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Impact of information exchange on supplier forecasting performance

Author

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  • Trapero, Juan R.
  • Kourentzes, N.
  • Fildes, R.

Abstract

Forecasts of demand are crucial to drive supply chains and enterprise resource planning systems. Usually, well-known univariate methods that work automatically such as exponential smoothing are employed to accomplish such forecasts. The traditional Supply Chain relies on a decentralized system where each member feeds its own Forecasting Support System (FSS) with incoming orders from direct customers. Nevertheless, other collaboration schemes are also possible, for instance, the Information Exchange framework allows demand information to be shared between the supplier and the retailer. Current theoretical models have shown the limited circumstances where retailer information is valuable to the supplier. However, there has been very little empirical work carried out. Considering a serially linked two-level supply chain, this work assesses the role of sharing market sales information obtained by the retailer on the supplier forecasting accuracy. Weekly data from a manufacturer and a major UK grocery retailer have been analyzed to show the circumstances where information sharing leads to improved forecasting accuracy. Without resorting to unrealistic assumptions, we find significant evidence of benefits through information sharing with substantial improvements in forecast accuracy.

Suggested Citation

  • Trapero, Juan R. & Kourentzes, N. & Fildes, R., 2012. "Impact of information exchange on supplier forecasting performance," Omega, Elsevier, vol. 40(6), pages 738-747.
  • Handle: RePEc:eee:jomega:v:40:y:2012:i:6:p:738-747
    DOI: 10.1016/j.omega.2011.08.009
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Cai, Wenbo & Abdel-Malek, Layek & Hoseini, Babak & Rajaei Dehkordi, Sharareh, 2015. "Impact of flexible contracts on the performance of both retailer and supplier," International Journal of Production Economics, Elsevier, vol. 170(PB), pages 429-444.
    2. Dominguez, Roberto & Cannella, Salvatore & Framinan, Jose M., 2015. "On returns and network configuration in supply chain dynamics," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 73(C), pages 152-167.
    3. repec:eee:ejores:v:264:y:2018:i:2:p:558-569 is not listed on IDEAS
    4. Zhao, Weigang & Wang, Jianzhou & Lu, Haiyan, 2014. "Combining forecasts of electricity consumption in China with time-varying weights updated by a high-order Markov chain model," Omega, Elsevier, vol. 45(C), pages 80-91.
    5. Cannella, Salvatore & Framinan, Jose M. & Bruccoleri, Manfredi & Barbosa-Póvoa, Ana Paula & Relvas, Susana, 2015. "The effect of Inventory Record Inaccuracy in Information Exchange Supply Chains," European Journal of Operational Research, Elsevier, vol. 243(1), pages 120-129.
    6. Bacchetti, Andrea & Saccani, Nicola, 2012. "Spare parts classification and demand forecasting for stock control: Investigating the gap between research and practice," Omega, Elsevier, vol. 40(6), pages 722-737.
    7. Li, Tian & Zhang, Hongtao, 2015. "Information sharing in a supply chain with a make-to-stock manufacturer," Omega, Elsevier, vol. 50(C), pages 115-125.
    8. Kim, T.Y. & Dekker, R. & Heij, C., 2016. "The impact of forecasting errors on warehouse labor efficiency," Econometric Institute Research Papers EI2016-10, Erasmus University Rotterdam, Erasmus School of Economics (ESE), Econometric Institute.
    9. Babai, M.Z. & Boylan, J.E. & Syntetos, A.A. & Ali, M.M., 2016. "Reduction of the value of information sharing as demand becomes strongly auto-correlated," International Journal of Production Economics, Elsevier, vol. 181(PA), pages 130-135.
    10. repec:wsi:apjorx:v:34:y:2017:i:01:n:s0217595917400012 is not listed on IDEAS
    11. Jairo R. Montoya-Torres & Diego A. Ortiz-Vargas, 2014. "Collaboration and information sharing in dyadic supply chains: A literature review over the period 2000–2012," ESTUDIOS GERENCIALES, UNIVERSIDAD ICESI, November.
    12. Trapero, Juan R. & Pedregal, Diego J., 2016. "A novel time-varying bullwhip effect metric: An application to promotional sales," International Journal of Production Economics, Elsevier, vol. 182(C), pages 465-471.
    13. Islam, S.M. Shahidul & Hoque, Md. Abdul & Hamzah, Norhayati, 2017. "Single-supplier single-manufacturer multi-retailer consignment policy for retailers’ generalized demand distributions," International Journal of Production Economics, Elsevier, vol. 184(C), pages 157-167.
    14. Hartzel, Kathleen S. & Wood, Charles A., 2017. "Factors that affect the improvement of demand forecast accuracy through point-of-sale reporting," European Journal of Operational Research, Elsevier, vol. 260(1), pages 171-182.
    15. repec:eee:transe:v:110:y:2018:i:c:p:122-136 is not listed on IDEAS

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