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Advances in information technology have made significant impacts on supply chain management. By making more information available more readily, it has provided suppliers with openings for improving efficiency. But the variety of information formats means that each will have different impacts, and it is useful for suppliers to understand this as they set about establishing or fine-tuning their supply chains.

Sheng Hao Zhang and Ki Ling Cheung of HKUST consider the effects of two types of information initiatives - information sharing and advance order information - to show that they can improve supply chain management, although it is not always win:win for suppliers and retailers.

They focus on a balanced ordering situation in which suppliers try to smooth out demand by requiring certain retailers to replenish their orders on certain days, for instance one on Monday, another on Tuesday and so forth. When information activities are incorporated into this model, there is potential for suppliers to further even out and manage demand.

When information sharing is introduced, the retailers agree to share point-of-sales data with the suppliers, so the supplier can better understand demand downstream and plan accordingly. An example of this would be a supermarket sharing data with Johnson and Johnson. The gain to the supplier comes at little to no cost to the retailer.

Advance order information is rather different. Retailers place an order in one period, say week 1, and receive it in the next period, week 2. They make some sacrifice here because they cannot be replenished immediately as needed, however this can be a necessary approach for suppliers to be able to cope with demand from many retailers. In effect, it creates a time buffer for them to fulfill their orders.

So, what impacts do these approaches have in balanced ordering? The authors show advance order information offers the most benefits, although it is in no way mutually exclusive to information sharing. Both forms of information activity can work in tandem to bring benefits.

"We prove that advance order information outperforms information sharing when a large portion of retailers order in advance. Furthermore, the supplier's performance benefits equally from an increase in the demand leadtime or an equivalent decrease in the supply leadtime," they say.

They also focus on the optimal replenishment sequence. This does not matter much to the retailer but it does make a difference for the supplier. The quicker the supplier can get goods delivered, the better off he is because it means he is left holding less inventory, which entails costs. That means certain retailers are best served before others.

"Our message is that you usually want to serve the retailers with the least variable orders first, and also those with large orders. If these orders are deployed early, the supplier does not have to keep that inventory for the rest of the cycle," they say.

Overall, although advance order information may mean retailers have less flexibility in their ordering, it benefits the overall supply chain efficiency. The model and subsequent tests by the authors demonstrate these effects and provide a scientific basis for assessing information initiatives in a balanced ordering system.