Supply Chain Subject Research Articles

IMPACT OF POS DATA SHARING ON SUPPLY CHAIN MANAGEMENT: AN EXPERIMENTAL STUDY

We examine the impact of point of sale (POS) data sharing on ordering decisions in a multi‐echelon supply chain. In particular, we focus on how exposure to POS data may help reduce the “bullwhip effect,” the tendency of orders to increase in variability as one moves up a supply chain. Theoretical studies have shown that exposure to POS data can lead to a reduction in the bullwhip effect when suppliers have no prior knowledge of the demand distribution. The benefit of sharing POS data in stable industries, where the demand distribution is commonly known, is less clear. We study this phenomenon from a behavioral perspective in the context of a simple, serial, supply chain subject to information lags and stochastic demand. We find, using a controlled simulation experiment, that sharing POS information does help reduce some components of the bullwhip effect in a stable demand setting, namely the order oscillation of upstream members. We offer one possible explanation for this improvement by examining the relationship between order decisions and demand line information.

Shortage gaming and supply chain performance

Supply chain management is an expanding field, both in research and in practice. Performance in supply chains is adversely affected by the bullwhip phenomenon. We have considered a decentralised supply chain subject to delays with no reliable past sales data, as in the case of a new product and modelled the supply chain using system dynamics. The impact of shortage gaming on whiplash effect is evident from the first model. When no reliable past data is available, sharing of demand forecasts may not be credible, as seen in the second model. The third model depicts a case where the shared information is credible as in the case of a customised product. This system shows a better performance.

Decentralized Supply Chains Subject to Information Delays

We consider a supply chain whose members are divisions of the same firm. The divisions are managed by different individuals with only local inventory information. Both the material and information flows in the supply chain are subject to delays. Under the assumption that the division managers share a common goal to optimize the overall performance of the supply chain (i.e., they act as a team), we characterize the optimal decision rules for the divisions. The team solution reveals the role of information leadtimes in determining the optimal replenishment strategies. We then show that the owner of the firm can manage the divisions as cost centers without compromising the systemwide performance. This is achieved by using an incentive-compatible measurement scheme based on accounting inventory levels. Finally, we investigate the impact of irrational behavior on supply chain performance and demonstrate that it is important for the upstream members of the supply chain to have access to accurate customer demand information.