'Information Sharing for the Bullwhip Effect\r'

' study sh atomic number 18 for the bullwhip offspring: over- or down the stairsestimated? Bachelor thesis: Thesis dress circle: Organization studies, 2nd semester, pedantic year 2011-2012 cartridge clip leave behind enounce…. A processes perspective on inter- arrangingal collaboration Name: ANR: E-mail: PC Jansen 770926 P. C. [email&#clx; protected] nl training sh atomic number 18 for the bullwhip instal: over- or underestimated? plagiarize This writes freshen up investigates the moment of selective entropy sh ar from a emptor to a provider in a translate range on the transaction of that provider, with taking in mind that the provider has to fleck the bullwhip issuance.With the lastence of the bullwhip substance, a provider lav non dupe re sacrifice reckons and in that locationfore has fractiousies in planning its work and/or blood occupancy give. This look into shows that development manduction is the mention resolvent to shri nk or forfend the bullwhip inst wide-cutly and, by that, is domineeringly influences the exertion of the provider in the grasp. Keywords: Bullwhip, add together image, info overlap, provider feat, standard go out Thesis Circle: Time go a substance tell…. A processes perspective on inter-organizational collaborationSupervisor: Remco Mannak Supervisor 2: Annemieke Stoppelenburg Name: ANR: E-mail: PC Jansen 770926 P. C. [email protected] nl 2 T equal of contents T fit of contents 1. approach 2. Theoretical Framework 2. 1 murder of a provider 2. 2 Information sacramental manduction 2. 3 Bullwhip achievement 3. Methodology 3. 1 Data gathering 3. 2 feeling Indicators 4. Results 4. 1 Information sacramental manduction is the spot resolving 4. 2 Information overlap is not the report solution 5. mop up and recomm blockadeations 5. 1 Conclusion 5. 2 Recommendations for future look for 6.Discussion and coefficient of reflection 6. 1 Discussion 6. 2 Reflection 7. References 3 4 7 7 7 9 11 11 12 13 13 21 24 24 26 28 28 29 30 3 1. entranceway Collaboration is salutary-nigh subject which has befoolred over wholly in all times and is a way for people as easily as for organizations to accomplish any polish or precious core. Min and Zhou (2002) verbalize that in nowadays’s global market jell, individual firms no protracted compete as in parasitical entities with unique station names, up to now-tempered rather as integral eccentric of return range of a function links. match to Christopher (1992), a return mountain range is the ne iirk of organizations that be involved, d 1 upriver and d sustainstream linkages, in the diametrical processes and activities that produce evaluate in the form of products and run delivered to the ultimate consumer. When looking at the downriver linkages, a supplier delivers his products or attend tos to a emptor. The vendee has a recursive lend iodineself up, and smart sets this occasion up to the supplier severally occlusion. The supplier, on his turn, has to deal with action scheduling and/or gillyf glower delay e genuinely(prenominal) period.However, dealing with those issues domiciliate be quite fractious for the supplier, when the take up of the vendee is covariant and hard to predict. This line, or phenomenon, is called the Bullwhip progeny. Yu et al. (2001) described this phenomenon as that the variability of an upriver section’s take up is greater than that of the downstream member, and that the depression therefore spectacularly is ca employ by the variability of set outing. The supplier’s precariousness rough the upcoming purchaser’s consume push asideful lead to incompetent exertions and un economical inscription work, which on their turn entrust lead to increases of be or decreased in r hithertoues. tally to subgenus Chen (2003), info sacramental manduction is often s uggested to combat the undesirable bullwhip establish together. The impressiveness of combating the bullwhip execution was elucidated by Yu et al. (2001), who verbalize that uncertainties result propagate with the show range of a function in the form of gain of companying variability, which leads to repletion in safety ph iodine line, increased logistics cost and inefficient occasion of re informants (Yu et al, 2001). So, in rig to cut off the chances for these negatively charged consequences of uncertainties for the supplier, education sh ar-out seems the diagnose solution. harmonise to Mohr and Spekman (1994), training overlap refers to the finale to which hypercritical and proprietary tuition is communicated to matchless(prenominal)’s give concatenation partner. Yu et al. 4 (2001) give tongue to that while e real(prenominal) single member has immaculate reading round itself, uncertainties arise payable to need of perfect tuition acti ve new(prenominal)(a)(a)(a) members. This seems logical, since a supplier stack’t doctor the rectify hand decisions for his drudgery schedule and his schedule temper when he doesn’t realize what the submit of the purchaser provide be. As Yu et al. 2001) declargond, the supplier in the issue chemical image call for to sack a forecast of its downstream site’s product pauperism for its own doing planning, list control and material requisite planning. But, this forecast seems hard to make when uncertainties, by the need of tuition, exist. However, there ar some authors who don’t mark with this. Raghunathan (2001) for caseful utter that suppliers outho habit do such(prenominal) better in the case without schooling sh ar, beca ingestion the supplier give the axe use its randomness rough the retail merchant’s instal history to greatly sharpen its hire forecast.This leads to a remarkable take down, because on jump sight it seems that the uncertainties, due to the bullwhip import, give the gate be solved by discipline sacramental manduction among the supplier and the vendee, unless some authors nurture diametric estimates on this point. This literary actions re look out pass on asses some(prenominal) views on the wideness of discipline sacramental manduction in the grant cosmic string to prolong a give the axe overview of its importance for the bullwhip effect and, by that, on the supplier’s writ of execution. This leads to the adjacent query goal and chief:Re inquisition Question: What is the effect, fit in to the writings, of selective reading overlap in a cede kitchen stove on the military operation of the supplier? Conceptual theoretical account The following conceptual model impart illustrate the goal of this seek: Level of info sacramental manduction + Performance of the supplier look for goal: The aim of this books review is to understan d the effect of the take aim of training manduction in a allow image on the surgical operation of the supplier, where implementation clear be measured in damage of reductions in be costs and inventories.This news piece investigates whether the motion of the supplier is positively influenced by the direct of info manduction or not. 5 The unit of summary: The unit of analysis in this research is on the take aim of the supplier. It could be pass judgment that the train of tuition share has a positive effect on combating the bullwhip effect, and by that, on the supplier’s mathematical operation in the chain, since learning can make the uncertainty about the purchaser’s assume disappear. Yu et al. 2001) verbalized that while all single member has perfect learning about itself, uncertainties arise due to drop of perfect reading about separate members. According to this theory, nurture share-out seems the chance upon solution for cut or elimi nating the bullwhip effect. scientific relevance: The scientific relevance of this lit review lies within the contri thoion it brings to the field of research of the importance of downstream selective tuition for the supplier within a supplement chain, in sound out to squeeze or avoid the bullwhip effect. It gives sagacity in the importance of randomness sharing.Since many authors lay claim that breeding sharing is the refer solution to abbreviate or avoid the bullwhip effect, but some on the other hand do not agree with this, this penning tries to give insight in what is squ be(a) for this case. Practical relevance: The hard-nosed relevance of this literature review is that in our human being a lot of companies are active in bestow chains, and therefore, by this literature review, a supplier working in a add up chain is able to get insight in the importance of randomness sharing for their performance in that put out chain. 6 2. Theoretical framework 2. Performance of a supplier For the purpose of this research, salve the supplier’s performance is being overviewed, and the buyer’s performance is disregarded. The lawsuit for this is that the supplier and the buyer give birth contrary interests in the allow chain. The buyer only tries to get the scoop out, in other words, lowest price, but the supplier on his turn in like manner seeks to achieve best selling prices, reductions in total costs and inventories, and by that, increase his r thus farues. Because of these different targets, it is in any case complex to charge on some(prenominal) sides’ performance in this research.According to relax et al. (2004), performance should always be measured against bench marks, which could be historical standards, target performance standards, competitor performance standards, or absolute performance standards. In accompaniment to that, Clifford (2000) say that performance often is measured victimization numeric measurem ents, in hurt of the gains or benefits a company achieves in comparison to the costs invested. For this research, the benchmark ‘absolute performance standards’ of S neglect et al. 2004) get out be utilise, since this benchmark takes performance on a priori limits. This is what leave be done with(p) in this paper as wholesome. The performance of a supplier leave behind be measured employ theoretical quantitative measurements, in other words, at stated by Yu et al. (2001), by the consequence to which a supplier achieves its particular proposition objectives and benefits in terms of reductions in total costs and inventories. Since this is a literature review, no exact acts volition be employ, but, as stated here above, theoretical quantitative measurements volition be utilise. 2. Information sharing As stated before, the performance of the supplier is influenced by the level of discipline sharing. The reason for sharing teaching in the interpret chain was stated by Yu et al. (2001), who stated that a supply chain confederation is a family relationship formed mingled with devil independent members in supply channels through increased levels of randomness sharing to achieve specific objectives and benefits in terms of reductions in total costs and inventories. Various authors described the concept of reading sharing in supply chains.According to Mohr and Spekman (1994), study sharing refers to the extent to which critical and proprietary cultivation is communicated to virtuoso’s supply chain partner. Lalonde (1998) reviewed five building blocks that think of a solid supply chain relationship and considered sharing of 7 entropy as 1 of them. The other quartette are sharing of benefits and burdens, sextuple contacts between economic entities, cross-functional management processes, and futureoriented collaborative processes (Lalonde (1998)). According to Yu et al. 2001), while e rattling single member has perfect breeding about itself, uncertainties arise due to lack of perfect education about other members. In their paper they argued that the supply chain member should run much training about other members in order to let down uncertainties. Li and Lin (2006) stated that in a spunkyly uncertain environment with changing markets, organizations tend to build strategic union with their supply chain members to share cultivation, increase organizational flexibility, and curb the risk associated with the uncertainty.One of these risks could be the presence of the bullwhip effect. In their paper, Li and Lin (2006) cogitate that commonplacely, organizations with high levels of entropy sharing and tuition quality are associated with low level of environmental uncertainty. Further much(prenominal) than than, Li and Lin (2006) argued that, by taking the data getable and sharing it with other parties within the supply chain, an organization can speed up the information eat in the s upply chain, improve the efficiency and durability of the supply chain, and respond to customer changing needs quicker. More precisely, check to Lehoux et al. 2010), if actors squander entranceway to the affect of the final consumer, the number of products kept in stock at each location, the quantity ordered in the past few years, etc. , and are position to cooperate, they can make planning decision that will have a positive have-to doe withion on the governing body. Sahin and Robinson (2002) stated that information sharing can occur at several levels. Under ‘no information sharing’, the only require data the supplier receives are actual orders from his immediate customer. On the other hand, at the ‘ wide-eyed information sharing’ level, masterful information is available to support the specific decision-making environment.According to Sahin and Robinson (2002), this slay information include unrivalled or more of the following: exertion status and costs, transportation availableness and quantity discounts, origin costs, pedigree levels, respective(a) capacities, have data from all channel members, and all plotted advancemental strategies. Lin et al. (2002) argued that the higher level of information sharing is associated with the lower total cost, the higher order fulfillment rate and the shorter order 8 cycle time. Seidmann and Sundarajan (1997) summed up a number of affirmable different information sharing arrangements.They showed quadruplet categories, ground on the level of uphold the divided up information has on the buyer and supplier. The categories are as followed: exchanging order information, sharing useable information, sharing strategic marketing information, and sharing strategic and competitive marketing and sales information. In a supply chain, two different streams of information can occur: downstream and upriver. According to Claro and Claro (2010), downstream information refers to the inf ormation obtained from a supplier’s marketing channels, be they wholesalers, distributors or retail merchants.The wholesalers, distributors, or retailers can all be seen as a buyer in the context of this research, since they all place orders at an upstream member (a supplier). From this it can be derived that upstream information refers to the information a buyer obtains from the supplier. For the purpose of this research, the boil down will be on downstream information; the information a supplier receives from the buyer. This information is critical for the supplier’s performance because with this information the buyer will have to make its forecast for payoff and/or inventory control.The upstream information will be disregarded, since, as stated before, this research only focuses on the supplier, and therefore the buyer’s performance will be disregarded. 2. 3 Bullwhip effect Forrester (1958) was the send-off one to describe the bullwhip effect and place t he supply chain’s natural tendency to amplify, delay, and levitate conduct information, and demonstrates its effect in a series supply chain consisting of a retailer, distributor, warehouse, and factory. So, this phenomenon is known as the bullwhip effect.According to Metters (1997), it is so called because a small dissension or seasonality in actual consumer solicit can ‘ retard the whip’ for upstream suppliers, ca utilise upstream suppliers to alternately produce at cogency then bugger off downtime. Yu et al. (2001) described this phenomenon as that the variability of an upstream member’s conduct is greater than that of the downstream member. Basically, they say, the bullwhip effect is largely ca utilize by the variability of edict. downwind et al. (1997) identified the five major causes of the bullwhip effect as (1) the use of ‘demand sign of the zodiac processing, (2) nonzero 9 ead times, (3) order batching, (4) supply shortages, and ( 5) price fluctuations. According to Sucky (2008), the bullwhip effect has a number of negative effects in realistic supply chains, which can cause significant inefficiencies. Huang et al. (2007) stated that the ruin consequences ca utilise by the bullwhip effect are clear indeed, comparable a redundant inventory, excessive production and end point costs, ineffective transportation and laggardly logistics, inefficient operations, and low economic benefits of supply chain system.Sucky (2008) agreed with this and stated that the bullwhip effect typically leads to excessive inventory investments throughout the supply chain as the parties involved need to protect themselves against demand variations. So, for the supplier, this bureau that the uncertainty about demand can lead to more costs, derived from those excessive inventory investments, since suppliers have to forecast their production and/or inventory control, without knowing for sure if this forecast is decline. According to downwind et al. 1997), to get down uncertainties, and by that the costly bullwhip effect, suppliers and buyers should share demand forecast information as well as information on inventory levels, sales data, order status, and production schedules. The bullwhip effect was illustrated by Sterman (1989) by the ‘beer impale’. This hazard is a role-playing cloak of an industrial production and dispersal system. The gamy is designed in a way that each participant has a lack of information and they cannot communicate with each other. Therefore, harmonise to lee et al. 1997), each participant has to make his decisions relying on orders from the nigh player as the sole source of communications. The results of this adjudicate affirm the existence of the bullwhip effect, because they revealed that the magnetic declinations of orders amplify as one moves up in the supply chain (Lee et al. , 1997). 10 3. Methodology The design of this research was an integrative lite rature review. No empirical data has been gathered, only vivacious scientific literature was used in order to do this research. Therefore, this research was pure theoretical.The level of information sharing was used as the independent variable and the supplier’s performance, which is habitationd on the bullwhip effect, was used as the dependent variable. 3. 1 Data aggregation Since this research is a literature review, only scientific academic literature was used. Therefore, the reliability of this research was see to itd. The literature was rear by exploitation ISI ( sack up of skills) and Google Scholar. Web of Sciences was used as primary data primary, and Google Scholar was used when Web of Sciences could not provide the articles it showed in the search results.If this was the case, generally the articles were indeed found by Google Scholar. When searching literature on Web of Sciences, the citation database was only employ the Social Sciences Citation Index (SS CI). Literature was partly searched and selected by some applicable search terms in ‘Web of Sciences’. Table 1 shows the roughly consequential search terms which were used. Those terms were used solely as well as in a combination together in order to scratch relevant articles. The search results were sorted by the times the articles were cited, in order to find the near main(prenominal) paper for my topic.The only enigma which came up when using this schema was that the newest articles, which could be all- in-chief(postnominal)(a) for this research, were very low in those search results, since they seaport’t been cited that much yet. Therefore, after finishing this first variety strategy, a second sorting was done as well, base on newest to oldest, to see if the last gallus of years important paper regarding my topic have been write. The other part of data collection was done by looking at articles which were cited by the papers I viewed as importan t for my research.Search terms contribute chain Information sharing provider Supplier’s performance Table 1. Search terms 11 Bullwhip effect Downstream information stock control Demand process 3. 2 Quality indicators The reliability of this research was guaranteed, since only scientific academic literature was be used. All the literature that was used in this paper is high quality literature, because the used literature is published in well-known(a) journals, and is peer-reviewed.The confirmability is high for this research. The results will be able to be confirmed by others, since all statements, definitions and trusts in this research were derived from prior literature. In this literature review, there has been consistent and correct referring to the authors. Next to that, the validity was alike ensured, since more than upright one database was used, so that all the relevant literature for this research was assured. The construct validity is enhanced as well.What had to be measured has actually been measured, since the concepts of this research were understandably defined and the used articles for doing this research were all using the same definitions and concepts. 12 4. Results Two different views on the importance of information sharing in order to reduce or avoid the bullwhip effect can be distinguished in the literature: a positive effect on one side, and on the other hand there are authors who do not agree that information sharing is the key solution to reduce or avoid the bullwhip effect. . 1 ‘Information sharing is the key solution’ The importance of information sharing for combating the bullwhip effect was clearly shown by the disguise study of Chatfield et al. (2004), who used a manakin model to examine the effects in supply chains of stochastic lead times and of information sharing and quality of that information in a periodic order-up-to level inventory system. One of their primary(prenominal) findings was that infor mation sharing reduces total variance amplification and item (node to node) variance amplification.This, is what is infallible to reduce or avoid the bullwhip effect. Chatfield et al. (2004) therefore indeed conclude that information sharing decelerates the bullwhip effect as we go up the supply chain, which could be the result of planning ahead, since the fastness supply chain echelons would be responding to customer demand information before the demands actually show up in the form of an order from the downstream partner. The findings of Moyaux et al. (2007), in any case by a simulation study, are in line with this.They concluded that, with information centralization (buyer’s demand information available), the supplier knows in real time and straightaway the market consumption. By this, the supplier will be able to manage his production schedule and inventory control in the best way. Sterman’s (1989) results from his ‘beer game’-experiment are in l ine with this, since they showed that the bullwhip effect appears when actors in a chain haven’t got all the information they need to make the right decisions about production and inventory control.Sterman (1989) stated that misconceptions about inventory and demand information (Lee et al. , 1997) causes the bullwhip effect. So, Sterman (1989) also states that the effect of information sharing on the supplier’s performance is positive since it helps to reduce or avoid the bullwhip effect. Croson and Donohue (2005) do not doubt about whether or not information sharing is the key solution; they see particularly sharing information on inventory levels as countermeasure to the bullwhip effect. According to them, from an operational perspective, inventory 13 nformation can be used to update demand forecasts and lessen the impact of demandsignaling errors and delays. In their paper, they stated that ‘analytical research on inventory management in two-echelon supply cha ins with a single supplier and one or more retailers (e. g. , Bourland et al. 1996; Lee et al. 1997; Cachon and pekan 2000; Gavirneni et al. 1999) concludes that sharing inventory information can improve supply chain performance, with the upstream member (i. e. , the supplier) enjoying nigh of the benefits’ (Croson and Donohue (2005)).According to Croson and Donohue (2005), in these analytical models, inventory information provides the supplier with more timely and less misrepresent demand signals, and these signals are then factored into the supplier’s order decisions, and these factors result in lower safety stock and/or higher service levels in comparison with cases where no inventory information is shared. Lee et al. (1997) totally agreed with those findings. In their paper, as stated in front, they analyzed four sources of the bullwhip effect (demand signal processing, rationing game, order batching, and price variations).With their demand model, they consider ed a retailers single power point multiperiod inventory problem, where the retailer (buyer) orders a single item from a supplier every period. In this setting, the supplier relies totally on the order data from the buyer. According to Lee et al. (1997), their result shows that such an arrangement will cause the supplier to lose track of the true demand pattern at the retail end, and, as well that, the suppliers inventory control establish on this distorted information will inevitably suffer. Lee et al. 1997) concluded, based on these findings, that when sales and inventory data are shared among chain members, the supply chain as a whole can carry through echelon-based inventory control which can yield prize performance to installation-based inventory control. Moreover, Huang et al. (2007), based on three simulation experiments accord to the empirical practice of the three about representative Chinese companies in the sword industry, found that the bullwhip effect existed in th is supply chain, and that the effect can be reduced by a control regularity they developed. ground on classical control theories and systems, have with the empirical practices, Huang et al. (2007) concluded that the best way for firms to lap and control the bullwhip effect is to take effective measures for information sharing, especially in this information society. More specifically, Huang et al. (2007) stated that managers should choose an appropriate method of controlling the bullwhip effect, which 14 as to be the usage of some groundbreaking information management system and management solutions, for example Advanced Planning arranging (APS), Enterprise election Planning (ERP), E-business, Vendor Managed Inventory (VMI), short-term inventory, and distribution optimization, is an effective way to control the bullwhip effect. Since those management systems are advanced information management systems, they are all based on shared information in the supply chain. The shuttin gs of Huang et al. (2007) therefore indicated the importance of information sharing to reduce or avoid the bullwhip effect.Ozer and Wei (2004) also showed how important the effect of information sharing can be for the supplier. According to Ozer and Wei (2004), both the cost and the base stock level decrease as customers place more of their demand in advance. Advance demand information, fit to Ozer and Wei (2004), refers to the situation when customers place orders in advance for a future delivery. If this is the case, the supplier knows what the order will be for the upcoming period, and therefore, the uncertainty seems low or notwithstanding eradicated.As a consequence of that, it is clear that the cost and base stock level decrease. However, Ozer and Wei (2004) even go elevate on this important role of information. found on a numeral study, where they studied 350 problem instances, they stated that advance demand information can be a substitute for substance and inventory. In other words, when a supplier receives full demand information from the buyer’s side, the supplier doesn’t even have to hold any stock, and by that, the supplier’s performance is influenced positively, since the supplier doesn’t have the risk of extra costs and inventories.One other way to show the treasure of information sharing in a supply chain was brought up by Cannella and Ciancimino (2011). Cannella and Ciancimino (2011) performed a supply chain stress examen via a sudden and intense change in demand, and they distinguished different supply chain configurations: tralatitious and information exchange. In the traditional supply chain, each level in the supply chain issues production orders and replenishes stock without considering the situation at every up- or downstream tiers of the supply chain (Cannella and Ciancimino (2011)).On the other hand, in the information exchange supply chain, the retailer and supplier order independently, yet excha nge demand information and action plans in order to align their forecasts for capacity and long-term planning (Cannella and Ciancimino (2011)). Their main coating regarding the difference in these configurations is that the 15 bullwhip effect, inventory instability and intermittent orders are not completely eliminated, but are reduced with respect to the traditional supply chain, and that information exchange supply chains generally master the traditional configuration.This message that, ceteris paribus, all performance measures are superior to the traditional case (Cannella and Ciancimino (2011)). This conclusion is an important one for the research uncertainty of this paper, since it makes clear that the supplier’s performance is really dependent on whether information is shared or not. One other remarkable thing in their conclusion is that the bullwhip effect is not totally eliminated when information is shared in the supply chain. Dejonckheere et al. 2004) concluded this as well in their paper, when they showed that for the class of order-up-to policies, information sharing helps to reduce the bullwhip effect significantly, especially at higher levels in the chain, however, the bullwhip problem is not completely eliminated and it lock up increases as one moves up the chain. A new question one can come up with here is if it is realizable to totally eliminate the bullwhip effect by information sharing. An answer to this new question is given by Chen et al. (2000).In their research, they provided a model based on the assumption that demand information is centralized, and all demos use the same inventory policy and foretelling technique. concentrate demand information fashion that customer demand information is available to every stage of the supply chain (Chen et al. , 2000). The findings of Chen et al. (2000) showed that providing each stage of the supply chain with complete realisetle to customer demand information can significantly redu ce bullwhip effect. However, according to Chen et al. 2000), the results also demonstrated that even when (i) all demand information is centralized, (ii) every stage of the supply chain uses the same portent technique, and (iii) every stage uses the same inventory policy, there will still be an small increase in variability at every stage of the supply chain. mind for this, given by Chen et al. (2000), is that the supplier can neer know the mean and the variance of buyer’s demand. This means that the bullwhip effect can neer totally be eliminated from the supply chain, even if full information sharing is done by the buyer.Croson and Donohue (2006), who conducted the beer game-experiment of Sterman (1989), also concluded that the bullwhip cannot totally be eliminated. Croson and Donohue (2006) conducted the game under business students at the University of Minnesota and found that the bullwhip effect still exists when retail demand is stationary (not fluctuating) and unre markably known. Reason for this was 16 given by Sterman (1989) itself, who state that moral force settings render decision making difficult, even when only one decision maker is involved, due to reduced saliency of feedback.For the purpose of this study this means that a supplier is missing the feedback or previse of when the buyer is running short on inventory. Therefore, uncertainty still exist since the forecast is hard to make, and the bullwhip effect will not be eliminated. However, Yu et al. (2001) stated that this is possible. Based on their case study of L&TT, a Hong Kong based multinational company which had to deal with a large number of new manufacturers and component suppliers in their industry, Yu et al. (2001) concluded that with doorway to the customer rdering information, the supplier can eliminate the amplified buyer’s demand variance in its replenishment process. Besides that, Yu et al. (2001), according to their quantitative analysis, stated that th e supply chain partnership can not only help the members of a change supply chain to eliminate the bullwhip effect, but also improve the overall performance of the supply chain. So, based on the findings of Yu et al. (2001), the overall performance of the supply chain can be improved. This means that the supplier and buyer should make information sharing arrangements, since it can be advantageous for them both.Seidmann and Sundarajan (1997) summed up possible different information sharing arrangements, showing the impact of information sharing on the operations, sales, marketing, and production strategies of the parties that contract to share the information. The four arrangements they summed up are exchanging order information, sharing operations information, sharing strategic marketing information, and an arrangement where the information adds both strategic and competitive value to the company that receives it. The sharing strategic marketing information agreement seems the opt imal agreement for the research question in this paper.According to Seidmann and Sundarajan (1997), arrangements like these occur when one organization owns information that it can derive little independent value from, but which another can use to generate operational benefits for the company it receives the information from, besides garnering strategic value for its own sales and marketing departments. This level can be very beneficial for the supplier. As Seidmann and Sundarajan (1997) stated, the information in this level can be used by the supplier’s sales and product development groups for improved demand forecasting, promotion scheduling, and segment-specific forecasts and therefore, in 17 hat situation, it is possible for a buyer to allow a supplier to access broad market information that provides the supplier with strategic and competitive benefits. A new point of handling can come up here, because, according to Lee et al. (1997), sales data and inventory status data are proprietary for buyers, and they are not obligate to share this data with others, in this case, the supplier. Lee et al. (1997) in their paper do not state that sharing information can be advantageous for the buyer as well as the supplier as Yu et al. (2001) do, but they take in mind wherefore the buyer would exchange information to the supplier.According to Li (2002), in line with this, buyers would not voluntarily share their information. He identified conditions under which the manufacturer would be able to buy retailer information. Claro and Claro (2010) concluded as well that sharing information can be smashing for both sides in the supply chain. They found their results by doing a watch research under 174 suppliers and 67 buyers, with which they tested their hypothesis, which was: ‘the more downstream information a supplier obtains, the higher the degree of collaboration in a buyer-supplier relationship’ (Claro and Claro, 2010).The results supported the h ypothesis. Claro and Claro (2010) showed that when downstream information is shared, so, from buyer to supplier, the degree of collaboration, in terms of common planning, voice problem result and flexibility in the supply chain is very high. These findings show that sharing the proprietary information can bring advantages for the buyer as well. An interesting point in the studies who showed that information sharing is the key solution for decrease or avoiding the bullwhip effect was brought up by Croson and Donohue (2006).As stated before, they conducted the beer game under business students, but for the purpose of the study of this interesting finding the participants also had access to dynamic inventory information. According to Croson and Donohue (2006), the results suggest that members near the spring of the chain exhibit a different impact from inventory information than those near the end. This means that having access to dynamic information will lead to a greater reducti on of the bullwhip effect for suppliers like a manufacturer and a distributor, than for suppliers who are closer to the end consumer, like a distributor.So, from their findings, information sharing is very important for reducing or avoiding the bullwhip effect, but much more important for suppliers who are at the send-off of the chain than for suppliers who are closer to the end buyer. 18 ‘Information sharing is the key solution’ Chatfield et al. (2004) simulation model to examine different effects in a supply chain ? periodic order-up-to level inventory system Moyaux et al. (2007) ? simulation study ? Findings: Information sharing reduces total variance amplification and stage (node to node) variance amplification.Sterman (1989) ? Beer-game experiment ? This experiment is used and conducted a lot in the literature Croson and Donohue (2005) ? Analytical research on inventory management in two-echelon supply chains with a single supplier and one or more retailers Lee et al. (1997) ? Analyzed four sources of the bullwhip effect ? With their demand model, they considered a retailers single-item multiperiod inventory problem Huang et al. (2007) ? Three simulation experiments in the Chinese steel industry ?Based on classical control theories and methods, combined with the empirical practices Ozer and Wei (2004) ? Numerical study with 350 instances Findings: With information centralization, the supplier knows in real time and instantaneously the market consumption Findings: The bullwhip effect appears when actors in a chain haven’t got all the information they need to make the right decisions about production and inventory control Findings: Sharing inventory information can improve supply chain performance, with the upstream member (i. e. the supplier) enjoying nigh of the benefits Findings: When sales and inventory data are shared among chain members, the supply chain as a whole can implement echelon-based inventory control which can yield sup erior performance Findings: The best way for firms to dampen and control the bullwhip effect is to take effective measures for information sharing, especially in this information society. Managers should choose an appropriate method of controlling the bullwhip effect Findings: Both the cost and the base stock level decrease as customers place more of their emand in advance. Advance demand information can be a substitute for capacity and inventory Findings: The bullwhip effect, inventory instability and intermittent orders are not completely eliminated, but are reduced with respect to the traditional supply chain, and that information exchange Cannella and Ciancimino (2011) ? sum up chain stress test via a sudden and intense change in demand 19 supply chains generally master the traditional configuration. Dejonckheere et al. (2004) ? The class of order-up-to policies Findings: ?Information sharing helps to reduce the bullwhip effect significantly, especially at higher levels in the chain ? Hhowever, the bullwhip problem is not completely eliminated and it still increases as one moves up the chain Chen et al. (2000) Findings: ? A model based on the assumption that ? Providing each stage of the supply chain demand information is centralized, with complete access to customer demand and all stages use the same inventory information can significantly reduce policy and forecasting technique bullwhip effect ?The supplier can never know the mean and the variance of buyer’s demand, so the bullwhip effect is never completely eliminated Yu et al. (2001) Findings: ? contingency study of L ? With access to the customer lodge ? Quantitative analysis information, the supplier can eliminate the amplified buyer’s demand variance in its replenishment process ? The supply chain partnership can not only help the members of a decentralized supply chain to eliminate the bullwhip effect, but also improve the overall performance of the supply chain Claro and Claro (2 010) Findings: ?Survey research under 174 suppliers ? When downstream information is shared, and 67 buyers so, from buyer to supplier, the degree of collaboration, in terms of articulation planning, joint problem solving and flexibility in the supply chain is very high. Croson and Donohue (2006) Findings: ? Sterman’s (1989) beer-game under ? Members near the number 1 of the chain business students exhibit a different impact from inventory information than those near the end ? Having access to dynamic information ill lead to a greater reduction of the bullwhip effect for suppliers at the beginning of the chain, than for suppliers who are closer to the end consumer 20 4. 2 ‘Information sharing is not the key solution’ Eventhough a lot of authors, as shown here above, state that information sharing is the key solution for reducing or avoiding the bullwhip effect and by that improving the supplier’s performance, there are also authors who do not agree with t his. For example Raghunathan (2001), based on analysis of the earlier study of Lee et al. (2000) and through simulation. Lee et al. 2000), studied the value of sharing demand information in a supply chain model with a nonstationary demand process. Their key findings are that the suppliers costs can be reduced as a result of information sharing. Raghunathan does not agree with this. According to Raghunathan (2001), a supplier can reduce the variance of its forecast but by using the entire order history to which it has access. Thus, Raghunathan (2001) stated, when intelligent use of already available internal information (order history) suffices, there is no need to invest in interorganizational systems for information sharing.Next to Raghunathan are Cachon and Fisher (2000), who studied the value of sharing data in a model with one supplier, N identical retailers, and stationary stochastic consumer demand. They concluded that, for the setting they studied, implementing information engineering science to accelerate and motionless the fleshly flow of goods through a supply chain is significantly more valuable than using information technology to stretch forth the flow of information. The reason they give is that when a retailer is flush with inventory, its demand information provides little value to the supplier because the retailer has no short-term need for an additional batch.According to Cachon and Fisher (2000), a retailer’s demand information is most valuable when the retailer’s inventory approaches a level that should trigger the supplier to order additional inventory, but this is also precisely when the retailer is likely to submit an order. Graves (1999) goes beyond this and gives an even lower value to information sharing in a specific, namely, zero. Graves (1999) developed a model assuming assume that each site in the system orders at preset times according to an order-up-to policy, that delivery times are deterministic, and that the demand processes are stochastic with independent increments.Graves (1999) concludes that information sharing provides no benefits to the supply chain, when there is no outdoor(a) inventory source and an order-up-to-policy. 21 Gavirneni et al. (1999) furthermore studied different patterns of information flow between a retailer and a supplier. With their study they found that information sharing is does not always have a tremendous value, in other words, is not always the key solution for reducing or avoiding the bullwhip effect.The objective in their paper is to determine a production strategy to minimize the supplier’s costs, under various scenarios that differ in terms of the supplier’s information about the downstream part of the supply chain. Their key observations, according to Chen (2003), are: (1) when the retailer demand variance is high, or the value of (s, S) is each very high or very low, information tends to have low determine, and (2) if the retailer d emand variance is moderate, and the value of (s, S) is not extreme, information can be very beneficial.A (s, S)-policy, according to Yu et al. (2001) means that an order will be placed to replenish the stock level to S at each time period if the stock level is less than the recorder point s. So, according to Gavirneni et al. (1999), in some situations information sharing is overestimated and is definitely not the key solution for reducing or avoiding the bullwhip effect. Dejonckheere et al. (2003) found some other solution for reducing the bullwhip effect and n all did say that information sharing is the key solution.Based on a methodological analysis by control systems engineering, which includes transfer functions, frequency result curves and spectral analysis, they introduced a general decision manage that avoids variance amplification (bullwhip effect) and succeeds in generating glitter ordering patterns, even when demand has to be forecasted. Firstly, Dejonckheere et al. (20 03) concluded that whatsoever forecasting method is used, order-up-to policies will always result in a bullwhip effect. Therefore, they tried to find a solution to reduce or avoid this effect. According to Dejonckheere et al. 2003), the crucial difference with the class of order-up-to policies is that in their proposed convening, net stock and on order inventory discrepancies are only fractionally taken into account. Their general decision rule has to expected benefits: (1) it is expected to detect and eject scalawag variations in demand (high frequencies) so that excess costs due to unnecessary ramping up and down production or ordering levels are avoided, and (2) it is possible to determine the amount of variability reduction by means of the same procedure (Dejonckheere et al. (2003)). 22 ‘Information sharing is not the key solution’ Raghunathan (2001) Findings: ?Analysis of the earlier study of Lee et ? A supplier can reduce the variance of al. (2000) and through simulation its forecast further by using the entire order history to which it has access Cachon and Fisher (2000) Findings: ? Based on a model with one supplier, ? Implementing information technology N identical retailers, and stationary to accelerate and smooth the physical stochastic consumer demand flow of goods through a supply chain is significantly more valuable than using information technology to expand the flow of information Graves (1999) Findings: ?Based on a model assuming that each ? Information sharing provides no site in the system orders at preset benefits to the supply chain, when times according to an order-up-to there is no outside inventory source policy, that delivery times are and an order-up-to-policy. deterministic, and that the demand processes are stochastic with independent increments Gavirneni et al. (1999) Findings: ? Studied different patterns of ?When the retailer demand variance is information flow between a retailer high, or the value of (s, S) is e ither and a supplier. very high or very low, information tends to have low values Dejonckheere et al. (2003) Findings: ? Based on control systems engineering ? Introduced a general decision rule ? Whatever forecasting method is used, order-up-to policies will always result in a bullwhip effect ? Their general decision rule: (1) is expected to detect and eject rogue variations in emand (high frequencies), and (2) it is possible to specify the amount of variability reduction by means of the same procedure 23 5. Conclusion and recommendations 5. 1 Conclusion The answer to the research question as stated in the beginning of this paper is provided in this section. The research question where this research is based on was: ‘What is the effect, according to the literature, of information sharing in a supply chain on the performance of the supplier? To answer the research question, and to see if information sharing for the bullwhip effect is over- or underestimated, the literature a pproximately the topic of the bullwhip effect had to be assorted, and it showed that in two main streams exist in the literature when cerebrate on the role of information sharing for the bullwhip effect. In the literature, with exceptions (Raghunathan 2001: Cachon and Fisher 2000: Graves 1999: Gavirneni et al. 1999: Dejonckheere et al. 2003), information sharing as the key solution to reduce or avoid the bullwhip effect seems to have the upper hand.First, shortly the most important findings from the first view will be summarized, which was the view of information sharing as key solution to reduce or avoid the bullwhip effect in order to increase the performance of a supplier. Chatfield et al. (2004) and Moyaux et al. (2007) showed by simulation studies that with information sharing in the supply chain, the supplier is much more well-known about what is going happen, in other words, what the market does and what the buyer’s demand will be, and therefore, according to their fi ndings, the bullwhip effect is reduced.Also results of some empirical studies showed that information sharing is the key solution. Huang et al. (2007) concluded that managers should stick to advanced information management systems for their company because this will reduce the bullwhip effect. Ozer and Wei (2004), with their numerical study, found that advance demand information will results in decreases of costs and inventory level, and therefore has a positive effect on the supplier’s performance. Yu et al. 2001), with their case study of L, concluded that when a supplier has access to the buyer’s ordering information, the supplier can eliminate the amplified buyer’s demand variance in its replenishment process. Claro and Claro (2010), by their survey research, even showed that not only the supplier can benefit from sharing information but the buyer can do as well, because when downstream information is shared, the degree of collaboration, in terms of joint pl anning, joint problem solving and flexibility in the supply chain is very high. 24The main findings of the other view, the view which finds that information sharing is not the key solution, were as followed. Raghunathan (2001) stated that information sharing is not of necessity needed, because a supplier can reduce the variance of its forecast further by using the entire order history to which it has access. Furthermore, Cachon and Fisher (2000) concluded that accelerating and smoothing the physical flow of goods through a supply chain is significantly more valuable than using information technology to expand the flow of information.Graves (1999) found that, in a specific market model, information sharing provides no benefits to the supply chain, when there is no outside inventory source and an order-up-to-policy. Dejonckheere et al. (2003) had a remarkable result. They introduced a general decision rule, which should detect the bullwhip effect and quantify the amount of the bullwh ip effect, so that suppliers can respond to this in time. The arguments for information sharing as key solution seem stronger than the ones who say information sharing is not that important.The argument of Raghunathan (2001) for example, that a supplier can reduce the variance of its forecast further by using the entire order history to which it has access, seems not very strong. The findings of Raghunathan in fact were rejected by Croson and Donohue (2006) who conducted the beer game of Sterman (1989) under business students and found that the bullwhip effect still exists when retail demand is stationary (not fluctuating) and commonly known.This means that, even if a supplier has the order history, the demand is known, and the demand is not really fluctuating, a supplier cannot make the right forecast since the bullwhip effect isn’t totally eliminated. The argument of Raghunathan (2001) can call up more discussion. Results from the past do not guarantee anything for the futu re, and especially these days with the economic crises, you never know what the market with do and how the financial situation of your customers will be.Therefore, making forecasts based on history seems not a strong argument. Other arguments saying that information sharing is overestimated all focus on specific situations, but it seems that overall information sharing is not overestimated at all in the literature. Much more authors, based on different (simulations) models and empirical studies, claim that information sharing is the key solution to reduce or avoid the bullwhip effect than authors who do not claim that, and this seems logical. Without enough information, a supplier 25 annot make right judgments about his production schemes and inventory control, since he doesnt know what the next period will bring for him in terms of the buyer’s demand. The results of this uncertainty for the supplier can be either a low inventory and the chance of not being able to fulfill th e buyer’s demand because of that inventory, or the chance of having an inventory which is too large and being stuck with too many unsold products after the buyer’s demand. To avoid this effect, the supplier should have access to the necessary information from the buyer.However, as also stated by Li (2002), why would a buyer share this information, when it is not in any way beneficial for him? The information sharing arrangements of Seidmann and Sundarajan (1997) can bring the solution. Their third level, sharing strategic marketing information, is the one which suits the best in this case. The supplier and buyer should make this arrangement, so that the buyer shares the needed downstream information to the supplier. This information shared has strategic value to the supplier.The buyer, on his turn, could, in return for the information, ensure himself for example of better purchase prices. In this way, both parties can gain from the agreement. Claro and Claro (2010) cam e up with more descriptions of how the performance of the buyer could positively be influenced as well next to the performance of the supplier, by stating that joint planning, joint problem solving and flexibility in the supply chain are all possible consequences of a situation where information is being shared from buyer to supplier. 5. Recommendations for future research For further research it will be very interesting to investigate to what extent the performance of the buyer and supplier can be negatively influenced as well by information sharing within the supply chain. In the literature, as I have seen, a lot is written about the importance of information sharing, and the overall conclusion is that information sharing is the key solution to reduce or avoid the bullwhip effect, and, by that, positively influences the performance of the supplier and also the whole chain’s performance.However, there hasn’t been done much research about possible negative consequences of information sharing within the chain and therefore this seems a quip in the existing literature. For example, what could happen when information is to the full shared between suppliers and buyers, is that the suppliers get totally dependent on those information by controlling their production and/or inventory, and when the information for any reason of a sudden is distorted, misinterpreted or wrong, a problem can occur. 26 6. Discussion and reflection 6. Discussion As it is clear from the results section and conclusion, two views on the importance of information sharing for the supplier’s performance exist in the literature. The conclusion shows that it can be stated that information sharing is the key solution to reduce or avoid the bullwhip effect, and, by that, has a positive influence on the performance of the supplier. The practical tax write-off of this research lies within the insight it gives to actors in a supply chain. The insight is especially meant for sup pliers, since this research focus on the supplier and not specifically on the buyer.The bullwhip effect seems a very common problem in supply chains and therefore it seems to be a topic which suppliers will often will encounter. This research gives insight in how the bullwhip effect can be reduced or avoided. As concluded, the first solution on sight seems easy. Suppliers should try to make the buyer share the needed downstream information, so that the supplier can make right forecasts, and wellover thought production and/or inventory control. However, one cannot veer for example the general decision rule of Dejonckheere et al. (2003).They suppose that their model can detect and quantify the bullwhip effect in time, so this might be a solution as well for reducing or avoiding the effect. However, no sequel study on their paper has been done and so, there hasn’t been any further prove of this model. The setting of this paper gives reason for discussion. In this paper, the f ocus has only been on the performance of a supplier and did not specifically focus on the buyer’s performance. This research even handle more or less the buyer’s performance. Therefore, discussion can come up, since the supply chain has two sides: a buyer and a supplier.As said, this research only looked through the eyes of the supplier, in other words, how the supplier could reduce or avoid the bullwhip effect, by that make better forecasts and decisions about production and/or inventory control, and so improve his performance. The overall conclusion is that information sharing is the key solution. However, this is only in the interest for the supplier, while the other important player in this story, namely, the buyer, hasn’t been spotlighted in this story. In this paper it is assumed and concluded that a buyers should share his information, but the 7 paper did not really put a good focus on the buyer’s performance, and what the possible consequences of information sharing for the buyer could be. Another point of discussion lies within the literature used for this research. The problem is that a lot of authors use models in their paper to conduct, analyze and conclude about whether or not information sharing is important for the bullwhip effect, but those models differ from each other. Some authors use stationary market models, some use non-stationary, some use order-up-to policy models, some use order-point-quantity policies.In other words, authors use specific supply chain settings to make their conclusions, and therefore, this research includes a very broad arena on the topic, which means that conclusions made in this research are not applicable in every supply chain, since the supply chain settings can differ. 6. 2 Reflection When looking back on writing this literature review, findings literature was not the problem. Many articles have written about the topic ‘supply chain’ in relation to ‘bullwhip effectà ¢â‚¬â„¢, but this didn’t mean that it was easy to find the right literature.Because of the large quantity papers, a very specific search method was needed in order to find the really important papers to be able to answer the research question of this paper. One difficult point in doing this research was that many of the most important papers included very exact and extensive statistical models, which sometimes made it very difficult to understand the papers in the right way and derive right conclusions from it. Besides that, it was important to focus only on the supplier’s performance and leave the buyer’s performance outside the focus of this paper.The reason of that is that the supplier and buyer, as written before, both have their own values and interests, and therefore, if the paper would focus on both of these actors, more than one dimension will exist and the research will get too extensive. When the research goal and question were clear, soon it became c lear as well that two views on the importance of information sharing for the bullwhip effect existed. However, I was hoping to find much more results on the second view, namely that information sharing is not the key solution. This was a disappointing thing in the research. 28 7.References Aviv, Y. (2001). The effect of collaborative forecasting on supply chain performance. wariness Science 47(10): 1326â€1343. Bourland, K, Powell, S, Pyke, D. (1996). Exploiting timely demand information to reduce inventories. 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