College of Business Administration
University of Rhode Island
201
3
2013
No. 5
This working paper series is intended to facilitate discussion and encourage the exchange of ideas. Inclusion here does not preclude publication elsewhere. It is the original work of the author(s) and subject to copyright regulations.
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Qing Cao, Dara G. Schniederjans, Jason Triche, and Marc J. Schniederjans A Synthesis of Resource-Based View and Social Capital Theory
Business Strategy, Cloud Computing, and Supply Chain Management: A Synthesis of Resource-Based View and Social Capital Theory Qing Caoa Dara G. Schniederjans*b Jason Trichea Marc J. Schniederjansc a
Texas Tech University, 310 Business Administration Building, P.O. Box 42101, United States Lubbock, TX
b
University of Rhode Island, 226 Ballentine Hall, 7 Lippitt Road, United States, Kingston, RI 02881, [email protected]
c
University of Nebraska-Lincoln, College of Business Administration, P.O. Box 880405, United States Lincoln, NE 68588, [email protected]
*
Corresponding Author
Abstract
Despite having various benefits associated with greater information flow in the supply chain, cloud computing technology has limited research in operations or supply chain management literature. Using a multi-method research design we conducted interviews with six individuals from four different companies in the United States, as well as conducted a survey to analyze and empirically assess our results. Our analysis found business strategy impacts the way companies use cloud computing technology and moderates how cloud computing use impacts information sharing. Additionally, we found cloud computing technology is positively associated with information sharing in the supply chain, which ultimately impacts supply chain performance. Trust is also shown to moderate the relationship between cloud computing use and information sharing among supply chain partners. This study is the first to develop a conceptual model that identifies the impact of business strategy on cloud computing use and how cloud computing impacts
Keywords: Cloud Computing, Information Sharing, Supply Chain Performance, Business Strategy
1. Introduction
The ever increasing geographical dispersion in supply chain networks adds to their complexity (Stock et al., 2000). To help effectively manage supply chain complexity, many firms have chosen a strategy of enhanced information technology for the purpose of
increasing information flow and in turn, for enhancing their competitive advantage (Ketchen, Jr. & Hult, 2007). Beyond increasing information flow, there is also a need for supply chain partners to be willing to share information. Research has shown that integrating supply chain practice with efficient information sharing becomes crucial for improving supply chain performance (Zhou & Benton, Jr., 2007). Moreover, Thomas et al. (2011) and others have suggested research on new information technology and how this impacts information sharing between supply chain organizations is needed in the supply chain literature.
As novel information technologies emerge, there is a need to explore their potential in improving supply chain performance. One state of the art information technology currently being adopted by a variety of organizations is cloud computing. Cloud computing can be generally defined as a massively scalable computing power that offers software, infrastructure and platforms on demand using a pay-as-you-go basis through the internet (Foster et al., 2008; Rochwerger et al., 2009). While the open access flow of information to cloud computing technology comes with security concerns, it has been shown to have various benefits for information flow, including cost reduction, massively scalable service and on demand access (Rochwerger et al., 2009). Despite these information flow benefits, very little empirical research has been undertaken to examine cloud computing’s impact on information sharing in a supply chain context. Moreover, to the best of our knowledge, no study has assessed the impact of inter-organizational trust on the relationship between cloud computing use and information sharing. Further, while past research has suggested logistics strategies are essential elements of business strategy (La Londe and Masters, 1994; Chow et al., 1995; Stock et al., 1998; Stank and Traichal, 1998; Stock et al., 2000), little empirical research has identified the impact of business strategy on how cloud computing impacts information flow, and no research has identified business strategy’s impact directly on cloud computing use.
In this paper, we attempt to address the gap in the literature by using a multi- method research design using both a multiple-case study approach involving four companies and survey analysis. This study uses resource-based view (RBV), as well as social capital theory, to examine the relationships among business strategy cloud computing use, information sharing, trust and supply chain performance. We analyze qualitative data from four firms and six individuals, including a Senior Manager, Co-Owner, Vice President of
Information Technology. Our findings indicate relationships between each of the constructs that support a proposed theoretical framework. This framework addresses questions including:
1. How does business strategy impact cloud computing technology and how does its impact the relationship between cloud computing and information sharing?
2. How does cloud computing impact information sharing?
3. How does trust moderate the relationship between cloud computing and information sharing? 4. How does information sharing impact supply chain performance?
This study finds five relationships: first, the goals of an organization directly impact how cloud computing technology is used and how cloud computing impacts information sharing; next, cloud computing use is positively associated with information sharing; also, trust moderates the relationship between cloud computing use and information sharing; finally, information sharing is positively associated with supply chain performance.
This study provides a foundation for not only researchers, but also is generalizable to wider business contexts. Cloud computing use can greatly impact how information sharing is used and is of great importance to overall strategies and plans. This paper provides a practical foundation for both researchers and supply chain professionals regarding how top executives and managers at companies utilize cloud computing and how trust and business strategy maximizes goals for information sharing and ultimately impacts supply chain performance.
In the following sections we first discuss theory and model development where we analyze the relationships between our constructs and their underlying theoretical foundations related to resource-based view and social capital theory. Next, we identify past research on each construct and their potential relationships. We then discuss case study methodology, as well as our data collection. After this, we describe our survey and assess the results of our model empirically. Finally, we summarize our findings and look at the potential limitations of the study.
2. Theory/Model Development
Cloud computing technology is in its infancy in operations and supply chain literature. Given the recent emergence of cloud computing technology, this study uses theoretical foundations, including resource-based view and social capital theory, to build a conceptual model. Both resource-based view and social capital theory can provide a strong theoretical background to delineate the
relationships between resources, including cloud computing technology and the relational characteristics of a firm, as well as information sharing, trust and the impact of these constructs on supply chain performance.
In order to develop the foundation for our paper, we will synthesize concepts such as Miles & Snow (1978) typology on strategic profiles, resource-based view and social capital theory. To begin, we will present an overview of each theory. We will then present our model based on these theories, which we then will further elaborate in the propositions section.
2.1. Resource-Based View (RBV)
Past supply chain management research suggests a connection between information technology and effective supply chain
management collaboration (Clemons et al., 1993; Lee & Whang, 2000; Sahin & Robinson, 2002; Rosenthal et al., 2010; Leidner & Jarvenpaa, 1995; Petersen & Ragatz, 2005; Xu & Beamon, 2006). This relationship has a strong theoretical background in resource-based view (Bharadwaj, 2000; Mata et al., 1995). Resource-resource-based view suggests that firms compete using unique corporate resources that are valuable, rare, difficult to imitate and non-substitutable by other resources (Barney, 1991; Conner, 1991, Schulze, 1992). A firm can consist of productive resources that can be used for competitive advantage (Penrose, 1959; Rubin, 1973; Wernerfelt, 1984). The rarer the resources are the greater the advantage for the firm (Dierickx & Cool, 1989). However, while resources are important, it is more critical how the firm uses them to maximize its competitive potential (Eisenhardt & Martin, 2000).
When assessing how information technology (IT) can be deployed in supply chains to achieve performance, Fawcett et al. (2011) used Newbert’s (2007) three RBV perspectives. The resource-heterogeneity perspective looks at resources and capabilities and their
relationships to sustainable competitive advantage, which is connected to sustained performance (Fawcett et al., 2011). The organizing perspective suggests that in order to achieve competitive advantage, valuable resources should be properly organized and leveraged (Fawcett et al., 2011). Finally, the dynamic-capabilities perspective suggests a need to alter resources into a capability in order to achieve superior performance in a changing environment (Fawcett et al., 2011).
In this study we consider cloud computing technology using the organizing perspective. Cloud computing can be a valuable, rare and difficult to imitate resource if the firm utilizes it based on its own business strategy in that it surpasses other information technologies commonly used in a supply chain context, such as web based electronic data interchange (EDI). EDI requires common platforms to transfer data unlike cloud computing which improves flexibility in both location and payment arrangements (Monczka et al., 1998). However, it needs to be adequately aligned with business strategy in order to provide foundations for greater information sharing in supply chains, which previous literature suggests positively impacts supply chain performance (Lee et al., 1997a,b).
2.2. Social Capital Theory
Social capital theory promulgates the benefits that relationships between entities can generate. These can be intangible and tangible benefits in a social, psychological, emotional or economic sense, both in the short-term and long-term (Lin, 1986; Lin, 1999; Lin, 2000). Narayan & Cassidy (2001) define seven dimensions of social capital. The first dimension consists of group characteristics, which involve number of memberships, participation in decision making, contribution of money, frequency of participation, etc. The second dimension is comprised of generalized norms, which refer to the helpfulness, trustworthiness and fairness of others. Third is togetherness, which represents how well people get along. Fourth is the everyday sociability of individuals. Fifth is neighborhood connections established among individuals or organizations. Sixth is volunteerism, which is kindness without the need for reciprocity. Finally, there is trust that exists among individuals or organizations.
Social capital theory can help to explain the importance of social capital in the realm of supply chain management. Two social aspects of supply chains are the focused in this study: information sharing and inter-organizational trust. Given the recency of cloud
computing, security of information appears to be a main concern for potential organization adopters (Rochwerger et al., 2009). Trust is vital, for organizations to build social capital and improve the relationship for both efficient and effective information flow (Cai et al., 2010). Further greater information sharing between organizations perpetuates social capital, ultimately reducing problems in the supply chain including has been shown to improve supply chain performance (Heikkila, 2002).
3. Literature Review and Hypotheses
3.1. Business Strategy and Cloud Computing Use
Walker & Ruekert (1987) differentiated five strategic types based on Miles & Snow’s (1978) work that was rooted in strategic choice theory. These include defensiveness (emphasis on cost reduction and efficiency seeking methods), risk aversion (risk in resource allocation decisions), aggressiveness (stance on improving market positions at a faster rate than competitors), proactiveness (continuous search for market opportunities), analysis (problem solving posture), and futurity (long-term vs. short-term
considerations) (Venkatraman, 1989). In this study, we analyze the relationship between business strategy using these five dimensions and its impact on cloud computing use as well as its moderating impact on the relationship between cloud computing use and
information sharing. . Previous literature has found a link between business strategy and information technology use leading to greater performance. For example, Tracey et al. (1999) suggest organizations participating in strategy formulation and investing in advanced
Business Strategy
Cloud Computing Use
Information Sharing Supply Chain
Performance
Trust
manufacturing technology will demonstrate better performance than those that do not. Kotha & Swamidass (2000) found that fits between strategy, information exchange and planning technology are associated with greater firm performance.
As stated previously, the organizing perspective of resource-based view suggests that valuable resources should be properly leveraged in order to sustain competitive advantage (Fawcett et al., 2011). Cloud computing technology can be a valuable resource if a company knows how and in what way to use it in order to maximize its value. Past literature suggests that IT applications have the potential to create differentiation across activities that will constitute a firm’s value chain (Floyd & Wooldridge, 1990). Firms will tend to align their IT resources in order to position themselves favorably relative to rivals, suppliers, etc. (Floyd & Wooldridge, 1990). While alignment between a firm’s strategy and its IT use can lead to enhanced performance, misalignment has been shown to reduce performance. Some studies have found that the misalignment between strategy and IT use caused IT to become almost a competitive burden (e.g. Warner, 1987; Vitale et al., 1986). Overall, alignment between strategy and IT use can lead to competitive advantage, avoid strategic disadvantage and enhance competitive position (Floyd & Wooldridge, 1990).
Cloud computing can be used as a resource to maximize results from current business strategies if it is valuable, rare, difficult to imitate and non-substitutable according to resource based view of a firm. Previous literature distinguishes cloud computing from other commonly used information technologies in its flexibility with analyzing a large amount of data on different platforms (Marston et al., 2011). This is dissimilar to web-based EDI which often requires common platforms (i.e. common ERP systems) (Monczka et al., 2011). Further, cloud computing has massively scalable services including software, platforms and infrastructure as well as payment arrangements (i.e. one time flat fee, pay-per-use and hybrid approach) that allows companies to scale their services based on their business strategy goals and competitive priorities (Marston et al., 2011; Benlian & Hess, 2011; Iyer & Henderson, 2010). This not only allows organizations to scale services according to their needs but also perpetuates social capital among their supply chain partners by focusing on their needs as well as their external partners. However, security concerns are rampant with the sharing of sensitive information over the cloud (Rochwerger et al., 2009). To mitigate these concerns, cloud computing allows organizations to choose between a public, private or hybrid cloud to secure information flow between partners allowing ease of access to information but reducing security concerns among partners (Marston et al., 2011). These massively scalable services allow business strategy to impact not only the use of cloud computing, but also allow a company to align their use with strategic initiatives in order to optimize information flow between supply chain partners.
Based on this past literature we formulate the following hypotheses H1. Business strategy positively influences cloud computing use
H2. Business strategy moderates the positive relationship between cloud computing use and information sharing. 3.2. Cloud Computing Use and Information Sharing
Cloud computing builds on the research in virtualization, distributed computing, grid computing, utility computing and networking web and software services (Vouk, 2008). It enables individuals or companies to lease infrastructure resources on-demand from a virtually unlimited pool, using either a one-time payment, pay-as-you-go billing model per unit of time or hybrid method (Rochwerger et al., 2009).
Table 1. Benefits and risks of cloud computing
Benefits Literature
Flexibility/Convenience
Ability to choose between owned infrastructure of rented from third party vendor
Marston et al. (2011); Benlian & Hess (2011) Large amount of computing power in short amount of
time (analyzing terabytes of data in a period of minutes)
Marston et al. (2011); Benlian & Hess (2011) Ability to request more computing resource in minutes
with minimal service provider interaction
Marston et al. (2011); Benlian & Hess (2011); Iyer & Henderson (2010)
IT services in countries that would traditionally lack resources for deployment of IT service
Marston et al. (2011) Adaptive structure shared by different end users in
different ways with different mediums
Marston et al. (2011); Benlian & Hess (2011); Iyer & Henderson (2010)
Offers mobile interactivity Marston et al. (2011); Iyer & Henderson (2010) Massively scalable services (SaaS, PaaS, IaaS) Marston et al. (2011); Benlian & Hess (2011); Mantena
et al. (2012); Iyer & Henderson (2010); Bardhan et al. (2010); Benlian et al. (2011); Vouk (2008); Rhoton (2011)
Ability to choose between public, private or hybrid Marston et al. (2011); Iyer & Henderson (2010); Bardhan et al. (2010)
On demand access to information Marston et al. (2011); Benlian & Hess (2011); Iyer & Henderson (2010); Bardhan et al. (2010); Benlian et al. (2011); Buyya et al. (2009); Armbrust et al. (2009) Reduced maintenance, upgrades and development with
vendor (focus on core competencies)
Marston et al. (2011); Benlian & Hess (2011)
Offers green practices Marston et al. (2011); Alford & Morton (2009); Benlian & Hess (2011); Whitten et al. (2010); Iyer & Henderson (2010)
Ability to verify history/location or application of an item through documentation
Iyer & Henderson (2010)
Payment choices (flat, pay per use, two tier) Alford & Morton (2009); Buyya et al. (2009) Cost
Energy, infrastructure and maintenance cost savings Marston et al. (2011); Alford & Morton (2009); Benlian & Hess (2011); Whitten et al. (2010); Demirkan (2010); Benlian et al. (2011)
No upfront capital investments with immediate access to hardware resources
Marston et al. (2011) Low cost for switching service providers Iyer & Henderson (2010)
Risks Literature
Current
Reliability Marston et al. (2011); Benlian & Hess (2011); Gewald et
al. (2009)
Stability Marston et al. (2011); Benlian & Hess (2011); Kauffman
& Sougstad (2008)
Security Marston et al. (2011); Benlian & Hess (2011)
Expected
Higher than expected cost arising from changing future requirements
Benlian & Hess (2011); Bardhan et al. (2010)
Table 2. Benefits and risks of EDI
Benefits Literature
Performance
Business/Supply chain performance Cantor & Macdonald (2009); Machuca & Barajas (2004); Rosenzweig & Roth (2007); Sanders (2007); Zhu & Kraemer (2005) (2002); Lee et al. (1997a,b) Cost
Cost reduction (transaction, paper, managerial) Prahinski & Benton (2004); Srinivasan et al. (1994); Handfield (1993); Boyer & Pagell (2000); Choudhury et al. (1998); Johnson et al. (2007); Mukhopadhyay et al. (1995); Massetti & Zmud (1996); Carter & Frendall (1990); Olson & Boyer (2003); Klein (2007); Lee et al. (1997); Cantor & Macdonald (2009); Machuca & Barajas (2004)
Flexibility/Convenience
Vickery (1998); Narasimhan & Carter (1998); Boyer & Pagell. (2000); Sanders (2008); Ragatz et al. (1997); Gunasekaran & Ngai (2005)
Frequency of information flow Hill & Scudder (2002); Sheombar (1992); Jayaram & Vickery (1998); Narasimhan & Carter (1998); Holland et al. (1992); Barratt & Oke (2007); Rosenzweig et al. (2003); Barratt & Barratt (2011)
Ease of information flow Hill & Scudder (2002); Sheombar (1992); Jayaram & Vickery (1998); Narasimhan & Carter (1998); Boyer & Pagell. (2000); Sanders (2008); Ragatz et al. (1997); Gunasekaran & Ngai (2005)
Risks Literature
Reliability Sanders (2007); Chopra et al. (2001); Menor et al.
(2002); Katsaros (94); Horback (94); Lockstrom et al. (2010)
Security Sanders (2007); Chopra et al. (2001); Menor et al.
(2002); Katsaros (94); Horback (94)
Incompatibility Frohlich & Westbrook (2001)
Costly Narasimhan & Das (2001)
Non-internet enabled EDI is difficult to implement Boyer & Olson (2002); Zhu et al. (2006)
While cloud computing is rapidly being adopted by various organizations to facilitate supply chain relations, it has various benefits and risks in common with the more traditional web-based EDI. Tables 1 and 2 provide a summary of the benefits and risks associated with both cloud computing and EDI. However, the main difference between the two information technologies is the flexibility of service options that cloud computing provides over traditional EDI. First, cloud computing provides three types of service: Software as a Service (SAAS), Infrastructure as a Service (IAAS) and Platform as a Service (PAAS), which entail different services based on a client’s needs. Software as a Service (SaaS) provides business applications that are delivered as a service. This helps reduce software complexity and costs, enhances accessibility to services and speeds up the time to market (Rochwerger et al., 2009). SaaS also offers service providers simplified software installation and maintenance, as well as centralized control (Vouk, 2008). With SaaS end users can access service on-demand wherever they are, share data and collaborate more easily, and keep data stored in a provided
infrastructure (Vouk, 2008).Infrastructure as a Service (IaaS) allows for storage and processing capacity (Vouk, 2008). Resources are split, assigned and dynamically resized to build ad-hoc systems for customers of cloud computing technology (Vaquero et al., 2009). This allows IaaS customers to rent computing resources, rather than install them in their own data centers. Likewise, it offers a fast,
easy, on-demand way of allowing customers access to computer hardware, such as servers, networking technology, and data center space. Platform as a Service (PaaS) is a set of software programs that can provide what a developer needs in order to build an application (Vouk, 2008). Instead of supplying a virtualized infrastructure, cloud computing offers a software platform on which systems can run (Vaquero et al., 2009). Further cloud computing offers the user the option to choose a payment plan that a user can choose and scale according to their needs or a supply chain partner’s needs. Along with manipulating the type and payment of the service users can also control the way in which it is received including a private, public or hybrid cloud service. Public clouds, like the amazon cloud drive allows multiple users to access the cloud infrastructure with limited security whereas a private cloud requires a user to provide a secure password and identification before accessing any type of information. The ability to privatize a cloud can ease security concerns among both users and their supply chain partners. While EDI promotes similar benefits to the supply chain field and in turn has been shown to enhance information delivery speed, frequency and ease and ultimately benefit supply chain performance (Cantor & Macdonald, 2009), cloud computing has greater potential to be accessed on a variety of mediums and locations and can analyze terabytes of data in a period of minutes (Marston et al., 2011; Benlian & Hess, 2011). This is dissimilar to web-based EDI which typically requires a common platform on either end (i.e. common ERP systems) (Monczka et al., 2011).
The impact of IT on information sharing is not new in literature (Clemons et al., 1993). Additionally previous research has suggested the various benefits associated with cloud computing that may impact information sharing (Sahin & Robinson, 2002; Rochwerger et al., 2009; Vouk, 2008; Rosenthal et al., 2010). However, no study to our knowledge has yet to empirically examine cloud computing’s impact on information sharing in the supply chain. The flexibility provided by the cloud offers three catalysts for greater information flow: greater speed at which information is processed, enhanced security through privatization options and ability to tailor the type, medium and payment of service. This flexibility allows for users to tailor the cloud according to both their and their supply chain partners needs leading to a safe and effective environment for information sharing ultimately being a useful resource to provide superior competitive advantage.
Based on this previous literature we formulate the following hypothesis H3. Cloud computing use positively influences information sharing. 3.3. Trust
While various definitions of inter-organizational trust exist, most scholars agree that confidence in the other party’s credibility and good will are essential (Johnston et al., 2004; Gattiker et al., 2007). In this study we use Zhang et al. (2011) definition of trust as “a
trustor’s confidence and belief in credibility and goodwill of an object of trust,” where the object may be a purchasing agent or a buying organization (Zhang et al., 2011). We use this definition because credibility and goodwill are two of the most well cited and agreed upon dimensions of trust (Zhang et al., 2011), and Zhang et al. (2011)’s definition focuses specifically in the supply chain management field.
Zhang et al. (2011) argues that in interpersonal and inter-organizational trust there exist two specific dimensions: credibility and goodwill. These dimensions incorporate several other dimensions that have been looked at in past research such as honesty and benevolence.
Credibility refers to the belief that the other party is dependable or reliable (Johnston et al., 2004). This can run the gamut of meaning anything from a supplier being honest to providing adequate information. Most if not all buyer/supplier relationships that seek to be long-term will require the supplier to fulfill obligations and behave predictably (Zaheer et al., 1998). This can include behavior in which a supplier follows through on contractual agreements. Without sufficient follow through it is unlikely that trust will be fostered due to the lack of credibility.
Goodwill refers to the belief that one party will act in the best interests of another, even if there is no way of monitoring behavior (Johnston et al., 2004; Ganesan, 1994; Baker et al., 1999; Zaheer et al., 1998; Sako, 1992). This dimension includes providing adequate information without compensation or not participating in activities that may be harmful to a trusting party (Johnston et al., 2004). The goodwill dimension of trust has also been defined as a partner’s moral values measured by a willingness to protect the interests of that partner (Hosmer, 1995; Hill et al., 2009). This represents anything that the trustee organization can do in order to benefit the success of the trustor organization.
Past research suggests that strategic alliances supported by information technology have high potential for opportunistic behavior such that in order for information sharing to occur, a firm needs to have confidence in its partner’s behavior (Das & Teng, 1998). Trust has also been shown as a moderator between a firm’s adoption of e-procurement to e-marketplace participation (Chang & Wong, 2010). Although adoption and participation are separate from cloud computing use and information sharing, a connection exists through information technology (cloud computing use and e-procurement adoption) and the implementation and result of information technology (information sharing and e-marketplace participation). While there is very little research in the supply chain management area with cloud computing use, the recentness of cloud computing has caused many organizations to be concerned about storing sensitive information on the cloud (Rochwerger et al., 2009). Without adequate trust, users may be concerned about storing vital information needed for better information sharing.
Social capital theory proposes that firms are made up of individuals, and the relationships among these individuals shape activities and outcomes (Ketchen, Jr. & Hult, 2007). Trust is a vital component for organizations to become comfortable with sharing sensitive information with other organizations. Trust, therefore, between supply chain partners is used as social capital to moderate the relationship between cloud computing use and information sharing.
Based on this previous literature we formulate the following hypothesis:
H4. Trust moderates the relationship between cloud computing use and information sharing. 3.4. Information Sharing and Supply Chain Performance
Because information sharing is widely cited in supply chain literature, it has various definitions. Monczka et al., (1998) explain that communication behavior combines the extent to which the information exchanged affects the level of information quality and participation. Mohr & Spekman (1994) argue that information sharing is the extent to which critical information is communicated to one’s supply chain partner. Huber & Daft (1987) focus on information quality, which includes accuracy, timeliness, adequacy and credibility of information.
In this study Zhou & Benton, Jr’s (2007) definition is used, which organizes information sharing into three dimensions: information sharing support technology, information content, and information quality. We chose Zhou & Benton Jr’s (2007) definition that focuses not only on content and quality of the information, but also on a method of how it may be communicated (i.e., information sharing support technology). Since our study focuses on cloud computing technology, this definition provides a broader and more definitive context for information sharing.
Previous research suggests that the degree of relationship among organizations in a supply chain has a significant impact on supplier satisfaction (Benton & Maloni, 2005). Additionally, stronger buyer-supplier relationships enhance supply chain performance (Benton & Maloni, 2005). A relationship among supply chain members is fostered when several factors exist among the members. These include commitment, trust, cooperation, and conflict resolution when conflict exists (Benton & Maloni, 2005). Information sharing is vital to maintaining and fostering the relational factors among supply chain members. For example, information that is shared is also useful in providing a reference guideline for suppliers when initiating collaborative relationships with customers (Humphreys et al., 2001). Li et al. (2005) suggest that information sharing helps to create superior performance in supply chains, because it allows for supply chain partners to work as a single entity. In addition, it helps break down functional barriers and engenders cooperation to meet
the requirements of customers (Flynn et al., 2010). Greater cooperation and integration, thereby, leads to process efficiency and logistics service performance (Saeed et al., 2005; Germain and Iyer, 2006; Stank et al., 2001a, b).
Based on this previous literature we have formulated the following hypothesis: H5. Information sharing positively influences supply chain performance
4. Methodology
A combination of case study methodology and survey methods was used to examine our proposed model. The multi-method (also known as mixed-method) was chosen because separate and dissimilar data sets provide a richer and more in-depth analysis (Sawyer, 2001, p. 180).
Qualitative methods including the case study were used, given the high degree of uncertainty surrounding our model (Trauth, 2001). Our conducted interviews provide a deep understanding of activities and behaviors associated with cloud computing use, as well as its impact on information sharing and ultimately performance. Additionally, using grounded theory in resource-based view and social capital theory as a basis for qualitative methods allowed us to build a conceptual model and derive propositions.
Quantitative methods were later employed to empirically examine the theoretical model derived from our qualitative data. Using structural equation modeling, we examined the relationships between each of our constructs. Using both qualitative and quantitative methods provides a deeper and richer understanding (Kaplan & Duchon, 1988). Moreover, the multi-method design strengthened the results through triangulation (Kaplan & Duchon, 1988).
4.1. Case Study
4.1.1. Case Study Selection
Case study methodology requires target organizations be chosen based on how they contribute to the ultimate research questions, as opposed to random sampling (Eisenhardt, 1989; Glaser & Strauss, 1967; Siggelkow, 2007; Staats et al., 2011). We chose our
organizations based on the following criteria. First, we wanted an organization that was currently using cloud computing technology, whether through a public or private cloud. Secondly, we interviewed participants in upper management that were well aware of the basic strategies of their organizations, as well as how the cloud was used by their companies.
4.1.2. Case Study Protocol
In developing our case study protocol we used sections incorporating research and construct overview, topics, objectives, and data collection (Yin, 2009). Our case study protocol can be found in the Appendix- Table 3.Yin (2009) outlines the assessment of the quality of an empirical research design, including construct validity, internal validity, external validity and reliability. Using a panel of experts, the questions were developed and structured from broad to detailed (Lockstrom et al., 2010).
During and after coding the data, we used multiple iterations through grounded theory (Glaser & Strauss, 2006). We also used existing literature to assess the causal relationships in order to establish adequate internal validity. We discussed both consistent findings, as well as rivaling propositions with colleagues (Marshall & Rossman, 1995).
A multiple case study approach was used in order to increase external validity. Using a multiple case study approach allows
researchers to consider “within-case” analyses and a “cross case” analysis using replication logic (Yin, 2009; Lockstrom et al., 2010). To maintain reliability, we developed a detailed case protocol to enable consistent data collection. Each interview was also conducted using a voice recorder and later transcribed. We also sent a case script for participants to review in accordance with Yin (2009). We also used multiple researchers to code and analyze the data and to cross validate recurring themes (Lockstrom et al., 2010).
4.1.2. Data Collection
In this study we used a representative case encompassing a holistic, multiple case study approach because the purpose was to capture the circumstances of everyday, commonplace situations (Lockstrom et al., 2010; Yin, 2009). The participants in our study included organizations that used cloud computing technology for operations and were varied in size. The sample of firms obtained is
summarized in Table 4.
Table 4. Company profiles
Company no. Company category Country of
origin
Key informant
2 Tax Software USA Co-owner
3 Global Logistics/Transportation USA Vice President (VP) of International Marketing & Director of Supply Chain Management
4 Deliverer or GPS technology USA Senior Vice President (SVP) of Marketing and Logistics
& Director of Information Technology
We conducted interviews over a two month period, and each interview lasted between thirty minutes and one hour. In order to ensure comparability and maintain consistency and flow, we used a semi-structured interview method (Yin, 2009). The interviewees ranged from top management to supply chain specialists who were aware of how their organizations utilized cloud computing technology and their overall company strategies.
The researchers continued to interview until theoretical saturation was accomplished (Yin, 2009). Overall, interviews with six different individuals from four companies were conducted, which is considered adequate according to Yin (2009). Since the
interviews were semi-structured, we were able to gather the required information needed to seek out the relationships for our model.
5. Exploratory Analysis
After completion of each interview, the voice recordings were transcribed by two different researchers in order to ensure construct validity. After coding the data, five analytical categories and five causal relationships were found. We interviewed four companies, whose names have been changed to protect their identities. These companies are further summarized in the next section.
5.1. Overview of Companies 5.1.1. Company Retail
In Company Retail we interviewed a consultant from a consulting, technology services and outsourcing company that specifically works for a retailer. The consulting company operates in over 200 cities in 53 countries and has several operating groups, including
health and public services, communication and high tech financial services, products and resources. In recent years, Company Retail has acquired consulting, software and technology firms. It is a 4 billion dollar publicly traded company.
5.1.2. Company Truck
Company Truck provides tax services for small or individual trucking companies. Since 2007, Company Truck has prepared IFTA returns for 2500 companies and provides access to these returns, as well as to miles and fuel data that can be accessed any time from any computer. Along with preparing returns, company truck offers customers free driver qualification tracking software, hours of service calculator and a fleet maintenance program wherever and whenever a trucking company may need it.
5.1.3. Company Transport
Company Transport is a holding company that offers its customers a range of transportation services, including global, national, and regional transportation, as well as logistics, with subsidiaries in the national, regional and international markets. Company Transport is a 2.69 billion dollar publicly traded company.
5.1.4. Company GPS
Company GPS provides navigation, communication and information devices and applications using GPS technology. Its four main business segments are marine, automotive/mobile, outdoor/fitness and aviation. The company is a 4.9 billion dollar publicly traded company.
5.2. Business Strategy and Cloud Computing Technology
Interview participants were first asked about business strategy. Following the Miles & Snow (1978) typology, we found each case identified with the different strategies.
Many of our interviewees stressed the importance of cost reduction and efficiency seeking methods prevalent in the defensiveness strategy. We interviewed a Senior Manager from Company Retail, a global management consulting and technology services company. The Senior Manager described the focus on cost reduction in the organization’s operations, “We are continually looking for areas where we can reduce costs and also become more efficient from an operating perspective.”
Company Retail’s Senior Manager suggests that this strategy impacts the company’s use of cloud computing technology. In particular, Company Retail uses cloud computing technology to further the goal of not only cost reduction, but also greater efficiency through virtual services. He later explained:
We have multiple sites, distribution operations, scattered across the U.S., and in each of these we’re continually looking for opportunities where I can take different aspects, whether it be email services or file print services, and make those virtual. Cloud computing not only provides a means of cost reduction, but also of increased efficiency through virtual services. A company, depending on its strategy, can use the cloud to obtain the benefits desired.
Like Company Retail, Company Truck, a tax software company, also considers both cost reduction and efficiency seeking as priorities for the firm. The cost reduction that cloud computing provides Company Truck is described by its Co-Owner as follows:
We are using infrastructure as a provider, called GoGrid, to replace all of our physical servers to run our applications on. We are also using other things like Google email, which is a cloud service as well. In cost reduction we replaced around 95k in hardware with $275 a month hosting charges…so our cost reduction is huge.
Originally, Company Truck invested $95,000 and was spending a large amount in upkeep of hardware. For a company focused on cost reduction, this may seem to be a large amount to invest. Yet, with cloud computing technology the firm is able to save a great deal of money in maintenance fees, as well as reduce the investment to $275 a month for hosting charges.
Company Transport, considers itself an industry leader in information technology and a very early adopter of cloud computing. They identify with a cost reduction strategy in their operations. They also suggest that their use of cloud computing technology is driven by their strategy. Company Transport uses cloud computing technology to reduce several different types of costs, as suggested by the Vice President (VP) of International Marketing below:
One way to reduce cost and enhance efficiency is to implement and use information technology and information systems. We use cloud computing technology to reduce our company’s overall costs. For instance, there is a drastic reduction in operational expenses. Hardware costs are also minimal. With a minimal maintenance cost, we can rely on the cloud computing services partner to look after our SCM related software applications, especially in overseas markets.
Company GPS, uses a slightly different strategy. Being not only a pioneer in implementation of cloud computing, but also a provider of cloud computing services, their strategic priorities are innovation and vertical integration. However, cost reduction and efficiency strategies are important operational tactics. Despite this, cloud computing provides a platform that enables a vertical integration strategy, as the Director of Information Technology describes below:
Cloud computing is very fit for our overall vertical integration business strategy in that it provides us with an efficient and cost effective platform to provide high quality services to various functional areas within our company and external partners. Risk aversion is another strategy outlined by Miles & Snow (1978). Each company interviewed had its own risk taking propensity. Company Retail is extremely risk averse. That is, they are conservative in resource allocation decisions and product and market choices. The Senior Manager at Company Retail described their risk taking propensity as follows:
We are an extremely conservative organization…so that we have the ability to manage risk of implementation and keep the product flowing through the supply chain.
This risk averseness impacts their use of cloud computing technology to share information with their supply chain partners. Company Retail is in a private cloud, where the private cloud is devoted to a single organization’s internal use (Grossman, 2009). The use of a private cloud tends to be more secure in storing sensitive information and helps reduce potential security risks, including the ability of others to obtain sensitive information.
In terms of risk, Company Truck is very conservative. Originally, Company Truck considers the major risk associated with the IaaS service to be the reliability of the cloud. This is not an uncommon worry for cloud computing users. Many are concerned about
whether the service will be available or down during critical times. However, for Company Truck the cost reduction benefits achieved from cloud computing technology far outweigh any associated risks as described below:
We are afraid of screwing up people’s taxes, so we have a bunch of disclaimers on our website about how the user is responsible for verifying the accuracy of the software return. Our biggest risk when we first went to GoGrid for our infrastructure was uptime. So I was able to sacrifice a little more risk in terms of cost benefit.
Despite this, Company Truck still monitors the information stored in the cloud, given the security risk. For example, company truck does not store customer credit card information in order to reduce the likelihood of potential fraud.
Unlike companies Truck and Retail, Company Transport considers itself risk neutral. The Director of Supply Chain Management stated:
We are risk neutral in the sense that we are actively pursuing business opportunities in emerging markets, while we have risk management strategies in place to deal with such risk effects.
Dealing with risk is a necessity for large supply chains. Complex supply chains require coordinated flows of goods, information, cash, etc. within and among different nations. Additionally, security issues and risks tend to perpetuate when dealing with large numbers of firms in different countries. Company Transport tries to maintain a balance between being opportunistic, yet verifying security and risk issues regarding information technology. With the use of cloud computing technology, there have been some troubling issues having to do with losing data as described by the Director of Supply Chain Management below:
We noticed that there have been a number of high profile incidents recently, where some of the largest cloud providers have had outages, and some even lost data.
In reaction to these problems, Company Transport utilized risk management tools to assess their information technology risk on different dimensions like technology, people and processes. In particular, they use risk assessment in their use of cloud computing technology for data integrity, recovery and privacy. Company Transport tends to use a private cloud, which provides security, while occasionally using a public cloud for customers. Their strategy is a balanced approach for taking advantage of opportunities and maintaining adequate security. Their cloud computing use is also balanced through the application of a public cloud to enhance opportunities for greater exchange between themselves and their customers and a private cloud to maintain adequate security within the company. Company Transport’s Director of Supply Chain Management describes this strategy as follows:
I feel that there is a trade-off between scale (massively scalable service that cloud computing offers) and control. One extreme is that organizations run their own infrastructure and have total control. The other extreme would be a totally cloud-based infrastructure. We are avoiding both extremes. For our cloud computing architecture, we use both private and public clouds. A private cloud offers less scale and more control, while a public cloud offers maximum scale and minimal control.
On the other end of the spectrum is Company GPS, which, being an innovator and pioneer in the industry, is alert to the pursuit of any market expansion opportunity. Within the past three years, they established a joint venture with Shanghai, and currently have
subsidiaries in Taiwan and South Korea. Cloud computing has enabled them to further their goal of vertical integration as the VP of Marketing and Logistics describes below:
Cloud computing is a viable tool for us to consolidate and coordinate IT functions between headquarters and subsidiaries to achieve our vertical integration strategy.
Although in the first adoption of cloud computing technology Company GPS used the private cloud for security reasons, they have now started to adopt the public cloud for external reasons. The Director of IT describes how they view the security of the cloud below:
Security is still an issue for executives considering the cloud, but it has dropped dramatically in importance. I think this indicates it may not be as crucial a factor for companies that are considering public cloud services as it once was.
Risk averseness is a strong factor in the way companies use cloud computing technology. In interviewing our participants, we also saw aggressiveness, or the rate at which a company moves faster than its competitors for improving market share, as a key factor in the use of cloud computing technology.
Aggressiveness was relatively constant between companies. Company Retail had a focus on maintaining a close watch on its competitors. They specifically sought out ways to maintain a strategic advantage over the competition. This strong competitive and aggressive focus impacted the way they used cloud computing technology. The Senior Manager describes their strategy as follows: …we want to be able to continually push things into the stores. (We use cloud computing) to make sure our information is updated. We also use cloud computing to keep all of the applications in sync in all of the different locations simultaneously. Cloud computing for Company Retail serves as a way to maintain product flow in the supply chain through updated information on shipments. This retailer is in multiple locations and accesses information through a system that specifically tabulates what is in each store and what is needed.
Like Company Retail, Company Truck also has to maintain its aggressiveness when dealing with constantly changing customer needs. Being a tax software service company, each year they must deal with new regulatory issues. At the same time, customers desire more in terms of access and speed of service. Cloud computing provides a platform that allows them to maintain an aggressive stance in changing their service in relation to their competitors. Company Truck’s Co-Owner describes this strategy as follows:
We are now looking at going a lot more mobile and collecting data from GPS devices both in terms of hardware and in terms of mobile devices for the phones. Our users are constantly in motion, so we are looking at different facets to use mobile technology.
Company Truck uses cloud computing to complete computations that would normally take several hours. However, by employing several different computers and carrying out computations simultaneously, they can do so in less time. By saving time they also save energy and power by not utilizing resources that would normally be used without cloud computing technology.
Company Transport also has an aggressive approach in reacting to changing customer needs. They focus on reducing costs for customers as the VP of International Marketing describes below:
We are confronting higher customer expectations such as more intimate knowledge of, and services tailored to, the customers’ respective industries. We are further recognizing a strain on their profitability from increasing cost pressures such as
government regulations and inflated fuel prices.
In response to this growing market need Company Transport uses information technology to maximize the overall efficiency of business processes. Cloud computing technology allows Company Transport to discover and adapt to regulatory changes and to lower costs, which are passed on to their customers.
Like aggressiveness pro-activeness, or flexibility in changing environmental trends, varies between companies and also impacts the use of cloud computing technology. Company Retail’s Senior Manager describes how things were before they started using cloud computing technology below:
Currently, we have a focus on sustainability, continually looking for opportunities to reduce carbon footprint. Before we had servers in every single store handling different applications…since (using cloud computing) we’ve been able to centralize a lot of our functions to reduce energy use.
From this statement it is evident that Company Retail is pro-active in sustainability and reducing their carbon footprint. This has impacted their use of cloud computing by focusing on reducing their carbon footprint via centralizing systems and reducing energy use.
Like Company Retail, Company Transport also has a pro-active stance with regard to reducing its carbon footprint as the VP of International Marketing explains below:
We participate in programs and processes for protecting and preserving the environment. These strategies have the dual goals of reducing our carbon footprint, while optimizing our corporate resources. Our industry-leading companies effectively and aggressively promote greenhouse gas reduction strategies, waste reduction and conservation across their daily operations, including green information technology.
Cloud computing is one resource that Company Transport uses as a “global logistics capability” to connect organizations throughout the world in order to improve the efficiency of the global supply chain.
Another strategy discussed in our interviews, as well as in Miles & Snow (1978), was analysis. There were several different ways our interviewees considered this in terms of problem solving strategies.
Company Transport’s representative discussed hiring external consultants that were technology experts in solving problems associated with information technology. This allows them to concentrate on their core competency, rather than having to worry about issues that are beyond their normal knowledge managing practices. This problem solving behavior also impacts the way they use their cloud computing technology. Company transport concentrates on vendor selection and risk management associated with its use. The VP of International Marketing describes this below:
We need to rely on our vendors if services provided by them are woven into business processes. So choosing a supplier for cloud computing services in our organization has to be done with the idea of a long-term relationship in mind.
Company Transport’s attention to detail in vendor selection and risk management has helped to recognize this company in Security magazine’s Top Security 500. By choosing a responsible vendor and concentrating on risk management, Company Transport is able to fix problems before they occur by having access to reputable vendors and eliminating future problems through risk management initiatives.
Futurity was the last strategy type discussed during our interviews. Company Retail describes why they focus on short- term decisions: We have operations teams that are very much focused on short-term. The effect of what we’re doing today is trying to get the product out, making sure the stores have the information they have.
This short-term viewpoint breeds concentration on efficiency of operations. In terms of cloud computing use, it also impacts the way they view the short-term use of cloud computing technology. They change the focus from questions such as, “Will I need as many servers in the data centers?” to, “Will I be able to operate the data centers in a different manner over time in the short-run in order to run operations efficiently?”
Company Transport, on the other hand, focuses on both short-term and long-term strategies. The VP of International Marketing describes this strategy below:
We are in a very competitive environment today, and the nature of the supply chain management business is thin profit margin and cut-throat. As such, efficiency of operations is very crucial. Supply chain management is also very tech intensive. To be a leader in the industry in the long-run, we need to pursue IT innovation.
For Company Transport, cloud computing provides a platform for supply chains to become more dynamic, scalable and capable of supporting objectives in cost reducing, efficiency and in being the leader in IT innovation for both the short-term and the long-term. Based on our interviews, we can support both hypotheses 1 and 2 that business strategy positively influences cloud computing use and that business strategy moderates the relationship between cloud computing use and information sharing.
5.3. Cloud Computing Use and Information Sharing
Interview participants were also asked about their cloud computing use. We asked them to describe the service that they use with cloud computing technology. In particular three surfaced: the massively scalable service provided by cloud computing, including the three types: SaaS, IaaS, and PaaS, the on demand service provided by cloud computing technology and the pay-as-you-go service. Company Retail uses a private cloud, which they describe as follows, “We’re private, so with clients we actually set up vendor portals.” The vendor portals allow other individuals to access information from the cloud, but each organization has its own password and log in information for added security.
This private cloud use impacts the way they share information and the type of information they share with vendors. Company Retail’s Senior Manager explains this below:
The vendor can obtain information, whether it is purchase order information, routing information for shipments, status of orders, or status payments.
This information is shared among vendors, and they can access it at any point in time using the secured password and log in
information. Cloud computing provides a platform for companies to access information at any point in time, even at different locations as described by Company Retail’s Senior Manager below:
It (Information sharing) is driven across the cloud. We have a centralized data center, and then everybody else can access that from a variety of different locations.
Company Retail’s private cloud computing offers ease of access to information without the security risks associated with public cloud computing. This also impacts Company Retail’s sense of security when sharing information with other users as described below:
We’re pretty comfortable with (sharing information) by giving each of the individual organizations their unique log on and password, so that only they can see their information and their data, even though it’s in a much larger database environment. Company Transport also has various uses for cloud computing technology. They include facilitating process integration with the help of enterprise resources planning, enterprise application integration and greater information sharing through greater coordination of efforts between supply chain partners to respond to customer needs, and greater availability of strategic and tactical data for other members in the supply chain. In this sense cloud computing was used as a driver for both process and service, allowing Company Transport a greater competitive advantage, especially in customer relationship management as the VP of International Marketing describes below:
We have revolutionized customer relationship management via cloud computing (e.g. public cloud), allowing our customers to deploy online customer services on their corporate websites.
Company GPS, which uses both web-based cloud services and SaaS, suggests that cloud computing provides them a “clear edge” in globalization efforts by allowing for greater communication between firms in the supply chain. The director of information technology describes this benefit of cloud computing as follows:
Cloud computing facilitates and enhances information sharing processes. For example, one of our second tier suppliers and our company use the same cloud computing service for VMI applications, and it improved the information sharing between us.
Based on these interviews, we can support hypothesis 3 that cloud computing use positively influences information sharing. 5.4. Inter-Organizational Trust of Cloud Computing and Information Sharing
Interview participants were then asked to elaborate on the social relationships they have with their supply chain partners. In this study we are specifically interested in inter-organizational trust between supply chain members.
Both credibility and goodwill dimensions of trust were established in the interviews we conducted. Company Retail’s Senior Manager describes the relationship with suppliers and clients as follows:
We like to feel that all of our clients and all of our suppliers are credible, and they all desire to put forth their best foot. Despite the strong level of trust that Company Retail has with its partners, trust at certain points in time needs to be verified. In order to do this, Company Retail researched its partner’s financial situation to discover any underlying problems as described below:
There are times, as with any business, you’ll find that when trouble does arrive they may be reluctant to put information forward. And you’ll start to see that with untimely delivery of making shipments. You’ll start to see issues from that perspective. At that point we start to take a look at their financials for a better understanding of what’s going on with their business.
When a partner is having difficulties with financial stability, Company Retail notices a decrease in the amount of information shared with them. By this we can see that trust may impact the relationship between cloud computing use and information sharing. That is, when trust is low, information sharing may be negatively impacted despite cloud computing use.
Company Transport is similar to Company Retail in their “trust but verify” mentality with supply chain partners in using cloud computing to communicate information sharing. The VP of International Marketing describes the company’s viewpoint of security with cloud computing technology below:
IT security of cloud computing is about trust. Any one of our IT partners (e.g., vendors and ISPs) can undermine our security: crash our systems, corrupt data, allow an attacker to get access to systems. The security and reliability of our platform is fundamental to our business, as is the trust and faith that our customers place in us…but we can use compliancy and standards as a solution to that issue.
Company Transport asks vendors to maintain adequate standards in terms of protocol and data formats. Further, vendors have to be certified and presented publicly to the company. While these certifications are costly, they are also critical for adoption, because they build the foundation of service level agreements between suppliers and buyers in the supply chain, thus, enhancing information flow and business. Moreover, Company Transport operates a business intelligence infrastructure to control its datacenters. This involves other companies in the supply chain having to provide operational data in order for Company Transport to react to bottlenecks or to up- or downscale the infrastructure. When this is done, adequate information sharing can be accomplished.
Company GPS also believes in the importance of trusting one’s supply chain partners. Company GPS treats its suppliers and buyers as business partners with the same goals and purposes in mind. Trust is of utmost concern when dealing with using IT such as cloud computing to facilitate information flow between partners as the VP of International Marketing and Director of IT describe below:
We believe in this day and age buyers and suppliers come together for mutually beneficial reasons, based less on the customer’s or supplier’s power and more so on a relationship based on value exchange . . . Any one of our IT partners can undermine our security…Before we can start to share information there has to be trust between the various links in the supply chain.
Given the security risk that often comes with cloud computing technology, including vendors that crash systems, corrupt data or allow an attacker to get access to the system, it is vital for Company GPS to maintain a trusting relationship before using cloud computing to communicate with firms. The VP of International Marketing describes this below:
Almost everything we will talk about in supply chain management is predicated on being able to share information openly with the appropriate members of the chain. In other words trust is then a key foundation of supply chain management.
Based on these interviews, we can support hypothesis 4 that trust moderates the relationship between cloud computing use and information sharing.
5.6. Information Sharing and Supply Chain Performance
Another aspect asked of our participants concerns information sharing between them and their partners. We inquired about three aspects: information sharing support technology, information content and information quality.
Company Retail describes information sharing support technology as consisting of vendor portals in the private cloud. Vendor portals are gateways that can be accessed by the partners, each using their own specific user names and passwords for added security. In these vendor portals individuals can access information, including shipping information and status of orders. Using these vendor portals seems to enhance Company Retail’s relationship with vendors and individual partners as described below:
That (vendor portals) seems to be spreading quite well and is very well received both within our organization and within our individual partners.
The vendor portals have been successful in sharing information between Company Retail and individual partners. In this sense the information sharing support technology, or vendor portals that Company Retail uses, strongly impacts their relationships with partners.
Company Transport also suggests sharing important information like sales forecasts, marketing strategies and inventory levels with supply chain partners using cloud computing technology. The Director of Supply Chain Management describes the importance of information sharing as follows:
Since building up new capacities in large quantities takes up to years, forecasting demand is vital for providers of computing power, and they (supply chain partners) invest great efforts in this.
Accurate forecasts in demand can also help alleviate the bullwhip effect in supply chains (Lee et al., 1997a, b). Through the use of cloud computing technology, Company Transport can help alleviate problems in the supply chains that result from inaccurate forecasts in demand.
Company Transport also suggests there are two types of information sharing: sequential information sharing and reciprocal
information sharing structures. In sequential information sharing the output of one partner’s activity flows to the next partner as an input, and this continues as a sequential process along the supply chain. In this case they rely on electronic data interchange. However, reciprocal information sharing is more complex, considering that information flow is bi-directional and partners communicate with several others, which may cause inconsistencies regarding the information of different partners. In this case cloud computing is more useful as a tool to prevent inconsistencies as described below:
To reduce uncertainty and conflict in collaboration, the best coordination mechanism for partners is to synchronize and integrate the interactive processes using cloud computing architecture.
In this case inconsistencies are eliminated via centralized data points. Multiple partners through a public cloud can gather accurate information and increase performance by using information sharing support technology or cloud computing.
Information content is another facet of information sharing. It is defined as the content exchanged between firms in the supply chain (Zhou & Benton, Jr., 2007). In the interviews conducted we found a broad variety of content was exchanged between partners through the use of cloud computing technology. Company Retail describes sharing future demand, shipping information, status of orders and other content as stated below:
We are continually polling our suppliers for what they think they might have coming available and then adjust our forecast accordingly. Likewise, we’re also polling our demand forecast and we’re looking at what we might have for storage from last season or 2-3 seasons ago and forecasting what we might think will sell the best.
Information sharing has impacted demand forecast accuracy. This directly may impact the bullwhip effect, which Lee et al. (1997a, b) describes as oscillating demand amplification upstream in the supply chain. This can also be considered a measure of supply chain performance.
Along with appropriate information content, another aspect important for reduction of bullwhip effect, and improved supply chain performance, is information quality. Information quality refers to the quality of the information exchanged between firms (Zhou & Benton, Jr., 2007). This is more specifically defined using several aspects, including, but not limited to, accuracy, availability, timeliness, internal connectivity, external connectivity, completeness, relevance, accessibility and frequently updated information (Zhou & Benton, Jr., 2007).
Information sharing as a whole, and information quality as a part, was described by Company Transport as helping to achieve an effective way to reduce uncertainties in the supply chain and counter problems like the bullwhip effect. The Director of Supply Chain Management describes how information sharing the right way allowed for greater efficiency:
Information sharing ensures that the right information is available for the right trading partner in the right place and at the right time. We use information sharing to prevent, detect and resolve exceptions spontaneously and create unprecedented levels of efficiency in collaborative supply chains.
Company GPS assesses the value of suppliers in terms of quality, timeliness, ease of access to information and commitment. Greater information quality and flow between each supplier and Company GPS gives the supplier a higher rating. Greater information sharing,
