Information sharing format preferences under different supply chain power structures

Abstract

Purpose This paper aims to study the preferences of the supply chain (SC) members on various power structures under demand information asymmetry considering competing retailers. Design/methodology/approach A two-level SC with one manufacturer and two retailers is designed. The retailers are in Bertrand competition. The manufacturer who holds the confidential demand information chooses the appropriate information sharing (IS) format. Three IS formats are provided, i.e. no IS (the manufacturer never shares with the retailers), partial IS (the manufacturer shares with one retailer), full IS (the manufacturer shares with all retailers). In addition, the authors model two power structures based on the decision sequences in the SC, i.e. retailers or manufacturer-dominant SC. The authors characterize the equilibrium solutions and payoffs and then investigate the members’ preferences for IS formats. Findings It is shown that in retailers (manufacturer)-dominant SC, the retailers prefer full (no) IS, but the manufacturer prefers no (full) IS. Moreover, the authors analyze the members’ preferences on power structures under demand information asymmetry, which has a relationship with the degrees of demand uncertainty and competition intensity. Originality/value The analysis regarding the preferences of the SC members on power structure under demand information asymmetry provides valuable managerial insights to enhance cooperation and achieve a win-win result.