Final answer:
Information symmetry in business, exemplified by Walmart's Vendor Managed Inventory system, leads to better supply chain performance by aligning incentives between parties. General Motors' evolution in information sharing with dealers showcases how reducing information asymmetry can correct incentive misalignment and improve inventory management.
Step-by-step explanation:
Examples of Information Symmetry and Asymmetry in Business
In the realm of inventory-based supply chain performance, the symmetry or asymmetry of information among parties involved can significantly influence the success of a business. For example, Walmart has extensively worked on achieving information symmetry with its suppliers through its advanced Vendor Managed Inventory (VMI) system. This level of shared information has allowed Walmart to streamline its supply chain operations, reducing stockouts and overstocked inventory, thus aligning incentives between them and their suppliers to maintain an efficient inventory system.
Another example can be seen in the automobile industry with the case of General Motors (GM) and its dealers. Historically, there was an asymmetric information problem where dealers had more information about vehicle sales prospects and inventory needs than GM did. This misalignment led to excess inventory or shortages, affecting GM's performance. However, as GM has improved its information systems, they have been able to incentivize dealers to provide accurate sales data, aligning their incentives and improving supply chain performance.