| Today's marketplace is demanding increased variety, faster delivery, and lower cost. To meet these demands, firms are developing new mechanisms to coordinate the flow of goods through their value-added chains. Information technology has played an important role in these developments. The advantages, for example, of electronic interfaces between suppliers and their customers for the purpose of improving the speed and accuracy of order entry and procurement are well documented, and this practice is now commonplace in most industries. Less common is the practice of sharing detailed information about the overall state of the logistics network with other channel partners for the purpose of improving the effectiveness of logistics decision-making.; The advantages of integrating logistics processes across firm boundaries in this way are more difficult to establish than were the advantages of simply interfacing order entry and procurement systems. Instead of thinking about how existing processes become more efficient when the same information arrives faster and more accurately, we must think about how fundamentally different types of information enable the logistics decision processes themselves to change.; This research examines information technology-enabled logistics process integration from the perspective of a mid-tier manufacturer in an industrial supply chain. Analytic models are developed to assess the benefits of entering into more information-intensive relationships with customers. A comprehensive case study is used to motivate the discussion and to illustrate how timely, accurate information about future demands from selected customers can reduce the variation in aggregate demand as perceived by the manufacturer, which in turn can reduce capital costs given appropriate scheduling and inventory policies. Research methods include simulation models and mathematical models that operationalize the information content in the coordinating mechanisms between firms as a decision variable. In certain restricted (but important) cases, these models can be used to determine the optimal subset of customers that should be considered for information-enriched cooperative relationships. In the general case, the simulation models can identify "good" solutions to this problem. |
