INFORMATION SHARING AND DECISION MAKING IN HUMANITARIAN NGOS SUPPLY CHAIN MANAGEMENT
Information Sharing and Decision Making in Humanitarian NGOs Supply Chain Management
4. Information Sharing
4.1. Concept and importance
Information sharing is one main driver in supply chain management, representing the basis of the entire supply chain management, as it provides the required data for the supply chain management (SCM) to make decisions (Ma, 2011). In a supply chain management, information sharing represents a form of coordination, connecting the members of the supply chain through various available technologies (Choi, 2010). Ma (2011, p. 876) defines information sharing in supply chain as an activity that facilitates the communication among partners on aspects regarding “shipping, demand, inventory and cash-flow” with the purposes of optimizing inventory, reducing the bullwhip effect and lowering the total costs for gaining increased core competitiveness.
4.2. Types and Classification
The specific literature recognizes two types of information sharing in supply chain: downstream and upstream, wherein the downstream information sharing type has a central planner that communicates the information to all partners and the upstream type emphasizes the unique supply chain relationships with suppliers (Choi, 2010). Botta Genoulez, Capagne and Pellegrin, (2013, p. 69) also indicate that information sharing can be “formal or informal, transactional or managerial, unidirectional or shared, internal or transverse”
Another significant dimension in information sharing is the time component, which can generate competitive advantage for the supply chain. Sharing information in real-time emphasizes the collaboration between supply chain partners, optimizing the underpinned activities (Ajayi and Maharaj, n.d.). Nevertheless, Zhao (2002) advices that information sharing should be postponed until the last stage of the production for both the large and the constrained production, because in these cases the production depends on capacity and not on information.
Information sharing has the value of information quality when the information exchanged among the members of supply chain meets their needs (Botta Genoulez, Capagne and Pellegrin, 2013). These authors also state that information quality is measured based on nine attributes: “accuracy, availability, timeliness, internal connectivity, completeness, relevance, accessibility, and frequently updated information” (Botta Genoulez, Capagne and Pellegrin, 2013, p. 64).
Discussing about the relationship between information quality and information sharing in a supply chain, Li and Lin (2006) indicate that although top managers are responsible for information sharing, they have no control or guarantee about the information quality. In supply chain, the information quality is influenced by technical factors of information sharing, but also by environmental, intra and inter-organizational factors (Li and Lin, 2006). Wiengarten, Humphreys, Cao, Fynes and McKittrick (1996) find that while information sharing is meant to improve the operational performance within the supply chain, contradictory to low quality information, the high quality information aligns improved operational performance with incentive alignment and joint decision.
Finally, the content of the information sharing in supply chain is essential for establishing the nature of the issues being communicated among SCM partners and for reducing the bullwhip effect. Botta – Genoulez, Campagne and Pellegrin (2013) state that even if the nature of the content is explicit it does not reflect the possible directions of communication exchange (upstream or downstream). The partners within a supply chain should agree on what content (demand, capacity, inventory, scheduling) should communicate among them and with what intensity or to what extent (Botta Genoulez, Capagne and Pellegrin, 2013).
4.3. Information sharing in humanitarian NGOs supply chain management
Referring specifically to humanitarian nongovernmental organizations, these four variables of information sharing (type, time, quality and content) influence the decision-making process. Within a NGO the structure of a supply chain differs from the structure of a public or private institution. The main stakeholders of an NGO are the communities that they serve, which represent a significant partner of their supply chain. The government, donors, sponsors and contributors are also relevant to NGOs supply chain, as they contribute with funds for assuring the completion of the humanitarian projects to serve communities and causes (Ergun et al., 2009). In this context, the information sharing needs to be adjusted to the nature and needs of knowledge of its supply chain members. More specifically, the humanitarian NGOs imply dealing with disasters, which gives the supply chain management in humanitarian NGO a particular dimension, different than the regular SCM (Ergun et al., 2009).
For humanitarian NGOs the information sharing has a different value than for the other supply chains, because it deals with many unknown data, such us: when and where a disaster will take place, what the nature of the disasters will be and what resources will be needed in what timing (Ergun et al., 2009).
Because the lack of these information it is difficult to predict, hence the information sharing across the supply chain management cannot be processed in a timely and effective manner. Although donations arrive from sponsors and donors, they might contradict the type or time variables of the information sharing, as the donated items might not be what it is required in a certain disaster or the items might arrive earlier or later than needed (Ergun et al., 2009). When the time component is not met, humanitarian NGOs face difficulties in storing the donations, which may even be destroyed because the lack of adequate collection logistics (Ergun et al., 2009).
The link between information sharing and decision making in SCM for humanitarian NGOs differ from the one in the regular supply chain management, because the NGOs do not pursue attaining profit, but efficiency in action through their decision making.
5. Decision Making in Supply Chain
5.1. Concept
The purpose of decision-making in supply chain is to drive corporate performance through qualitative decisions that assure inventory consistency and supply chain flexibility (Lewin, “Supply Chain”). Qualitative decisions are the decisions made based on consistent analysis of the shared information, used for attaining the objectives of an organization.
5.2. Process
Decision makings in supply chain facilitate the optimization of inventory, which, in terms of supply chain capabilities reduces the supply chain costs that further affect the financial metrics by minimizing the total cost (Lewin, “Supply Chain”). In parallel, the decision making in supply chain contributes to optimizing the supply chain flexibility, which further leads to optimizing cycle time. Optimized cycle time that has a positive effect on market response (in terms of capabilities) and it generates optimized return on net assets and on revenues, which maximizes the economic value added (Lewin, “Supply Chain”).
5.3. Classifications, Decision States
There are three decision making levels or states, hierarchically classified based on the planning time: strategic (requires the longest planning time), tactical (medium planning) and operational (shortest time for planning) (Holten et al., 2005).
At the strategic level, the decision making is aligned with the mission statement, focusing on reaching cost and/or differentiation objectives while pursuing strategic positioning by analyzing how upstream or downstream activities, company, products, business process can be integrated in the supply network for attaining competitive advantage (Clements, Wilson, Bacanaru, 2006).
At this level the gap between information sharing and decision making should be approached by involving the main supply chain members in managerial levels into an open communication about their experience and information about how to reach specific objectives. For measuring the decision making at this level, the information received from the members of supply chain should be placed in direct relationship with the sought objectives and further measured how attainable and achievable the objectives are based on the information gathered.
At the tactical level the decisions focus on meeting the demand by covering the logistics needs that imply quality management, integration of up-to-date technology, updating processes, selecting suppliers, developing relations and products for delivering production decisions, inventory policies, transportation and customer strategies (Clements, Wilson, Bacanaru, 2006).
The decision making at this level should consist in information gathered from the general trends in technology and from the specific applicability of technological trends in the activity domain, in this case the humanitarian NGOs. For measuring better decision making, there must be performed a detailed analysis of the technology at hand, technological trends and the technology that other NGOs are using, for avoiding that a gap between information sharing and decision making should appear. A comparison with the latest technological trends and the effectiveness of the decisions to integrate specific technology in a NGO’s operations should be performed for measuring the quality of the decision making at this level, based on the shared information.
Decisions made at the operational level serve the daily activities such as scheduling, routing, truck loading, etc. and imply manufacturing operations: machining, handling, transferring, maintaining, etc. (Clements, Wilson, Bacanaru, 2006).
A day-to-day communication on the challenges or opportunities available in these operations should enhance better decision making. The decision making at this level should be measured by quantifying the sup of shipments, transfers, maintenance work against the set objectives.
5.4. Decision Models in Supply Chain
The multicriteria decision making model in supply chain describes the complex behavior of decision-makers of taking into consideration various social relationships, focusing on both business-to-business (B2B) and business-to-consumer (B2C) for achieving the profit maximization (Wu and Blackhurst, 2009).
The rational decision making model is based on a consistent foundation that enables an accurate structure for the complex decision process, describing how the decision-makers should act for maximizing the outcomes (Andersson and Wemner, 2008). The rational decision making model is formed of six phases: problem definition, decision criteria identification, weights allocation for the criteria, alternatives development, alternatives evaluation and best alternative selection (Robbins, 2003, in Andersson and Wemner, 2008)
6. Information Sharing and Decision Making in NGOs
In a humanitarian NGO information sharing and decision-making are significant actions for reaching goals, developing negotiations and maintaining balance of power between different supply chain members (Hadiwinata, 2003). However, as it was earlier mentioned, the activity of humanitarian NGOs supply chain management greatly differs from a regular supply chain management, because its operations cannot be predicted, being connected with catastrophic events and disasters. In this context, humanitarian NGOs need to remain flexible, which hampers the information-sharing and the decision-making process. Nevertheless, as Irrera (2013) indicates, within humanitarian NGOs there exists a coordination that assures the sharing of information and centralizes the decision-making through participative involvement of all the members of the supply chain management.
However, the complexity increases because there are multiple participants in the humanitarian NGO supply chain management (government, military, donors, sponsors, NGOs, volunteers, end-users), high bureaucracy specific to each country and also lack of specialization in logistics or operations (Ergun et al., 2009).
Irrera (2013) explains that the information-sharing is stringent in NGO supply chain, so that the NGOs can communicate on upstream and downstream activities with government, military, private institutions, volunteers and end-users. As such, the author exemplifies that in the case of acting on a humanitarian mission of maintaining peace, Save Children organization informs and trains military on how to communicate and to behave with children associated with terrorism or armed groups (Irrera, 2013).
As this report indicated, information sharing heavily affects the decision making process, regardless of the decision making model utilized. In the humanitarian NGO supply chain information sharing does not always generate decision making, because although data are communicated among the supply chain members, action might not be immediately required. However, information sharing is useful for calculating environmental impact (Ergun et al., 2009) and for establishing policies to be followed in case of a disaster, which can be integrated in a multicriteria decision making model that takes into consideration various social relationships. By involving all members of the supply chain management network in a decision-making process, information will be shared across all the members. Based on the gathered knowledge, each member can propose directions for further actions, consistent with the specificities of humanitarian NGOs profile. Decisions about the bureaucratic humanitarian actions, about the private company’s involvement and about the volunteers support can be made based on the available information, shared among the members of supply chain.
Strategic decision making will be focusing on the general goals of the actions – how to remedy a community after a disaster. Tactical decision making will be focused on deciding what resources to be allocated, what logistics are required and how the resources will be transported to reach the end users. Finally, the operational decisions will produce schedules and will assure the handling, shipments, maintenance and storage of the resources. Information sharing should be integrated throughout the supply chain, including in the decision making phase, as information must be shared in this phase also.
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