Abstract
This paper evaluates (via simulation) the benefit of a supplier sharing its shipping quantity with its immediate downstream customer in a supply chain. Upstream supply chain members cannot always satisfy exactly what downstream members order on time. Instead the firm may split the order – fulfilling it in multiple shipments. Consequently, shipment quantities arriving at the customer side, following a given lead-time, may be different from what the customer expects (here we define this phenomenon as shipping quantity uncertainty). In the situation that the supplier does not inform the customer about the exact shipping quantity in advance, the customer is aware of this information only when it receives the shipments and the only way to respond is using safety stock. However, if the supplier informs the customer about the shipping quantity when sent out, the customer may have enough time to adapt and mitigate this uncertainty by adjusting its future order decision. Our results indicate that in a three-tier linear supply chain network, this strategy, enabled by information technologies, benefits customers (the information receivers), but not always benefit the supplier (the information sender). This unequal impact may cause implementation barriers. This study provides a simulation approach to examine the strategy of sharing shipping quantity information in a general supply chain and to help organizations evaluate the cost-benefit trade-off.
Recommended Citation
Zhang, Cheng; Tan, GekWoo; Zheng, Xin; and Robb, David J., "Evaluating the Value of Shipment Information Sharing in a Supply Chain: A Simulation-Based Approach" (2002). PACIS 2002 Proceedings. 80.
https://aisel.aisnet.org/pacis2002/80