| Bullwhip Effect |
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| CATEGORIES ABOUT BULLWHIP EFFECT | |
| distribution, retailing, and wholesaling | |
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Bullwhip effect is also attributed to the separate ownership of different stages of the supply chain. Each stage in such a structured supply chain tries to amplify the profit of the respective stages, thereby decreasing the overall profitability of the supply chain. Supply chain experts have recognized that the Bullwhip Effect is a problem in forecast-driven supply chains, and careful management of the effect is an important goal for Supply Chain Managers . The alternative is to establish a demand-driven supply chain which reacts to actual customer orders. In manufacturing, this concept is called Kanban . This model has been most successfully implemented in Wal-Mart's distribution system. Individual Wal-Mart stores transmit Point-of-sale (POS) data from the cash register back to corporate headquarters several times a day. This demand information is used to queue shipments from the Wal-Mart distribution center to the store and from the supplier to the Wal-Mart distribution center. The result is near-perfect visibility of customer demand and inventory movement throughout the supply chain. Better information leads to better inventory positioning and lower costs throughout the supply chain. Barriers to the implementation of a demand-driven supply chain include the necessary investment in information technology and the creation of a corporate culture of flexibility and focus on customer demand. Factors contributing to the Bullwhip Effect:
Methods intended to reduce uncertainty, variability, and lead time:
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