Big data investment decisions in a supply chain under the impact of transparency and competition

To investigate the decision and incentive issues arising from big data investment in supply chains, this paper studies a supply chain where two manufacturers source components through a group purchasing organization (GPO). The manufacturers compete in quantity and can invest in big data to achieve accurate demand forecasts, which can be shared horizontally with their competitors or vertically with the GPO. By presenting a measurement of supply chain transparency in vertical and horizontal dimensions, a game model is established to address the decision problems of big data investment. Then, impacts of supply chain transparency, competition intensity, and technological level of big data on the equilibrium results are analyzed, and the investment performance is compared with the centralized decision scenario. The results indicate that both vertical and horizontal transparency has a negative effect on big data investment, such that the feasibility and the level of the investment will be reduced by supply chain transparency. When the competition intensity is sufficiently high (low), the negative effect of vertical transparency can not only be smaller (greater) than that of horizontal transparency but also reduce (enlarge) the negative effect of horizontal transparency, thus spillover effects exist between the two dimensions of transparency. Moreover, competition induces overinvestment in big data, while horizontal transparency induces underinvestment. Vertical transparency can induce either overinvestment or underinvestment in big data, but it can also realize the optimal investment when both the competition intensity and big-data technological level are sufficiently high or low. Finally, numerical examples show that the manufacturers may sink into prisoner's dilemma in big-data investment when only vertical transparency exists. © 2018, Editorial Board of Journal of Systems Engineering Society of China. All right reserved.