INFORMATION TECHNOLOGY AND INFORMATION SHARING IN SUPPLY CHAIN OVERVIEW AND BUILDING OF A C ONCEPTUAL FRAMEWORK45331

INFORMATION TECHNOLOGY AND INFORMATION SHARING IN SUPPLY CHAIN OVERVIEW AND BUILDING OF A CONCEPTUAL FRAMEWORK Nguyen Anh Hao” ABSTRACT In a highly competitive environment, it is important for firms to collaborate with their supply chain partners to save cost, enhance quality, and improve decision-making process This paper aims to review the concepts of information technology (IT) and information sharing in the context of supply chain, then building a conceptual framework linking IT link in supply chain, supplier and customer information sharing, supplier development, knowledge absorption from customers, and supply chain performance The model suggests that IT link should be a foundation to foster information sharing practices between manufacturing firms and their suppliers and customers Information sharing leads to better supplier development, knowledge absorption then improves supply chain performance The conceptual framework in this study can be applied in future empirical researches to test the relationships between supply chain IT, information sharing and supply chain effectiveness in specific Department of Business Administration, Yokohama National University, Japan *Corresponding author: nguyenanhhao040294@gmail.com 72 PRODUCTIVITY AND QUALITY IN THE ERA OF DIGITAL TRANSFORMATION contexts and industries Empirical results would help firms to enhance information flow, supplier partnership, and customer relationship management Keywords: Information technology, information sharing, supply chain, supplier development, customer relationship management INTRODUCTION Supply chain management requires collaboration across members to ensure material, financial and information flows Firms regardless what industry they are working in are facing uncertainties usually caused by delivery delays, machine breakdowns or order fluctuations Uncertainty leads to variability between demand and production, creating Bullwhip effect then increasing cost Moreover, due to the globalization of markets, collaboration between firms and external partners become crucial, so that firms should link their business with customers and suppliers Sometimes firms have to work with too many suppliers and customers at the same time This may confuse them about whether it is customer requirement or supplier quality To handle that issue, information sharing in supply chain is necessary, as the sharing makes information available to all supply chain members (Kumar and Pugazhendhi, 2012) Many previous researches confirmed the importance of IT on the improvement of operations of supply chain (Ye and Wang, 2013; Vanpoucke et al., 2017) However, the impact of IT adoption on the organizational effectiveness of firms remains controversy For example, joining in an IT network can increase costs for suppliers because a quick-response program leads to more material deliveries, also increases inventory holding costs Moreover, IT application may increase cost if a firm makes a hugely financial investment but fail to benefit from such a highly sophisticated IT system International Conference Proceedings 73 Some other research works developed an analytical framework for the investigation of the impact of IT link on information sharing (Baihagi and Sohal, 2013; Li and Lin, 2006) Since information sharing is a process that requires two-way interaction, both how firms share information with their partners and how they receive information from their partners As discussed above, it is necessary to build a conceptual framework which can help researchers and practitioners to better understand the impact of information sharing and IT link in supply chain This paper gives an overview of IT link, information sharing in supply chain, then proposes a conceptual model which can be used in future researches LITERATURE REVIEW 2.1 Concept of information sharing in supply chain Lotfi et al (2013) defined information sharing as a process of disseminating the useful information for systems, people or organizational units Information sharing is a multi-directional process that organizations implement internally among functions, and externally between partners and customers It has become an obligation that supply chain members have to achieve in order to increase the supply chain efficiency There are other terms which can be used interchangeably with “information sharing” such as “knowledge sharing” or “information integration.” Because of a huge amount of information being exchanged in a supply chain, the management of information flows is considerably complicated It is difficult for firms to so because they lack framework to exchange information In fact, information sharing between supply chains should be timely and undistorted so as to build up competitive advantage (Li et al., 2005) 7% PRODUCTIVITY AND QUALITY IN THE ERA OF DIGITAL TRANSFORMATION To avoid uncertainty and reduce sharing cost, prior to sharing information with other supply chain partners, it is necessary to answer questions of what to share, whom to share, how to share, and when to share There are various types of shared information, which can be classified as product, process, inventory, resource, order, and planning In the viewpoint of Pandey et al (2010), shared information in supply chain can be Purchases and sales, Inventory status, Product development, Sales and forecasting, Market development, Future plan, Production cost, Technology know-how, and Order tracking In more general, information sharing among manufacturers, suppliers and customers can be tactical (e.g.: purchasing or logistics) or strategic (e.g.: long-term relationship objectives, customer information) (Kumarand Pugazhendhi, 2012) When it comes to manufacturers, sharing information with both suppliers and customers is necessary to capture market demand, achieve efficiency in order management as well as facilitate collaborative activities, leading to more innovation performance Nowadays, sharing information becomes easier thanks to IT advance 2.2 The importance of information sharing in supply chain ‘The effect of information sharing on the performance of supply chain has been proved in many previous researches as well as recognized by many practitioners First, it allows supply chain partners to integrate their knowledge in order to identify opportunities in the market and develop potential competitive advantages (Sambamurthy et al., 2003) In details, the more the information is gathered, the more accurate the prediction of real demand is, which helps each supply chain member to formulate effective future plans Therefore, information sharing plays an important role in making supply chain activities become smoother and more effective such as joint business plans, demand forecast, and new product development Second, for manufacturing International Conference Proceedings 75 firms, it enables them to access various sources of information such as sales, production and logistics, hence improving visibility and reducing uncertainty (Handfield and Bechtel, 2002) Moreover, it is shown in the literature that cost and financial performance is an important business performance which is significantly influenced by information sharing (Sahin and Topal, 2018) Thanks to the shared information, a firm is able to achieve supply chain integration to improve its operational performance, which means it helps reduce material purchasing cost, facilitate quality improvement effort, and enhance flexibility in responding to customer needs For example, the efficient implementation of information can reduce inventory cost up to 35% for manufacturers, while maintaining or increasing the level of operation (Lotfi et al., 2013) Moreover, information sharing allows firms to work collaboratively with their suppliers and customers, therefore they can develop trust then lead to better long-term relationship with external partners The benefits of long-term relationship include shorter lead time as well as order fulfillment cycle, faster and high-quality new product development process, etc (Hall and Saygin, 2012) Good connection among supply chain members also fosters business partnership, bringing considerable enhancement in supply chain integration via cross-docking, quick response (QR), vendor managed inventory (VMI) Thus, in a broad view, information sharing is considered a crucially intangible asset to create physical and financial assets, leading to higher performance of supply chain Empirical studies have proved that information sharing has a significant impact on the effectiveness of supply chain, ensures a common value-shared network, and leads to effective physical and non-physical asset flows from material sources towards product consumption by endcustomers (Li and Lin, 2006) 76 PRODUCTIVITY AND QUALITY IN THE ERA OF DIGITAL TRANSFORMATION 2.3 Practices and tools of information sharing in supply chain Information sharing practices in supply chain involve intrafirm and inter-firm data sharing An organization implements information sharing by encouraging interaction among its departments, sharing information with its suppliers and customers, also receiving information from its suppliers and customers Hence, information sharing practices are categorized into internal practices and collaboration practices (Baihaqi and Sohal, 2013) Internal information sharing refers to interdepartmental interaction in sharing resources, creating mutual understanding so as to achieve common goals Internal information sharing can be labeled as knowledge transfer amongst functions, and it requires cross-functional teams, which include members from each department to facilitate internal collaboration (Mentzer, 2004) Moreover, collaborative culture should be built, and all management procedures need to be standardized Internal knowledge sharing is important because it is a prerequisite to implement information sharing with other members in the supply chain Researches have demonstrated the significant correlation of internal and external integration (Baihaqi and Sohal, 2013) One of the tools to facilitate internal information sharing is enterprise resources planning (ERP), which is widely knownasasystem for internal integration Organizations can replace their operational system with ERP modules so that firms become more integrated, data flows become smoother with electronic data interchange (EDI) technology Another tool used for intra-organizational integration is enterprise application integration (EAI) This technology incorporates functionality from disparate applications with cheaper, functional and manageable IT infrastructure Collaboration practices refer to actions taken by a firm in association with its supply chain members in jointly planning and International Conference Proceedings T7 operating supply chain for greater success Information sharing is the basis for effective collaboration Information sharing among firms or downstream and upstream supply chain members is implemented through strategic supplier partnership and customer relationship management practices Strategic supplier partnership is a long-term relationship between firms and suppliers as they coordinate to utilize capabilities in achieving mutual benefits In order to so, it is necessary to build up IT systems to communicate with suppliers Some of them are SCEM (supply chain event management) systems, SCE (supply chain execution) systems, WMS (warehouse management system), AOM (advanced order management) systems, TMS management system) (transportation (Genoulaz et al., 2010) When it comes to customer relationship management (CRM), it is implemented to collect customer feedbacks, handle customer complaints with the aim of building long-term relationship and improving customer satisfaction Many firms apply CRM software, which aim at customers in their information system, to anticipate demand for better knowledge of customer expectations (Genoulaz et al., 2010) 2.4 Information sharing and information technology link in supply chain IT and information sharing have a tight link since IT link is considered as a foundation for information sharing IT link is defined as the application of automated systems or computer-tocomputer links between firms and suppliers, customers Hence, IT link is concerned with electronic link among organizations There are several tools for IT link such as transactional management system, electronic commerce, purchasing information system The main purpose of linking IT is to facilitate material flows as well as information ERP is one of those tools PRODUCTIVITY AND QUALITY IN THE ERA OF DIGITAL TRANSFORMATION 78 '82UEUI10J18d Jeu0I1e1ad0 pue dIsuo!e|a1 12IIldns-1aÁngq 18112q 01 ñuIpee| 'ÁIsua1uI ñuJ1euS u0I1BU1101uI uo 198dUII 9AI1IS0d seU uI81SÁS || p81E1081u| SISÁJBUE ||3S saibojopoyjay| S18U101S12 Áq puE ñUI1E\ u0IEu110JUI J0 u0Id12S9( (210Z) 12 38 ayonodue, (2u1au| '0uIuue|d uoIy2np01d “aseqE1ep) | (£I02) IE0S — U121SÁS 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pue Aaains | 0uJJeus “u0Ije2tunu1u102 | 01eu110/Ị 0216162101) “SISÁIEUE 10128 JBu0!]2unJ-ss01)| 1uanba!J) ssauful|||IlA Ñ1JA128Uu03| '82UEUI10J18d JEuoIe1ado pue 1uauuu6Jel || uaamjag diysuoneysas J0 Joyeipaw e SỊ 0uI1BUS U011BUI10JU| seI60jopou9jj| uo Hulziseydwa aue SLI} JO 1S0|j '89uEUI1011d |eu0Ie1ad0 Uo }9edwI aAlyisod øABU 01 punoj} aJe ssaubuiyim pue AyAoauu0)| sBuIpuIJ uIeij| PRODUCTIVITY AND QUALITY IN THE ERA OF DIGITAL TRANSFORMATION 80 "1U8U11IUIU102 DUE u0JSỊA D81EUS 'Á1UJE1182un 0002 SuE2|10 @ØN UỊ 92U818JU02 juawabeuey S3IISI00] J0 JI9un02) 8L] Je Saapuaye S18U11ed Áq pue UIM| — 319U1210| “113 'I03 JO BuJ1eus u0I1eu110Ju| abesn) siajqeua ||| sioyjny (9005) ur]pue r] (9UE1]X1 '19UE11U| yuly i jo uoldiussag) (abpaymouy — ssauIsnq 'Á1e1olido1d 'spaau 0uJ0ueu3) ay} WO) S1211128JnUEUI 96| ñUI1eS U0116110JUI Jo uondiussag Jo S189uI0U3 Buiunjoejnue,y; J0 Ấ181209 1UEUIUII12SIp 'U0ISS8169)| ajdwes pue eyeg "§ISÁIEub ul uJ1EUS U0I18U1101u1 U0 12EdUI| 1UE2IJIUBIS ØABU 10U 0p S1Ø|(EU8 || saifojopoyjay| Jaijddns Aq payeulwisasip ase HUIJeYS u0I18U1101U1 J0 |ØA| AA0| Jo ybiy I4 su0I1eZIUEð10 '||2S shuipuy uiey| International Conference Proceedings IT link facilitates the availability of information, 8ï thus encouraging coordination and collaboration across supply chain partners through information sharing (Fawcett et al., 2007) Effective information sharing can be obtained when a supply chain has an integrated IT system, acting as a tool for a firm to retrieve, process and disseminate the information upward or downward in the supply chain for a better decision-making process As long as firms not set up IT link with their suppliers and customers, they are restricted in accessing information in a timely manner, consequently lowering their responsiveness Furthermore, IT link should be adequately implemented, otherwise it is difficult for manufacturing firms to utilize the information shared by suppliers and customers It is shown in the literature that information sharing is beneficial for organizational performance, but not always It depends on the type of information, the intensity of information or the capacity of supply chain partners (Hall and Saygin, 2012) Table provides a summary of the previous studies on IT link and information sharing in supply chain management BUILDING A CONCEPTUAL FRAMEWORK 3.1 Information technology link and information sharing ‘The implementation of an integrated IT system enables firms to share information, also to utilize information received from supply chain partners When it comes to suppliers, firms can share order information, operational information, strategies, and competition information In return, firms can ask suppliers for cost information, delivery information or change in engineering information For customers, an IT link system helps firms to manage customer behaviors on a continuous basis (Fawcett et al., 2007) Furthermore, 82 PRODUCTIVITY AND QUALITY IN THE ERA OF DIGITAL TRANSFORMATION customers with technical knowledge can monitor the production of their own orders In general, IT link in supply chain leads to seamlessly connectivity; facilitates information dissemination among supply chain members so that managers across organizational boundaries can make decision in a faster and more collaborative way The above arguments lead us to the first two propositions: ws The implementation of IT link in supply chain leads to higher level of Propositionl | , information sharing with and by suppliers Proposition 2: The implementation of IT link in supply chain leads to higher level of information sharing with and by customers 3.2 Information sharing with suppliers, information sharing by suppliers and supplier development Supplier development refers to the extent that plants support for supplier development in terms of exchanging improvement ideas, asking for consultancy and investment Effective information exchange between buyers and suppliers increases the understanding of buyers of the situation of suppliers; it makes buyers more committed with the relationship Manufacturers are more likely to select the suppliers who are more willing to share their information Consequently, firms can develop and support their suppliers whenever problems occur Since information sharing by suppliers enhances buyer-supplier relationship, it facilitates direct interaction (e.g on-site visit, joint problem solving) that creates value for both buyers and suppliers Moreover, Modi and Mabert (2007) argued that knowledge transfer activities accelerate the transfer of tacit knowledge from buyer to supplier personnel; assisting suppliers in tackling problems on production or process management Thus, the authors propose the following propositions: International Conference Proceedings 8ã Proposition 3a: P Greater level of information sharing with supplier leads to better " supplier development activities Proposition 3b: P Greater level of information sharing by supplier leads to better bays supplier development activities 3.3 Information sharing with customers, information sharing by customers and knowledge absorption from customers Firms operating in any industry or business field are always beneficial from the knowledge shared by customers, because they can utilize the knowledge to better develop customer relationship Customer knowledge utilization implies that firms can learn about customer behaviors, then improve product development process and customer satisfaction as well Customer Relationship Management (CRM) system is developed by many firms as a customer-oriented technology solution to acquire customer feedbacks as well as implement customer focus (Salojarvi et al., 2010) Achieving the information shared by customers is not enough to create a “learning organization”, but the acquired information should be assimilated for commercial exploitations The use of technology increases the amount of information shared by customers, and more knowledge from customers can be utilized Therefore, next propositions are formed as: Proposition 4a: P Greater level of information sharing with customer leads to better knowledge absorption from customers Proposition 4b: oposition 4b Greater level of information sharing by customer leads to better knowledge absorption from customers 3.4 Supplier development, knowledge absorption from customers and supply chain performance Since supplier development activities enhance the coordination between buyers and suppliers, positive impact on both sides can 84 PRODUCTIVITY AND QUALITY IN THE ERA OF DIGITAL TRANSFORMATION be expected Specifically, collaborative activities including giving feedbacks, training from buyers can assist suppliers to handle problems that negatively influence the performance of a supplier When supplier performance is improved, buying firms will be beneficial from high-quality materials or parts, on-time delivery and better inventory management Previous studies have shown that supplier development improves buyer-supplier performance, reduces supply base and improve quality of final products (Kaynak, 2002) Moreover, customer knowledge absorption is a key for strategic decision-making, providing new opportunities for customer value creation (Salojarvi et al., 2010) Hence, becoming knowledgeable about customers improves market responsiveness, reduces supply chain uncertainty, and enhances supply chain performance Last propositions are presented as follow: Proposition 5: Supplier development activity leads to higher supply chain performance Proposition 6: Knowledge absorption from customers leads to higher supply chain performance 4, RESULTS AND DISCUSSION 4.1 Integrated conceptual model According to the above-mentioned discussion, an integrated framework is built and represented in Figure The proposed model can be applied in future researches to empirically test the impact of IT link on information sharing, the effect of information sharing practices on organizational capabilities such as supplier development, knowledge absorption from customers, as well as how those capabilities lead to supply chain performance Managers can look at empirical results in the decision-making International Conference Proceedings 85 process of IT adoption, knowledge management strategy for higher effectiveness of the organizations and supply chains Information sharing with EN suppliers Supply chain IT link with suppliers oo A customers Information sharing by Supplier development Supply chain performance Information sharing with Z\ Supply chain IT link with customers Information sharing by suppliers À Lư Knowledge absorption from customers customers Figure 1: The proposed conceptual model 4,2 Challenges of information sharing in supply chain Despite the significance and benefits of information sharing in supply chain, it is not always easy for organizations to share and obtain information from others, even with the support of advanced IT Firstly, it takes time and costs for any supply chain member to learn how to use IT system Moreover, when organizations apply an IT system, long time may be needed to train their employees to be familiar with the new system It is necessary for the organizations to choose suitable and user-friendly IT applications to improve information sharing (Kim and Lee, 2006) Secondly, inter-organizational information sharing requires trusted networks as the organizations want to keep privacy of information Lack of trust among supply chain members will have negative impact on the intensity as well as quality of information sharing In addition, timeliness, accuracy and amount of shared information should be considered, depending on 86 PRODUCTIVITY AND QUALITY IN THE ERA OF DIGITAL TRANSFORMATION the relationship between firms and their external partners, also the capabilities to utilize the shared information in an effective way CONCLUSION As the supply chain network becomes more complicated and because of the IT evolution, firms are getting more integrated It is necessary for firms to understand comprehensively about information sharing with supply chain partners and its impact on supply chain performance Through the literature review, this paper has provided an overview of concepts of IT and information sharing in supply chain Besides, a conceptual framework is proposed, suggesting the relationship between several constructs related to supply chain IT link, supply chain information sharing, supplier development, knowledge absorption from customers, and supply chain performance The model highlights the profound role of information sharing between firms and supply chain partners in enhancing organizational capabilities as well as performance Managers should therefore pay attention to IT link with supply chain partners to provide and receive information throughout the chain, removing inefficiencies for better operations REFERENCES Baihaqi, I., & Sohal, A (2013), “The impact of information sharing in supply 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Information sharing practices in supply chain involve intrafirm and inter-firm data sharing An organization implements information sharing by encouraging interaction among its departments, sharing information. .. conceptual model 4,2 Challenges of information sharing in supply chain Despite the significance and benefits of information sharing in supply chain, it is not always easy for organizations to share and. .. information sharing and IT link in supply chain This paper gives an overview of IT link, information sharing in supply chain, then proposes a conceptual model which can be used in future researches