Value of supply disruption information and information accuracy |
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| Institution: | 1. Department of Marketing & Supply Chain Management, School of Business Administration, Wayne State University, 5201 Cass Ave., Detroit, MI, 48202, USA;2. Department of Supply Chain Management, W. P. Carey School of Business, Arizona State University, 300 E Lemon St, Tempe, AZ 85287, USA;1. Aalto University School of Science, Department of Industrial Engineering and Management, Finland;2. Chalmers University of Technology, Department of Technology Management and Economics, Supply and Operations Management, Vera Sandbergs Allé 8, Gothenburg, Sweden;1. Aston University, Aston Logistics and Systems Institute, Aston Triangle, Birmingham, B47ET, United Kingdom;2. Department of Marketing and Supply Chain Management, Haslam College of Business, University of Tennessee, TN, United States;3. Cranfield School of Management, Cranfield, Beds, MK43 0AL, United Kingdom;1. University of Antwerp, Faculty of Applied Economics, Department of Management, City Campus, Prinsstraat 13, 2000 Antwerp, Belgium;2. Antwerp Management School, Sint-Jacobsmarkt 9-13, 2000 Antwerp, Belgium;3. University of Antwerp, Faculty of Applied Economics, StatUa Center for Statistics, City Campus, Prinsstraat 13, 2000 Antwerp, Belgium;1. HEC Montréal 3000 chemin de la Côte-Sainte-Catherine Montréal, Québec, Canada H3T 2A7;2. Aix-Marseille Université CRET-LOG, 413 Avenue Gaston Berger, 13625 Aix-en-Provence Cedex, France |
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| Abstract: | In this paper, we examine the factors that influence the value of supply disruption information, investigate how information accuracy influences this value, and provide managerial suggestions to practitioners. The study is motivated by the fact that although accurate disruption information creates benefits, fully accurate disruption information may be difficult and costly to obtain. Furthermore, inaccurate disruption information can decrease the financial benefit of prior knowledge and even lead to negative performance. To perform the analysis, we adopt a newsvendor model within a single product setting where the focal firm can source from a supply network and has a given resilience capacity. The results show that information accuracy, specifically information bias and information variance, plays an important role in determining the value of disruption information. This influence varies at different levels of disruption severity and resilience capacity, and our results imply that higher amounts of resilience capacity actually may be detrimental to a firm without accurate information about a disruption's influence. Thus, for companies with a high resilience capacity, obtaining quality information is critical for effectively coping with disruptions. |
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| Keywords: | Disruption information Information accuracy Resilience capacity Risk management Supply disruption |
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