What Information Should Be Shared?

According to Du et al. (2012) firms need to be very careful when determining what and with whom information is shared because information sharing involves the sharing of important operational, strategic and financial information with those partners who might be future competitors. Information exchange in supply chains mainly incorporate product and product development information, customer information, supplier information, manufacturing procedure information, transaction information, transportation information, inventory information, supply chain alliance information, competition information, sales and market information, supply chain process and performance information (Hsu et al., 2009). Fawcett et al. (2007a) suggest that at a minimum, firms should be sharing the following types of information: sales data and sales forecasts, inventory levels, order status for tracking/tracing, performance metrics, and capacity and capability information. A frequent, bidirectional, informal and non-coercive information sharing is preferred (Cai et al., 2010) even though the nature of information shared varies from strategic to tactical depending upon the orientation (strategic or operational partnership orientation) of the partners (Mentzer et al., 2000).

Because of the variety of information and the availability of various sharing options, it is difficult to determine the nature or level of information sharing between firms (Feldmann and Müller, 2003). Therefore, Seidmann and Sundararajan (1998) suggest that firms should share information up to the level where it is beneficial for them to do so. It was proposed that the information sharing must be reciprocal, selective and justified - but not necessarily symmetrical (Rashed et al., 2013).

Seidmann and Sundararajan (1998) categorise information sharing into four main categories depending on how the shared information affects buyers and suppliers, 1) transactional level such as order quantities and prices; 2) operational level such as inventory levels; 3) strategic level such as distribution plans; and 4) strategic and competition level such as market information. The four categories of information sharing suggested by Seidmann and Sundararajan (1998) can be condensed into operational information sharing (Short-term) and strategic information sharing (Long-term) as time frame is the major difference between the

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four categories (Moberg, 2000). In order to perform short-term activities to achieve operational efficiencies, firms need operational information sharing whereas, firms need to acquire strategic information to perform long-term activities for achieving strategic goals that deliver value to customers and profitability to partners (Lee et al., 2010). To capture the possible differences between firm’s incentives to share different levels of information, this study differentiates information sharing as operational and strategic information sharing. Operational information sharing refers to the sharing of order status, shipment notice, production and delivery, sales, logistics or inventory level information on a daily or weekly basis with an aim to reduce order cycle time and inventory levels and to improve asset utilisation and customer services (Moberg et al., 2002, Patnayakuni et al., 2006, Ramayah and Omar, 2010). Operational information plays an efficient role to leverage operational economies of scale and expertise of an organisation (Patnayakuni et al., 2006). As operational information determines the everyday activity of a firm, the speed of information exchange plays a significant role in lowering inventory costs and enhancing customer services (Moberg, 2000). Unlike strategic information, most of the operational information is quantitative in nature such as order, sales and inventory information which can be obtained in tables and spread-sheets through information technologies such as internet and EDI (Moberg, 2000). A good example of sharing operational information is vendor managed inventory where a supplier manages its own products’ inventory at the buyer’s site. This results in cost savings for both parties as both parties experience reduction in inventory costs and lead times. This also reduces the supply-side uncertainty that a buyer normally faces. The supplier on the other hand gains superior knowledge on how well its product is doing which gives it the advantage to bargain for price schedules that are more in its favour (Seidmann and Sundararajan, 1998).

Strategic information refers to information which is strategic in nature and covers long-term issues and has a long term effect on firm business strategies such as marketing, logistics, new product development and other business strategies (Moberg et al., 2002, Ramayah and Omar, 2010). Due to the qualitative nature of the strategic information, managers prefer to share strategic information through face-to-face meetings or phone calls rather than using new advanced technologies (Moberg et al., 2002). Unlike operational information sharing, the speed of strategic information sharing is not likely to significantly affect its value to the

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recipient of the information (Moberg, 2000). The exchange of sensitive, long-term strategic information was not common in the past whereas the exchange of operational information such as ordering information started even before the development of information technologies and SCM initiatives (Moberg, 2000).

Sharing point-of-sales (POS) information is a good example of strategic information sharing. POS information can be categorised as operational information as it helps a retailer to derive the inventory positions. However, it can provide strategic benefits to a supplier who can make superior demand forecasts by analysing the POS data (Seidmann and Sundararajan, 1998). The availability of POS information will help suppliers to make superior demand forecast including segment-specific (geographical or seasonal) forecast, which can be of great value to its sales and product development groups improving their internal operating efficiency (Seidmann and Sundararajan, 1998). On the other hand, sharing POS information gives the retailer the power to negotiate on price, payment terms, lead time reduction and sharing IT implementation costs (Lee et al., 2000, Chu and Lee, 2006).

The differences between operational and strategic information sharing is summarised in Table 2.1 (Moberg, 2000).

Table 2.1: Difference between Operational and Strategic Information Sharing

_{Types of Information Sharing}

S.N. Operational Strategic

1 Short-term daily information Long-term information

2 Quantitative in nature Qualitative in nature

3 Shared through advanced IT Shared through face-to-face meeting or phone call

4 Less complex More complex

5 Can be captured in tables and _{spread-sheets} Cannot be captured in tables and _{spread-sheets} 6 Operational information has been _{commonly exchanged in the past} Strategic information has not been _{commonly exchanged in the past} 7 Firms are more comfortable sharing _{operational information} Firms are less comfortable sharing _{strategic information} Source: Adapted from Moberg (2000)

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