Managing The Bull Whip Effect

These spikes and troughs could be the result of price discounts that the company is offering due to which customers are buying in bulk and stocking up on products. This could lead to variability in demand, leading to excess demand or no demand that would lead to non-efficient production by the company. Root cause analysis should be performed, and if it is established that volume discounts are leading to this phenomenon, it is recommended that the company minimize discounting and work with the customers using a partnership model to ensure a steady demand.

High risk of huge inventory returns from the distributors if they are not able to sell in reasonable timeframe. This will increase huge sales return in B&L books in the following year.

Without 100% deliverables on-hand this could create a bullwhip in the supply chain. A bullwhip effect is point to a lack of synchronization among supply chain members. This happens when changes in sales ripples backward (e.g. bullwhip) because the supply patterns do not match the demand patterns causing shortages and delays.

Supply chains are networks of organisations, information, technologies, activities and resources involved in the movement and conversion of physical goods or services from suppliers to end consumers. These different organisations are interlinked by physical, information and monetary flows. Organisations create value by transforming raw products into finished goods or repositioning of resources thru space and time, which is based on networks of supply chains. Both ways, it involves the movement and conversion of physical goods and information throughout supply chains across the world. Therefore organisations and supply chains are closely interlinked in the creation of value for its customers. Manufacturing firms produce goods for

Supply chains represent the procurement, production and distribution activities of an organisation. Within a supply chain, these activities are viewed as linked and reliant on one another to produce the final outcome. It is believed that if one component of the chain fails, the whole chain is broken and product/service delivery goals will not be achieved.

27. The push/pull view of the supply chain is useful when considering strategic decisions relating to supply chain design, because it categorizes processes based on whether they are initiated in response to or in anticipation of customer orders.

-Ordering patterns are extremely volatile (i.e. with spikes followed by periods of small orders -Inventory levels are high even as stock-outs occur!

This causes the price and the quantity move in opposite directions in a supply curve shift. Also, if the quantity supplied decreases at any given price the opposite will happen.

The group of firms that makes and delivers a given set of goods and services is known as a supply chain.

SF does not want the product overproduced, provide timely reporting of product sales in order to avoid this problem. For this reason, the company's inventory becomes a serious problem.

A third factor contributing to the Bullwhip Effect is the specific production process of pasta. Barilla cannot re-act to demand changes quickly enough, due to production restrictions as e.g. heat and humidity specifications. That means, if a product is out of stock it cannot be produced and delivered immediately.

Supply chain innovations should ensure on-shelf availability at retail outlets, improving collaboration between vendors and retailers, translating supply chain costs to product pricing, lean inventory and real time replenishment. Wal-Mart should ensure that process differentiation to determine the right method of moving products with varying demand characteristics (Akehurst, C., & Alexander, N. (1995)

The retailers had to estimate their customers’ demands well in advance of the selling season and place bulk orders for each season’s inventory. This involved high risk for the retailers as over-estimation would lead to unsold stock; whereas under-estimation led to stock outs and loss of potential sales.

The supply chain is a system made amongst different companies producing and distributing the product. Specifically, the supply chain contains the steps it takes to deliver goods or services from the supplier to the customer.

Economic factors the main impact every product and service is inflation. When there is inflation it has a ripple effect on all products and services. As a result companies incur an increase in their cost of production, and that leads to an increase in retail and wholesale prices. This can decrease the consumer buying