Information Sharing in a Supply Chain : Technology Choices for Reliability

Information sharing is the backbone of collaboration in a supply chain. In a B2B environment, partners may share information online using different technologies - the higher the technology sophistication, the higher are its cost and information reliability. We study the interactions between investment in technology, information reliability, and operational decisions, in a supply chain where the supplier is unable to make instantaneous deliveries due to manufacturing or purchase lead times. Our intent is to determine the economic equilibrium between supply chain partners incorporating information unreliability, to determine the optimal investment in technology for enhancing information reliability, and to structure an incentive scheme to ensure partners' participation in sharing information. Our study reveals that (i) access technology geared to reducing information noise, increases retailer's order quantity and decreases supplier's inventory buffer; (ii) increased demand-uncertainty increases value of information sharing; (iii) sharing the gains from noise reduction benefits both supplier and retailer but not indefinitely; (iv) technology with even moderate noise reduction rating can accrue benefits to the supplier if demand uncertainty is high, but the supplier becomes less willing to share gains