A supermarket shares consumer demand information with a sole supplier. Can both firms be better off?

What is it about?

This paper is about aspects of an optimal relationship between two firms, a supplier and a retailer, in a two‐party supply chain. The focus is on sharing private information when demand uncertainty exists so as to better coordinate the supply chain. It draws inspiration from a real case in Ireland of a new fish‐processing company, Oceanpath, and a supermarket chain, Superquinn, in which information was shared. The argument is that sharing the retailer's information increases supply chain profit, as well as benefiting consumers. Profit sharing will be needed to guarantee that both the retailer and the supplier gain when information is shared.

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Why is it important?

The literature generally concludes that the larger firm, with the information, loses out as a result of sharing information with the supplier. This paper shows that this is not necessarily so, and provides evidence that the relationship that actually existed between the retailer and the supplier could indeed have been in the interests of both.

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