ANALYSIS OF FACTORS AFFECTING THE BENEFITS OF DEMAND INFORMATION SHARING

Sharing customer demand information across the supply chain is known to be an effective approach to improve the performance of the whole supply chain. However, demand information sharing between companies requires a large amount of budget and leads to a change in the work process within the organization. Therefore, it is necessary to verify whether the sharing of customer demand information is beneficial to the company or not by considering their business environment. This paper aims to analyze the benefits of demand information sharing between companies in various business environments in order to provide managerial implications for the companies considering the adoption of a collaborative inventory management policy with external companies. This research uses a simulation approach based on system dynamics to model the considered supply chain and to explore its performance. For the simulation test, two types of simulation models were developed which represent a supply chain without information sharing and a supply chain with information sharing. Test results were analyzed in terms of the bullwhip effect, the inventory level and the stockout rate of the retailer. The results of this research may help practitioners to understand the dynamics of supply chain when the customer demand is shared. These understandings could help them to make a decision on adopting a collaborative inventory management policy based on the demand information sharing. The originality of this paper is that it deals with various business environments which are rarely considered in the previous researches. These include the length of ordering cycle, the maximum size of ordering quantity, backlog versus lost sales and the type of information shared.