Managing The Bull Whip Effect

Supply chain management is a complex process. There are several issues that can lead to the bullwhip effect and those issues can be exacerbated by delays in transmitting information, and a lack of coordination up and down the supply chain. Some causes of the bullwhip effect include:

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.

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 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)

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.

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

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.

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.

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.

when a wide range of goods is put into each shipment and it offsets the smaller volume of bulk orders.

Supply chain: Supply chain encompasses all activities associated with the flow and transformation of goods from the raw materials stage (extraction) through to the end user all well as the associated information flows. Material and

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.

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