The Impact of Information Sharing on Supply Chain Performance

Yao Zhao, PhD

Professor in

Supply Chain Management

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Information technology is an important enabler of efficient supply chain strategies. Indeed, much of the current interest in supply chain management is motivated by the possibilities introduced by the abundance of data and the savings inherent in sophisticated analysis of these data. For example, information technology has changed the way companies collaborate with suppliers and customers. These collaborations, which allows companies to share sensitive demand information with their suppliers in real time, have achieved huge success in practice in terms of inventory reduction, service level improvement, and quick response to market changes (Stein and Sweat (1998) "Killer Supply Chains").

My research in this area focuses on two questions: (1) how to efficiently utilize the shared information, and (2) what is the impact of information sharing on supply chain performance.


Zhang, X.L., Y. Zhao (2010).  The Impact of External Demand Information on Parallel Supply Chains with Interacting DemandProduction and Operations Management 19(4): 463-479

Abstract: This paper considers two parallel supply chains with interacting demand streams. Each supply chain consists of one supplier and one retailer. The two demand streams are jointly described with a vector autoregressive time-series process in which they interact and their respective innovation errors correlate contemporaneously. For each supply chain, we develop insights into when and how much the supplier and the retailer can improve on their forecasting accuracy if the external demand history of the other supply chain is utilized.  When this external demand history is not available or made available after a time lag, we develop a partial process and a delayed process to characterize the demand structure that the retailer can recover from the available demand histories. Our results show that the external demand history of the other supply chain always helps the retailer make better forecasts when demand streams interact; however, the enhanced information alters the retailerís order process, which may produce larger forecasting errors for the supplier.  Conditions are established for the supplier to benefit from the external demand history of the other supply chain.  

Simchi-Levi, D., Y. Zhao (2003). The Value of Information Sharing in a Two-Stage Supply Chain with Production Capacity ConstraintNaval Research Logistics 50, 888-916.

Abstract: This paper considers a class of serial supply chains with a single retailer and a single supplier constrained by finite production capacity. The supplier, however, can receive demand information from the retailer in between retailerís consecutive orders. The paper characterizes the optimal inventory policies that allow the supplier to best utilize the information over a finite time horizon. Managerial insights are developed with respect to the impact of information sharing, its timing and frequency.

Simchi-Levi, D., Y. Zhao (2004). The Value of Information Sharing in a Two-stage Supply Chain with Production Capacity Constraint: The Infinite Horizon CaseProbability in the Engineering and Informational Sciences 18, 247-274.

Abstract: This paper extends the analysis of Simchi-Levi and Zhao (2003) to models in an infinite time horizon under either the total discounted cost criterion or the average cost criterion. It develops a new approach to characterize the Markov chain induced by the cyclic order-up-to policies. It also provides a simple proof for the optimality of the cyclic order-up-to policy under the average cost criterion.



Zhao, Y. (2002). The Impact of Information Sharing on Supply Chain Performance. Ph.D. Thesis. IEMS Dept., Northwestern University. Evanston, IL.