Crying Wolf and a Knowing Wink: A Behavioral Study of Order Inflation and Discounting in Supply Chains

• 成果类型: Article
• 署名作者: Niranjan, Tarikere T.; Ghosalya, Narendra K.; Gavirneni, Srinagesh
• 署名单位: Indian Institute of Technology System (IIT System); Indian Institute of Technology (IIT) - Bombay; Cornell University
• 刊物名称: PRODUCTION AND OPERATIONS MANAGEMENT
• ISSN/ISSBN: 1059-1478
• DOI: 10.1111/poms.13595
• 发表日期: 2022
• 页码: 1071-1088
• 关键词: information distortion; Case studies; Eye tracking; verbal protocol analysis (VPA)

摘要

Two field case studies uncover information discounting in supply chains, which manifests in the form of schedule padding and order inflation. Buyers often exaggerate the urgency and quantity of their needs (crying wolf). However, both buyers and suppliers eliminate old, inflated orders from their behavioral ordering/supply system implicitly (knowing wink) even though they exist in the hyper-rational ordering system represented by the ERP system. This behavior results in (and from) low credibility of information exchanged between the buyers and suppliers and their subsequent actions, and settles in a suboptimal equilibrium. Eye tracking experiments based on these case studies unpack the psychophysiological mechanisms behind this behavior, specifically, how decision makers consider past UnFilled Orders under different experimental conditions. We find that merely improving the supplier behavior does not help: information discounting reduces only when we sensitize the buyer to the improvement in the supplier behavior. However, this comes with no financial performance improvements; performance improves by further educating the buyers of the optimal target inventory.