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ARTICLE TITLE

Simatupang, Togar M., Sridharan, R., Wright, A.C., "Information and incentives in a supply chain", Proceedings of the 7th Annual New Zealand Engineering and Technology Postgraduate Conference, Massey University, New Zealand, 23-24 November 2000, pp. 269-274.

 

ABSTRACT

Manufacturing and retailing companies tend to collaborate in a supply chain to effectively match demand with supply. Although partnership in a supply chain promises advantages in the gaining of mutual benefits, those benefits are rarely realised due to differences of interests among its chain members. Identifying differences of interests that may prevent channel members from gaining mutual benefits, and studying the extent to which they relate to the level of the conflict perceived by each of channel members appear to be very important research issues. Asymmetric information and incentive misalignment in a supply chain are believed to be responsible for differences of interests. Asymmetric information occurs because each member has its own private information that other members need to know in order to make decisions. A channel member who has a set of operative goals, which typically often differ from the channel goal, prioritises decisions relevant to its own benefits. This typical behaviour leads to incentive misalignment. This paper introduces the existence of asymmetric information and incentive misalignment in a supply chain that may result in possible discontent which can prevent a supply chain from functioning effectively as a team.

Keywords: Information Sharing; Supply Chain; Incentive Alignment.