Advanced Search
MyIDEAS: Login

Manufacturer Benefits from Information Integration with Retail Customers

Contents:

Author Info

  • Susan Cohen Kulp

    ()
    (Harvard Business School, Boston, Massachusetts 02163)

  • Hau L. Lee

    ()
    (Graduate School of Business, Stanford University, Stanford, California 94305)

  • Elie Ofek

    ()
    (Harvard Business School, Boston, Massachusetts 02163)

Registered author(s):

    Abstract

    Information integration efforts between manufacturers and retailers, in the form of information sharing, synchronized replenishment, and collaborative product design and development, have been cited as major means to improve supply chain performance. This paper develops a conceptual framework that relates information-integration initiatives to manufacturer profitability. The framework allows such initiatives to impact inventory management and revenue-enhancing measures that, in turn, increase manufacturer profit margins, or affect profit margins directly. Through an extensive survey in the food and consumer packaged goods industry, we empirically examine this framework. The analysis reveals that the various integration techniques are differentially associated with manufacturer performance. Collaborative planning on replenishment, in the form of vendor-managed inventory (VMI), is directly and positively related to manufacturer margins, while collaboration on new products and services is positively related to intermediate performance measures. Specifically, this latter form of collaboration allows the manufacturer to charge higher wholesale prices and, interestingly, is associated with lower retailer, and consequently manufacturer, stockouts. In contrast, collaboration on the handling of excess and defective retailer inventory (i.e., reverse logistics) results in higher manufacturer stockout levels, on average. Solely sharing information on either inventory levels or customer needs is associated with higher manufacturer performance measures up to a certain point; sharing this information is prevalent among manufacturers that achieve industry-average profitability relative to those that achieve below industry-average profitability. The paper explains these results in the context of the conceptual framework developed and discusses the managerial implications for effective coordination between supply chain partners.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://dx.doi.org/10.1287/mnsc.1030.0182
    Download Restriction: no

    Bibliographic Info

    Article provided by INFORMS in its journal Management Science.

    Volume (Year): 50 (2004)
    Issue (Month): 4 (April)
    Pages: 431-444

    as in new window
    Handle: RePEc:inm:ormnsc:v:50:y:2004:i:4:p:431-444

    Contact details of provider:
    Postal: 7240 Parkway Drive, Suite 300, Hanover, MD 21076 USA
    Phone: +1-443-757-3500
    Fax: 443-757-3515
    Email:
    Web page: http://www.informs.org/
    More information through EDIRC

    Related research

    Keywords: supply chain management; information integration; collaboration;

    References

    No references listed on IDEAS
    You can help add them by filling out this form.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as in new window

    Cited by:
    1. Ramanathan, Usha, 2013. "Aligning supply chain collaboration using Analytic Hierarchy Process," Omega, Elsevier, vol. 41(2), pages 431-440.
    2. Oliveira, Fernando S. & Ruiz, Carlos & Conejo, Antonio J., 2013. "Contract design and supply chain coordination in the electricity industry," European Journal of Operational Research, Elsevier, vol. 227(3), pages 527-537.
    3. Holmström, Jan & Främling, Kary & Ala-Risku, Timo, 2010. "The uses of tracking in operations management: Synthesis of a research program," International Journal of Production Economics, Elsevier, vol. 126(2), pages 267-275, August.
    4. Fayard, Dutch & Lee, Lorraine S. & Leitch, Robert A. & Kettinger, William J., 2012. "Effect of internal cost management, information systems integration, and absorptive capacity on inter-organizational cost management in supply chains," Accounting, Organizations and Society, Elsevier, vol. 37(3), pages 168-187.
    5. Williams, Brent D. & Waller, Matthew A. & Ahire, Sanjay & Ferrier, Gary D., 2014. "Predicting retailer orders with POS and order data: The inventory balance effect," European Journal of Operational Research, Elsevier, vol. 232(3), pages 593-600.
    6. Caniato, Federico & Golini, Ruggero & Kalchschmidt, Matteo, 2013. "The effect of global supply chain configuration on the relationship between supply chain improvement programs and performance," International Journal of Production Economics, Elsevier, vol. 143(2), pages 285-293.
    7. van der Vaart, Taco & van Donk, Dirk Pieter, 2008. "A critical review of survey-based research in supply chain integration," International Journal of Production Economics, Elsevier, vol. 111(1), pages 42-55, January.
    8. Caridi, Maria & Moretto, Antonella & Perego, Alessandro & Tumino, Angela, 2014. "The benefits of supply chain visibility: A value assessment model," International Journal of Production Economics, Elsevier, vol. 151(C), pages 1-19.
    9. Wong, W.K. & Qi, J. & Leung, S.Y.S., 2009. "Coordinating supply chains with sales rebate contracts and vendor-managed inventory," International Journal of Production Economics, Elsevier, vol. 120(1), pages 151-161, July.
    10. Ryu, Seung-Jin & Tsukishima, Takahiro & Onari, Hisashi, 2009. "A study on evaluation of demand information-sharing methods in supply chain," International Journal of Production Economics, Elsevier, vol. 120(1), pages 162-175, July.
    11. Timothy Park & Robert King, 2007. "Evaluating food retailing efficiency: the role of information technology," Journal of Productivity Analysis, Springer, vol. 27(2), pages 101-113, April.
    12. Kyu Kim, Kyung & Yul Ryoo, Sung & Dug Jung, Myung, 2011. "Inter-organizational information systems visibility in buyer-supplier relationships: The case of telecommunication equipment component manufacturing industry," Omega, Elsevier, vol. 39(6), pages 667-676, December.
    13. Ding, Huiping & Guo, Baochun & Liu, Zhishuo, 2011. "Information sharing and profit allotment based on supply chain cooperation," International Journal of Production Economics, Elsevier, vol. 133(1), pages 70-79, September.
    14. Tang, Christopher S., 2010. "A review of marketing-operations interface models: From co-existence to coordination and collaboration," International Journal of Production Economics, Elsevier, vol. 125(1), pages 22-40, May.
    15. Vijayasarathy, Leo R., 2010. "Supply integration: An investigation of its multi-dimensionality and relational antecedents," International Journal of Production Economics, Elsevier, vol. 124(2), pages 489-505, April.
    16. Li, Gang & Yang, Hongjiao & Sun, Linyan & Sohal, Amrik S., 2009. "The impact of IT implementation on supply chain integration and performance," International Journal of Production Economics, Elsevier, vol. 120(1), pages 125-138, July.

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:inm:ormnsc:v:50:y:2004:i:4:p:431-444. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Mirko Janc).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.