Capacity constraints, demand uncertainty, and the value of supply information sharing

Abstract

Economic globalisation in general and enhanced core competencies in particular have greatly increased supply chain complexity. Supply chain integration is essential for effective supply chain management, whereas information sharing is a necessary condition for integrated supply chain operations. Supply chain information sharing (SCIS) research is more on demand-side than on supply-side. This paper simulates operating activities with and without supply information sharing in a three-level capacitated supply chain by using a simulation model with mixed-integer programming. The simulation results indicate that supply information sharing can greatly improve supply chain performance in terms of cost and service level. The impacts of supply information sharing on the supply chain performance are heavily influenced by demand patterns and capacity tightness.