Impact of Information Sharing and Order Aggregation Strategies on Supply Chain Performance

With the extensive discussion of Supply Chain Management concepts in the recent past, issues concerning efficient inventory policies gain in importance. Several analytical models as well as simulation studies revealed inventory reductions for the entire supply chain by applying information sharing strategies. However, discrepancies in the published results concerning the effects on individual supply chain members exist. By using discrete event simulation we analyze various approaches of differently aggregated order data compared to shared demand data. Our experiments show that, even for a constant demand pattern, suppliers cannot accurately estimate demand means and variances due to time-depending order quantities and biasing effects of order inter-arrival times. Whereas information sharing can reduce safety stocks and inventories, it may lead to considerably lower service levels.