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Simatupang, T.M., Sridharan, R., "The Collaborative Supply Chain: A Scheme for Information Sharing and Incentive Alignment", Working Paper, Massey University, Palmerston North, New Zealand, May 2001



Partnership in a supply chain helps different companies match demand with supply more effectively than they could alone. Although partnership promises mutual benefits to the partners, those benefits are rarely realised due to differences in interest. Lack of information sharing and a tendency to local optimisation are the primary reasons for lower overall performance of the chain. This paper argues that managerial inertia manifested in local perspective and opportunistic behaviour of chain members contribute to mismatch between supply and demand. Identifying the managerial inertia of various chain members that prevents them from gaining mutual benefits, and studying the underlying reasons for self-interested behaviour are very important research issues. A collaborative supply chain that improves partnership relationships and simultaneously incorporates appropriate performance measures, integrated policies, information sharing, and incentive alignment as initiatives to mitigate the detrimental effects of managerial inertia on chain performance is proposed.

Keywords: Supply Chain Management; Collaboration; Incentive Alignment; Information Sharing; Asymmetric Information