that information can be shared in the different supply chain. The serial structure is the standard structure which includes four participants which are the retailer, distributor, manufacturer and the supplier. On the other hand, the dyadic is the simplest form of information flow study and is the most considered. Further, Montoya-Torres and Ortiz-Vargas (2014, p.343) and Costantino et al. (2014, p. 4) commented that the international trade is dynamic, and therefore, demand uncertainty. As a result, the companies involved in production need to have appropriate production strategies which are in turn achievable by the appropriate communication. However, the biggest issue is how to coordinate all the players within a supply chain getting the information flowing so as to pass the knowledge. Figure 1 The Different Forms of Information Flow for Different Supply Chains- Source Kembro and Näslund 2014 Figure 2 The Supply Chain Map-Source Jeff Singer 2017. Figure 2 shows how information flows within the Cocoa value chain from the farmer to the multinational manufacturers (Jeff Singer 2017). The upstream information is shared from the cocoa bean production to the collectors, then local processors who in turn inform the exporters who pass it to the importers that tell the processors and finally the manufacturers. The downstream information is shared from the producers to the cocoa bean production. The information must circulate within a value chain so that the other resources can flow successfully. The companies go ahead and implement the supply chain information systems (SCISs) so that they can facilitate their management to enable the information flows. There are critical factors that emerge from the supply chain information flows during implementation and other periods (Denolf et al. 2015, p.17; Kache et al. 2017, p. 11). Additionally, Fahimnia et al. (2015, p. 1) suggested the use of systematic quantitative models to determine the risks involved in information flow within a value chain. In brief, the information sharing is very critical in the supply chains. Though there are costs involved in the exchange of information, there are many benefits that are got out if this process. The information flows can be described in various theoretical frameworks such as the game theory, agency theory, transaction cost theory, and the resource-based view. Each of these theories described the academic standing of the informer and informed in the real world situation. Finally, the information flows can be depicted in maps that show how the information flows from the sender to the receiver in a supply chain. There are factors and risks involved in this process, and therefore a supply chain should identify theirs so that they can deal with them. References Costantino, F., Di Gravio, G., Shaban, A. and Tronci, M., 2014. Replenishment policy based on information sharing to mitigate the severity of supply chain disruption. International Journal of Logistics Systems and Management, 18(1), pp.3-23. Cui, R., Allon, G., Bassamboo, A. and Van Mieghem, J.A., 2015. Information sharing in supply chains: An empirical and theoretical valuation. Management Science, 61(11), pp.2803-2824. Denolf, J.M., Trienekens, J.H., Wognum, P.N., van der Vorst, J.G. and Omta, S.O., 2015. Towards a framework of critical success factors for implementing supply chain information systems. Computers in Industry, 68, pp.16-26. Engel, T., 2015. Information Sharing as a Competitive Supply Chain Strategy: Mapping the Various Antecedents (Doctoral dissertation, Universitätsbibliothek der TU München). Fahimnia, B., Tang, C.S., Davarzani, H. and Sarkis, J., 2015. Quantitative models for managing supply chain risks: A review. European Journal of Operational Research, 247(1), pp.1-15. Jeff Singer, Q. 2017. 3.2.5. Value Chain Mapping Process | USAID Microlinks. [online] Microlinks.org. Available at: https://www.microlinks.org/good-practice-center/value-chain-wiki/value-chain-mapping-process [Accessed 6 Jul. 2017]. Kache, F., Kache, F., Seuring, S. and Seuring, S., 2017. Challenges and opportunities of digital information at the intersection of Big Data Analytics and supply chain management. International Journal of Operations & Production Management, 37(1), pp.10-36. Kembro, J. and Näslund, D., 2014. Information sharing in supply chains, myth or reality? A critical analysis of empirical literature. International Journal of Physical Distribution & Logistics Management, 44(3), pp.179-200. Lotfi, Z., Mukhtar, M., Sahran, S. and Zadeh, A.T., 2013. Information sharing in supply chain management. Procedia Technology, 11, pp.298-304. Martínez-Jurado, P.J. and Moyano-Fuentes, J., 2014. Lean management, supply chain management and sustainability: a literature review. Journal of Cleaner Production, 85, pp.134-150. Montoya-Torres, J.R. and Ortiz-Vargas, D.A., 2014. Collaboration and information sharing in dyadic supply chains: A literature review over the period 2000–2012. Estudios Gerenciales, 30(133), pp.343-354. Ramanathan, U., 2014. Performance of supply chain collaboration–A simulation study. Expert Systems with Applications, 41(1), pp.210-220. Stevens, G.C. and Johnson, M., 2016. Integrating the supply chain… 25 years on. International Journal of Physical Distribution & Logistics Management, 46(1), pp.19-42. Inderfurth, K., Sadrieh, A. and Voigt, G., 2013. The impact of information sharing on supply chain performance under asymmetric information. Production and Operations Management, 22(2), pp.410-425. Zhou, H., Shou, Y., Zhai, X., Li, L., Wood, C. and Wu, X., 2014. Supply chain practice and information quality: A supply chain strategy study. International Journal of Production Economics, 147, pp.624-633. Read More