Causes And Consequences Of The Bullwhip Effect

Using Supply-Chain Management to reduce space and investment requirements while maintaining adequate service levels is that when an effective supply-chain management, Wolf Motors can streamline the acquisition processes and maintain efficient inventory control while reducing unnecessary inventory warehousing. Wolf Motors could analyze the historical inventory turnover rates to diagnose the appropriate range of supplies that should be on hand in each and every category. Wolf

Retail super-giant Wal-Mart has fought its way to becoming the world's largest company. Wal-Mart’s legendary supply chain technology has allowed them to break the three-day barrier that some economists in the eighties felt that it was unbreakable. In other words, Wal-Mart is often able to replenish items on the Wal-Mart shelf in less than three days – not from the central warehouse to the shelf, but from the manufacturer to the shelf. With quick and reliable 2-day turn around, Wal-Mart is able to maintain lower levels of inventory and still meet customer demand. These lower inventory levels result in either a reduced floor plan with lower carrying costs and lower interest expense – or a greater diversity of products on the store shelves.

Changes within the supply chain can disrupt the normal flow of goods and services because each change hasn’t been fully scrutinized. A firm can plan and speculate that a change with have a certain effect on the supply chain, but until those processes have been measured it is impossible to know the true cause and effect of any disruption.

Walmart’s approach means frequent, informal cooperation among stores, distribution centres and suppliers and less centralized control. The company’s supply chain allowed consumers to effectively pull merchandise to stores rather than having the company push goods onto shelves by tracking customer purchases and demand. Through the use of universal product codes, implementation of Retail links at the store, use of RFIDs and smart tags, suppliers and manufacturers within the supply chain synchronize their demand forecaste under a collaborative planning, forecasting and replenishment scheme, and every link in the chain was connected through technology that includes a central database, store-level point-of-sale systems, and a satellite network. As per report, there was a 16% reduction in out-of-stocks with the use of RFIDs and pointed out that the products using an electronic product code were replenished three times as fast as items that only used bar code technology. These strategies have made Walmart to be the dominant force over other competitors with information and technology helping its supply chain strategy attain greater

For instance (ceteris paribus), if the transportation of the HP products were air shipped, and the lead time passed from four and a half weeks to three days, logically stock levels would decrease. The same would happen if we reduce the time between orders or the level of satisfaction that we want to assurance to our customers.

Barilla, the leading pasta manufacturer in Italy, faces increasing problems related to demand fluctuation. Their distributors also suffer from high inventory holding costs and low service levels on the other hand. This report explains, why the company and their distributors are troubled with this situation and how Barilla intends to solve it. The problem Barilla experiences is called the “Bullwhip Effect”, i.e. that demand variability increases when moving up the supply chain. Several factors enforce this Bullwhip Effect, e.g. high lead times, poor demand forecasting, and batch ordering. In this report we will point out, that exactly those aspects can be identified as the underlying reasons for Barilla’s problems. In a

Raising maximum distributor order, more than customer demand is one good choice made in the three games. According to the supply chain order, the maximum distributor order totals to 15units compared to a maximum demand of 9units. These figures prove that backordering costs will not occur during business operations. Good inventory management techniques require placing adequate orders to reduce backordering costs. The cost and time of backordering affects operations and hence the need to adequate inventory to match demand changes. An average customer order of 7units compared to average distributor order of 5units points to low backordering costs. A minimum customer order of 4units means that market demand is under control from

In this final paper for Managerial Finance I will attempt to show how the supply chain inventory management method can be affected depending on the situation of the retailer. Studying the control method for problems in inventory, which would include both, excesses in inventory as well as shortages, and hoping to minimize loss.

The customers, wholesalers and retailers may order in large quantities with the expectation that they will receive a greater allocation of products that are in short supply. The impact on the supply chain is significant as the forecasted demand is greatly, and unrealistically, increased with these inflated orders. Eventually orders disappear and cancellations pour in, making it impossible for the manufacturer to determine the real demand for its products

The suppliers get the advantages of making their products be showcased for the consumers thru these retailing outlets. A wider scope of retail outlets could mean wider scope for the brand recognition of the seller’s products, that is why these retailing giants has more power than suppliers. But when it comes to distribution, having a strong supplier is important, the company be better over competitors when it comes to qualitative factors such as on time deliveries on their branches and wider network of

By taking a more collaborative approach, major improvement could be made. One way is by embracing the concept of “Collaborative Planning, Forecasting and Replenishment” (CPFR) which have been developed and successfully employed by leading food retailers. It foresees that data is shared and discussed actively between retailers and suppliers, e.g. by producing joint forecast on annual production volumes, also considering foreseeable flunctuations. With a better understanding of the mutual dependencies, the planning basisi could be improve and complexity reduced. On the short term planning basis, making aviable sales data collected in-store 9from the scanner-equipped cash registers) to suppliers in real time allows suppliers to produce more accuratelty to the actual demand, and thus reducing cost for buffers and excess inventory (Trebilcock 006). Of course, Aldi will have to receive a certain share of these benefits. Going one step further would be to add ”Category Management” to Aldi’s supplier collaboration approach to optimise assortment towards the end of customer needs.

if supplier doesn’t supply on time may incur the company the loses of the clothes out of date fashion . Huge number of tons will be consumed faster than before because of this fast fashion. This was the possible disadvantage of the fast fashion distribution system. There are a lot of advantages that offset the disadvantages of the fast fashion distribution system. We may say here fast fashion requires innovation and brainstorming to get new designs overtime to be

Second, excess inventory will be reduced on items that have a lower demand. Third, there should be enhanced credibility with customers due to the better availability of product. Forecasting should also benefit scheduling and labor needs for production. Ultimately, there should be an increase in inventory for products with high demand, a decrease in overall inventory, and reduced operating expenses.

For partners of ASOS, they generally go through the same production process as ASOS own-branded dress. However, they receive the order from ASOS and its merchandisers instead of consumers. It is an important process for ASOS as understanding the product lifecycle and stock level, they can plan the introduction and withdrawal of product. Also price can be adjusted accordingly with which sales are introduced during the decline period (The Times 100, NA). However, this supply chain requires a high collaboration of functions across supply chain (Fernie, 2009). The reason why ASOS can eliminate the traditional functions of a retail store is due to its well-managed supply chain, effective stock keeping system and fast-going logistic system (Meadows, 2007).

In an ideal situation, customers would not have to wait for the delivery of products and services. However, in the real world, organizations cannot always match exact capability and demand; therefore, waiting is frequently inevitable while purchasing, especially in service marketing, as service firms can barely inventory their “stock” for sale at a later date (Lovelock, 1992, p.154). In general, waiting in lines – known as “queuing”, happens when the number of customers arrive at a facility exceeds the capability of the system to serve them (Lovelock & Wirtz, 2011, p.260). Basically, this essay will state the relationship between queuing and customer satisfaction, as well as relationship between customer satisfaction and