Demand Collaboration: Effects on Knowledge Creation, Relationships, and Supply Chain Performance

While demand collaboration is crucial to supply chain performance, there is divergence over what demand collaboration really means. Currently, one perspective stresses the use of electronic communication systems for real-time data exchange (e.g., EDI, VMI) to increase speed of response and reduce costs, thereby improving operational efficiencies. Another perspective stresses relational elements to create close, long-term links. These links, facilitated largely through the use of non-electronic communication channels, serve the purpose of developing complementary capabilities, sharing more information, and engaging in more joint planning. In this study, we provide a framework that considers both elements of demand collaboration individually and jointly. The relative effectiveness of the various forms of demand collaboration is assessed via the use of a controlled simulation experiment.