Trust, Information Technology, and Cooperation in Supply Chains

Abstract

The decentralized control of supply chains enables them to adapt to unforeseen circumstances. However, local decisions can lead to suboptimal outcomes at the global level, as with the bullwhip effect and vicious cycles, if cooperation between supply chain members gives way to competition. Forecasting systems and other forms of information technology promise to alleviate the bullwhip effect and vicious cycles but may actually exacerbate these problems if used inappropriately. Inappropriate trust in the forecasting technology can lead to erroneous decisions, and supply chain members may misinterpret these technology- induced errors as the intent of other supply chain members to compete. This paper reviews literature regarding trust in technology and presents a framework for information sharing that can help to promote appropriate trust in supply chain technology and in other supply chain members. Explicitly considering trust in technology may lead to improved supply chain performance and may protect against loss of trust between supply chain members. Overall, this paper identifies human interaction with forecasting systems and other types of technology as an important contributor to cooperation and performance in supply chains.