"Information Sharing and Supply Chain CapabilitiesAs supply chains grow increasingly complex, organisations become further dependent oninformation sharing to help them thrive. Managing global relationships, collaborating withlogistics service providers, and serving omni-channel consumers requires effectiveinformation sharing and advanced information systems functionality. This contributes toimportant supply chain capabilities such as cross-chain visibility, agility, velocity,synchronisation, adaptability, segmentation, and optimisation.? Cross-chain Visibility: Managers need to control key supply chain activities. Havingthe most current data about the supply chain is a prerequisite for effective decisionmaking and rapid problem response by managers.? Agility: Agile supply chains have the capability, capacity, and flexibility to deliverconsistent or comparable cost, quality, and customer service under changingconditions.? Velocity: The speed of product flows across the supply chain must be aligned withcustomer expectations.? Synchronisation: The goal of a multi-organisation supply chain is to function as asingle entity that produces and distributes the inventory needed to meet customerrequirements.? Adaptability: Organisations must strategically adapt the design and capabilities of asupply chain to evolving conditions. This requires a flexible, geographically dispersednetwork supported by strong technology to analyse options and properly allocatenetwork capacity.? Segmentation: Organisations must dynamically align their demand and supplyresponse capabilities to optimise net profitability across each customer segment. Offering differentiated service levels to each segment, the organisation can increasesales and reduce costs.? Optimisation: To achieve peak supply chain performance, an organisation mustconsider numerous trade-offs, effectively deploy its resources, and make the bestpossible decisions. Supply chain optimization technologies use mathematicalmodelling tools to quickly run through the options to find the solution that facilitatessuccess for all supply chain stakeholders.Importantly, information sharing helps to reduce the bullwhip effect (erratic demand forecastscausing excess safety stocks, which cause production planning problems) significantly,especially at higher levels in the chain.3 The Bullwhip Effect[This page should take about 1 hour to complete]As we learned so far, within supply chain environments a series of companies work togetherand receive orders from their immediate upstream member. Inbound orders from adownstream member serve as a valuable informational input to upstream production andinventory decisions. The problem here is that information transferred in the form of ‘orders’tends to be distorted (see traditional supply chain in Figure 2 of Mason-Towill andJones, Supply chain information and material flows) and can misguide upstream members intheir inventory and production decisions. In particular, the variance of orders may be largerthan that of sales, and distortion tends to increase as one moves upstream. This phenomenon is termed the ‘bullwhip effect’ (Lee et al, 2004). WatchWatch a description of the bullwhip effect by Professor Hau Lee of the Stanford GraduateSchool of Business. (3 minutes)(Excerpt from "Supply Chain Master: Prof.Hau Lee", Stanford Graduate School of Business,2011)Click to show/hide transcript.The bullwhip effect can be caused by a range of stimuli (see Lee et al., 1997). The veryobvious one, as detailed earlier, is lack of information. Other causes can be attributed tosupply chain structure and local optimisation. Let's explore these stimuli further:1) Lack of informationIt can be a case within the supply chains that no information except for the order amount isperpetuated up the supply chain. Hence, most information about customer demand is quicklylost upstream in the supply chain. With these characteristics, supply chains are often dealingwith low levels of trust among trading partners, where only little information is being sharedbetween the parties. Without actual customer demand data, all forecasting has to rely solelyon the incoming orders at each supply chain stage. In reality, in such a situation, traditional "