Supply Chain Information : Procter & Gamble

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Supply Chain Information
A few years ago, some logistics executives at Procter & Gamble (P&G) reviewed the order patterns on one of their most popular products, Pampers. Its sales at retail stores were fluctuating, but the variances were not excessive. Now, as the executives reviewed the distributors’ orders, the executives were astonished at the amount of variances. As they proceeded to review the Procter & Gamble orders of materials to Procter & Gamble’s suppliers, such as 3M, the Procter & Gamble executives revealed that the shifts were even larger. When the Proctor & Gamble executives first looked, the variances were not logical. As the consumers, in this particular instance was the babies have been consuming diapers at a pretty regular rate. Somehow, the Proctor & Gamble executives found that the demand order variances in the supply chain had been magnified as they continued to move up the supply chain. Procter & Gamble named this extraordinary finding the “bullwhip” effect. (In some industries, it is also known as the “whiplash” or the “whipsaw” effect.) (Lee, Padmanabhan, &Whang, 1997)
Bull Whip Effect
The purpose of supply chain management is to supply an extreme rapid flow of superior quality relevant information that will allow suppliers to offer a continuous and accurately timed flow of materials to customers. However, unexpected demand variances, including those caused by stockouts, in the supply chain operations process create abnormalities which
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