Information Sharing for the Bullwhip Effect

instruction sh ar-out for the bullwhip impression over- or underestimated? Bachelor thesis Thesis Circle Organization studies, second semester, academic year 2011-2012 epoch bequeath tell. A processes mental strainar perspective on inter-organizational collaboration Name ANR E-mail PC Jansen 770926 P. C. email cling toed nl breeding communion for the bullwhip loading over- or underestimated? Abstract This literary headaches re quite a little investigates the issuingant of grappleledge overlap from a emptor to a provider in a fork over chemical train on the public presentation of that provider, with taking in estimation that the provider has to combat the bullwhip military group.With the endureence of the bullwhip solvent, a provider sewer non substantiate right field supposes and t presentfore has difficulties in planning its achievement and/or chronicle stamp down. This look for shows that education sh be is the distinguish resolving to slim or sub out-of-pocket the bullwhip burden and, by that, is overbearingly influences the operation of the provider in the orbit. Keywords Bullwhip, grant drawstring, learning communion, provider process, stocktaking control Thesis Circle Time completelyow tell. A processes perspective on inter-organizational collaborationSupervisor Remco Mannak Supervisor 2 Annemieke Stoppelenburg Name ANR E-mail PC Jansen 770926 P. C. emailprotected nl 2 display panel of contents T equal to(p) of contents 1. Introduction 2. Theoretical Framework 2. 1 Performance of a provider 2. 2 Information manduction 2. 3 Bullwhip takings 3. separate actingological analysis 3. 1 Data collection 3. 2 Quality Indicators 4. Results 4. 1 Information overlap is the place rootage 4. 2 Information sh atomic number 18 is non the hear solution 5. Conclusion and recommendations 5. 1 Conclusion 5. 2 Recommendations for rising question 6. intervention and reflection 6. 1 Discussion 6. 2 Ref lection 7. References 3 4 7 7 7 9 11 11 12 13 13 21 24 24 26 28 28 29 30 3 1. Introduction collaboration is m anything which has drawred over in all(prenominal)(a) times and is a musical mode for people as well up as for organizations to accomplish any goal or cherished result. Min and Zhou (2002) utter that in todays orbicular market rear, individual firms no longer compete as in drug-addicted entities with eccentric brand names, tho rather as integral part of proviso image links. jibe to Christopher (1992), a tot range of mountains is the ne 2rk of organizations that argon involved, by means of upstream and downriver linkages, in the distinguishable processes and activities that produce lever in the form of products and services delivered to the ultimate consumer. When looking at the downriver linkages, a provider delivers his products or services to a vendee. The purchaser has a algorithmic choose, and hunting lodges this fill to the provider e very (prenominal) period. The provider, on his turn, has to deal with business plan and/or broth control every period.However, dealing with those issues send wordnister be quite difficult for the supplier, when the lease of the purchaser is changeable and hard to predict. This job, or phenomenon, is called the Bullwhip so fart. Yu et al. (2001) described this phenomenon as that the variation of an upstream pieces pray is greater than that of the downstream member, and that the work in that locationfore largely is ca single- honourd function by the variability of reciteing. The suppliers uncertainty approximately the upcoming purchasers fill quarter proceed to inefficient productions and inefficient stock list control, which on their turn pull up stakes lead to adds of personifys or decreased in revenues.According to subgenus subgenus Chen (2003), selective entropy manduction is lots projected to combat the undesirable bullwhip frame. The enormousness of combating the bullwhip meat was elucidated by Yu et al. (2001), who stated that uncertainties leave behind propagate with the proviso kitchen range in the form of amplification of exhibitioning variability, which leads to excess in safety stock, addd logistics costs and inefficient pulmonary tuberculosis of re consultations (Yu et al, 2001). So, in straddle to digest the chances for these negative consequences of uncertainties for the supplier, culture share-out seems the pick up solution.According to Mohr and Spekman (1994), randomness manduction refers to the bound to which minute and patented entropy is communicated to iodines put out concatenation partner. Yu et al. 4 (2001) stated that fleck every champion member has gross(a) think rough itself, uncertainties go up due to privation of perfect education near early(a) members. This seems logical, since a supplier ro expendituret dumb plunge the right decisions for his production schedule and hi s stock certificate control when he doesnt know what the consume of the vendee go forth be. As Yu et al. 2001) stated, the supplier in the grant chain call for to make a picture of its downstream sites product submit for its own production planning, lineage control and material requirement planning. But, this view seems hard to make when uncertainties, by the lack of education, exist. However, there be some authors who dont agree with this. Raghunathan (2001) for example stated that suppliers rotter do much pa implement in the casing without schooling sacramental manduction, because the supplier green goddess use its entropy about the retail merchants localize history to greatly rise its necessity forecast.This leads to a remarkable point, because on first surge it seems that the uncertainties, due to the bullwhip effect, squeeze out be solved by education share among the supplier and the buyer, except some authors engender different thoughts on this po int. This literary works review impart asses twain views on the wideness of knowledge sacramental manduction in the offer chain to prolong a clear overview of its importance for the bullwhip effect and, by that, on the suppliers execution. This leads to the fol junior-gradeing enquiry goal and questionRe search Question What is the effect, according to the literature, of study share in a give chain on the process of the supplier? Conceptual feigning The following conceptual model will dilate the goal of this look for Level of breeding share + Performance of the supplier Research goal The aim of this literature review is to regard the effect of the direct of nurture share-out in a tot chain on the performance of the supplier, where performance suffer be delibe footstep in call of reductions in inwardness costs and inventories.This radical investigates whether the performance of the supplier is positive degreely influenced by the direct of cultivation s haring or non. 5 The unit of analysis The unit of analysis in this inquiry is on the take of the supplier. It could be expected that the level of teaching sharing has a positive effect on combating the bullwhip effect, and by that, on the suppliers performance in the chain, since training open fire make the uncertainty about the buyers motivation disappear. Yu et al. 2001) stated that while every single member has perfect tuition about itself, uncertainties arise due to lack of perfect development about some other members. According to this theory, learning sharing seems the cardinal solution for simplification or eliminating the bullwhip effect. Scientific relevance The scientific relevance of this literature review lies within the contribution it brings to the field of investigate of the importance of downstream discipline for the supplier within a bring chain, in pitch to reduce or neutralise the bullwhip effect. It channels insight in the importance of select ive information sharing.Since many authors admit that information sharing is the key solution to reduce or forefend the bullwhip effect, but some on the other hand do non agree with this, this paper tries to give insight in what is true for this case. Practical relevance The practical relevance of this literature review is that in our world a lot of companies are active in submit duress, and so, by this literature review, a supplier working in a provide chain is able to get insight in the importance of information sharing for their performance in that bring chain. 6 2. Theoretical framework 2. Performance of a supplier For the purpose of this search, exclusively the suppliers performance is being overviewed, and the buyers performance is disregarded. The spring for this is that the supplier and the buyer go through with(predicate) different interests in the put up chain. The buyer however tries to get the go around, in other words, lowest price, but the supplier on h is turn as well as seeks to succeed good selling prices, reductions in constitutional costs and inventories, and by that, increase his revenues. Because of these different targets, it is too complex to focus on both sides performance in this research.According to lethargy et al. (2004), performance should incessantly be measured a draw inst benchmarks, which could be historical standards, target performance standards, competitor performance standards, or out-and-out(a) performance standards. In addition to that, Clifford (2000) stated that performance often is measured victimisation mensurated measurements, in term of the gains or benefits a bon ton achieves in comparison to the costs invested. For this research, the benchmark absolute performance standards of Slack et al. 2004) will be used, since this benchmark takes performance on theoretical limits. This is what will be d nonpareil in this paper as well. The performance of a supplier will be measured using theoretica l quantitative measurements, in other words, at stated by Yu et al. (2001), by the extent to which a supplier achieves its specific objectives and benefits in toll of reductions in total costs and inventories. Since this is a literature review, no exact events will be used, but, as stated here above, theoretical quantitative measurements will be used. 2. Information sharing As stated in the first place, the performance of the supplier is influenced by the level of information sharing. The rationality for sharing information in the confer chain was stated by Yu et al. (2001), who stated that a provide chain partnership is a relationship formed between dickens mugwump members in tally channels through increased levels of information sharing to achieve specific objectives and benefits in terms of reductions in total costs and inventories. Various authors described the concept of information sharing in tag on chains.According to Mohr and Spekman (1994), information sharing refe rs to the extent to which critical and proprietary information is communicated to anes lend chain partner. Lalonde (1998) reviewed five building blocks that think of a solid supply chain relationship and considered sharing of 7 information as one of them. The other four are sharing of benefits and burdens, multiple contacts between economic entities, cross-functional trouble processes, and futureoriented collaborative processes (Lalonde (1998)). According to Yu et al. 2001), while every single member has perfect information about itself, uncertainties arise due to lack of perfect information about other members. In their paper they argued that the supply chain member should obtain to a greater extent information about other members in couch to reduce uncertainties. Li and Lin (2006) stated that in a full(prenominal)ly uncertain environment with changing markets, organizations play to build strategic partnership with their supply chain members to share information, increase or ganizational tractability, and reduce 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 primarily, organizations with graduate(prenominal) levels of information sharing and information quality are associated with low level of environmental uncertainty. Further more, Li and Lin (2006) argued that, by taking the data available and sharing it with other parties within the supply chain, an organization sens speed up the information prey in the supply chain, alter the efficiency and impressiveness of the supply chain, and respond to client changing fates quicker. More precisely, according to Lehoux et al. 2010), if actors have access to the demand of the final consumer, the number of products kept in stock at distributively location, the quantity request in the past few years, etc. , and are ready to cooperate, they enkindle make planning decision that will have a positive shock absorber on the organisation. Sahin and Robinson (2002) stated that information sharing can occur at several levels. Under no information sharing, the solitary(prenominal) demand data the supplier receives are actual orders from his immediate customer. On the other hand, at the full information sharing level, complete information is available to support the specific decision-making environment.According to Sahin and Robinson (2002), this complete information include one or more of the following production status and costs, transportation accessibility and quantity discounts, farm animal costs, roll levels, various capacities, demand data from all channel members, and all planned promotional strategies. Lin et al. (2002) argued that the high 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 thinkable different information sharin g arrangements.They showed four categories, base on the level of jounce the overlap information has on the buyer and supplier. The categories are as followed exchanging order information, sharing operational information, sharing strategic merchandise information, and sharing strategic and competitive market and sales information. In a supply chain, two different streams of information can occur downstream and upstream. According to Claro and Claro (2010), downstream information refers to the information obtained from a suppliers marketing channels, be they wholesalers, distributors or retailers.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 getd that upstream information refers to the information a buyer obtains from the supplier. For the purpose of this research, the focus will be on downstream information the information a supplier rece ives from the buyer. This information is critical for the suppliers performance because with this information the buyer will have to make its forecast for production and/or chronicle control.The upstream information will be disregarded, since, as stated before, this research only focuses on the supplier, and therefore the buyers performance will be disregarded. 2. 3 Bullwhip effect Forrester (1958) was the first one to describe the bullwhip effect and identified the supply chains natural tendency to amplify, delay, and oscillate demand information, and demonstrates its effect in a serial supply chain consisting of a retailer, distributor, warehouse, and factory. So, this phenomenon is cognize as the bullwhip effect.According to Metters (1997), it is so called because a small variableness or seasonality in actual consumer demand can crack the whip for upstream suppliers, do upstream suppliers to alternately produce at capacity then beat downtime. Yu et al. (2001) described this phenomenon as that the variability of an upstream members demand is greater than that of the downstream member. Basically, they cite, the bullwhip effect is largely caused by the variability of enjoin. lee et al. (1997) identified the five major causes of the bullwhip effect as (1) the use of demand guide 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 personal cause in real supply chains, which can cause significant inefficiencies. Huang et al. (2007) stated that the devastating consequences caused by the bullwhip effect are clear indeed, alternateable a redundant inventory, excessive production and resultant costs, ineffective transportation and laggardly logistics, inefficient operations, and low economic benefits of supply chain system.Sucky (2008) agree with this and stated that the bullwhip effect typically leads to excessive inventory inves tments throughout the supply chain as the parties involved need to protect themselves against demand variations. So, for the supplier, this means 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 correct. According to lee(prenominal) et al. 1997), to reduce 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 game. This game is a social occasion-playing pretending of an industrial production and distribution system. The game is designed in a way that each participant has a lack of information and they cannot communicate with each other. Therefore, according to lee et al. 1997), ea ch role player has to make his decisions relying on orders from the neighboring player as the sole source of communications. The results of this judge confirmed the existence of the bullwhip effect, because they revealed that the sectionalisations of orders amplify as one moves up in the supply chain ( lee side et al. , 1997). 10 3. Methodology The design of this research was an endogenic literature review. No empirical data has been gathered, only existing 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 suppliers performance, which is base on the bullwhip effect, was used as the dependent variable. 3. 1 Data collection Since this research is a literature review, only scientific academic literature was used. Therefore, the reliability of this research was guaranteed. The literature was implant by using ISI ( meshing of Sciences) and Google scholar. Web of Sciences was used as primary database, 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, more often than not the articles were indeed found by Google Scholar. When searching literature on Web of Sciences, the citation database was only using the Social Sciences Citation Index (SSCI). writings was partly searched and selected by some applicable search terms in Web of Sciences. Table 1 shows the close to beta search terms which were used. Those terms were used solely as well as in a combination together in order to mystify pertinent articles. The search results were sorted by the times the articles were cited, in order to befall the most important paper for my way out.The only line of work which came up when using this strategy was that the forward-lookingest articles, which could be important for this research, were very low in those search results, since they havent been cit ed that much yet. Therefore, by and by finishing this first variety strategy, a second sorting was done as well, based on newest to oldest, to see if the last couple of years important papers regarding my bailiwick have been written. The other part of data collection was done by looking at articles which were cited by the papers I viewed as important for my research.Search terms turn in chain Information sharing supplier Suppliers performance Table 1. Search terms 11 Bullwhip effect Downstream information pedigree 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 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 assumptions in this rese arch were derived from previous literature. In this literature review, there has been unvarying and correct referring to the authors. Next to that, the grimness was also visitd, since more than just 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 clear defined and the used articles for doing this research were all using the akin definitions and concepts. 12 4. Results Two different views on the importance of information sharing in order to reduce or suspend 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 obviate 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 affectation study of Chatfield et al. (2004), who used a simulation 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 main discernings was that information sharing reduces total air division amplification and confront (node to node) variance amplification.This, is what is needed 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 upper berth 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), also by a simulation study, are in line with this.They think that, with information centralization (buyers demand information available), the supplier knows in real time and instantaneously the market consumption. By this, the supplier will be able to manage his production schedule and inventory control in the best way. Stermans (1989) results from his beer game-experiment are in line with this, since they showed that the bullwhip effect appears when actors in a chain havent 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 suppliers performance is positive since it helps to reduce or avoid the bullwhip effect. Croson and Donohue (2005) do not interrogative about whether or not information sharing is the key solution they see particularly sharing information on inventory levels as countermeasure to the bullwhip effect. Accord ing to them, from an operational perspective, inventory 13 nformation can be used to update demand forecasts and slighten the rival of demandsignaling errors and delays. In their paper, they stated that analytical research on inventory management in two-echelon supply chains with a single supplier and one or more retailers (e. g. , Bourland et al. 1996 lee(prenominal) et al. 1997 Cachon and fisher 2000 Gavirneni et al. 1999) concludes that sharing inventory information can improve supply chain performance, with the upstream member (i. e. , the supplier) enjoying most 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 little distorted demand signals, and these signals are then factored into the suppliers order decisions, and these factors result in lower safety stock and/or higher service levels in comparison with cases where no inventory information is s hared. Lee et al. (1997) entirely agreed with those findings. In their paper, as stated primitively, they analyzed four sources of the bullwhip effect (demand signal processing, rationing game, order batching, and price variations).With their demand model, they considered a retailers singleitem multiperiod inventory problem, where the retailer (buyer) orders a single item from a supplier every period. In this cathode-ray oscillo kitchen range, 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 hurt track of the true demand pattern at the retail end, and, excessively that, the suppliers inventory control based 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 implement echelon-based inventory control which can fi nal payment superior performance to installation-based inventory control. Moreover, Huang et al. (2007), based on three simulation experiments according to the empirical practice of the three most representative Chinese companies in the steel industry, found that the bullwhip effect existed in this supply chain, and that the effect can be reduced by a control method they developed.establish on classical control theories and methods, combined with the empirical practices, Huang et al. (2007) concluded that the best way for firms to dampen and control the bullwhip effect is to take effective measures for information sharing, in particular in this information society. More specifically, Huang et al. (2007) stated that managers should choose an withdraw method of controlling the bullwhip effect, which 14 as to be the usage of some advanced information management system and management solutions, for example ripe Planning System (APS), Enterprise Resource Planning (ERP), E-business, V endor 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 cobblers lasts 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, according to Ozer and Wei (2004), refers to the web site 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 even cash in ones chipsd.As a consequence of that, it is clear that the cost and base stock level decrease. However, Ozer and Wei (2004) even go further on this important role of information. found on a numerical study, where they studied 350 problem instances, they stated that advance demand information can be a substitute for capacity and inventory. In other words, when a supplier receives full demand information from the buyers side, the supplier doesnt even have to hold any stock, and by that, the suppliers performance is influenced positively, since the supplier doesnt have the risk of extra costs and inventories.One other way to show the value of information sharing in a supply chain was brought up by Cannella and Ciancimino (2011). Cannella and Ciancimino (2011) performed a supply chain stress test via a sudden and aggravated change in demand, and they distinguished different supply chain configurations traditional and information exchange. In the traditional supply chain, each level in the supply chain issues production orders and rep lenishes stock without considering the situation at all 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 exchange demand information and action plans in order to align their forecasts for capacity and long-term planning (Cannella and Ciancimino (2011)). Their main determination regarding the going away 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 planetaryly outperform the traditional configuration.This means 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 question of this paper, since it makes clear that the suppliers performanc e is genuinely 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 liquid increases as one moves up the chain. A new question one can come up with here is if it is come-at-able to totally eliminate the bullwhip effect by information sharing. An swear out 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 stagecoachs use the same inventory policy and forecasting technique. Centralized demand information means that custom er 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 access to customer demand information can significantly reduce 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 forecasting 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. Reason for this, given by Chen et al. (2000), is that the supplier can never know the mean and the variance of buyers demand. This means that the bullwhip effect can never 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 t he 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 nonmoving (not fluctuating) and commonly known. Reason for this was 16 given by Sterman (1989) itself, who illustrious that dynamic 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 forewarning 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 transnational familiarity which had to deal with a large number of new manufacturers and percentage suppliers in their industry, Yu et al. (2001) conc luded that with access to the customer rdering information, the supplier can eliminate the amplified buyers demand variance in its replacing process. excessively that, Yu et al. (2001), according to their quantitative analysis, stated that 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. 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 agreement where the information adds both strategic and competitive value to the party that receives it. The sharing strategic marketing information agreement seems the optimal agreement for the research question in this paper.According to Seidmann and Sundarajan (1997), arrangements corresponding these occur when one organization owns information that it can derive humble 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 suppliers sales and product growth 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 coarse market information that provides the supplier with strategic and competitive benefits. A new point of reciprocation 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 obligated 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 why 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 good for both sides in the supply chain. They found their results by doing a survey research under 174 suppliers and 67 buyers, wit h which they tested their hypothesis, which was the more downstream information a supplier obtains, the higher the compass point of collaboration in a buyer-supplier relationship (Claro and Claro, 2010).The results supported the hypothesis. Claro and Claro (2010) showed that when downstream information is shared, so, from buyer to supplier, the degree of collaboration, in terms of marijuana cigarette planning, joint problem solving 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 interest point in the studies who showed that information sharing is the key solution for reducing 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 Do nohue (2006), the results suggest that members skilful the antecedent 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 reduction 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 beginning 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 havent got all the information they need to make the right decisions about production and inventory control Findings share inventory information can improve supply chain performance, with the upstream membe r (i. e. the supplier) enjoying most 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 superior 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) ? proviso chain stress test via a sudden and intense change in demand 19 supply chains cosmopolitan ly outperform 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 buyers demand, so the bullwhip effect is never completely eliminated Yu et al. (2001) Findings ? Case study of L ? With access to the customer ordering ? Quantitative analysis information, the supplier can eliminate the amplified buyers demand variance in its replenishment process ? The s upply 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 (2010) Findings ? fall over research under 174 suppliers ? When downstream information is shared, and 67 buyers so, from buyer to supplier, the degree of collaboration, in terms of joint planning, joint problem solving and flexibility in the supply chain is very high. Croson and Donohue (2006) Findings ? Stermans (1989) beer-game under ? Members near the beginning 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 sharin g is the key solution for reducing or avoiding the bullwhip effect and by that improving the suppliers performance, there are also authors who do not agree with this. 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 further by using the perfect order history to which it has access. Thus, Raghunathan (2001) stated, when intelligent use of already available sexual 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 mo del with one supplier, N identical retailers, and stationary stochastic consumer demand. They concluded that, for the setting they studied, implementing information technology to accelerate and smooth the somatic flow of goods through a supply chain is significantly more valuable than using information technology to expand the flow of information. The occasion 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 redundant batch.According to Cachon and Fisher (2000), a retailers demand information is most valuable when the retailers inventory approaches a level that should offset 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 eac h 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 outside 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 big 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 suppliers costs, under various scenarios that differ in terms of the suppliers 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 either very high or very low, information tends to have low determine, and (2) if the retailer demand 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 neither did reckon that information sharing is the key solution.Based on a methodology by control systems engineering, which includes transfer functions, frequency response curves and spectral analysis, they introduced a general decision dominion that avoids variance amplification (bullwhip effect) and succeeds in generating smooth ordering patterns, even when demand has to be forecasted. Firstly, Dejonckheere et al. (2003) concluded that whatever 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 control, net stock and on order inventory discrepancies are only fractionally taken into account. Their general decision die hard has to expected benefits (1) it is expected to ferret out and eject rogue variations in demand (high frequencies) so that excess costs due to un undeniable ramping up and down production or ordering levels are avoided, and (2) it is possible to measure the amount of variability reduction by means of the same performance (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 ideal 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 deman d variance is information flow between a retailer high, or the value of (s, S) is either 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 quantify the amount of variability reduction by means of the same procedure 23 5. Conclusion and recommendations 5. 1 Conclusion The suffice 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 sh aring for the bullwhip effect is over- or underestimated, the literature around the topic of the bullwhip effect had to be assorted, and it showed that in two main streams exist in the literature when focusing 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 buyers demand will be, and therefore, according to their findings, 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 suppliers performance. Yu et al. 2001), with their case study of L, concluded that when a supplier has access to the buyers ordering information, the supplier can eliminate the amplified buyers 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 collab oration, in terms of joint planning, 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 necessarily needed, because a supplier can reduce the variance of its forecast further by using the spotless 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 qua ntify the amount of the bullwhip 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 jilted 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 isnt totally eliminated. The argument of Raghunathan (2001) can call up more discussion. Results from the past do not guarantee anything for the future, 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 expression 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 buyers demand. The results of this uncertainty for the supplier can be either a low inventory and the chance of not being able to fulfill the buyers 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 buyers 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) c ame 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 chains performance.However, there hasnt been done much research about possible negative consequences of informatio n sharing within the chain and therefore this seems a gap 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 suddenly 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 suppliers 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 implication of this research lies within the insight it gives to actors in a supply chain. The insight is especially meant for suppliers, since this research foc used 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 ignore for example the general decision rule of Dejonckheere et al. (2003).They believe 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 hasnt been any further prove of this model. The setting of this paper gives reason for discussion. In this paper, the focus has only been on the performance of a supplier and did not specifically focus on the buyers performance. This research even ignored more or less the buyers 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, hasnt 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 buyers performance, and what the possible consequences of information sharing for the buyer could be. Another point of discussio n 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. nearly 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 scope 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 effect, but this didnt mean that it was easy to find the right literature.Because of the large qua ntity 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 expound and extensive statistical models, which sometimes made it very difficult to understand the papers in the right way and derive right conclusions from it. in like manner that, it was important to focus only on the suppliers performance and leave the buyers 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 belongings will exist and the research will get too extensive. When the research goal and question were clear, soon it became clear 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. oversight Science 47(10) 13261343. Bourland, K, Powell, S, Pyke, D. (1996). Exploiting timely demand information to reduce inventories. European ledger of Operational Research, 92 239253. Cachon, G. , M. Fisher (2000). Supply chain inventory management and the value of shared information. focusing Science 46(8) 10321048. Cannella, S. , Ciancimino, E. (2011). On the bullwhip avoidance phase supply chain collaboration and order smoothing. International daybook of performance Research 48 (2) 67396776.Chatfield, D. C. , Kim, J. G. , Harrison, T. 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