Bullwhip effect

How is getting in the shower similar to bullwhip?

Constantly adjusting (the handle) until you find the correct spot (temperature), You don't know the delay of the action you have just applied, you maybe want to adjust it again before the real effect would come,

What is supply chain bullwhip effect?

It is a distribution channel phenomenon, where forecasts yield supply chain inefficiencies. It refers to increasing swings in inventory in response to shifts in customer demand as you move further up the supply chain.

What are the strategies for mitigating the bullwhip effect?

1. Decision making, 2. Time comprehension, 3. Information transparency, 4. Echelon elimination.

What are the causes of the bullwhip effect? (3)

1. Lack of information, 2. The structure of the supply chain, 3. Lack of collaboration.

Mitigation through time comprehension?

Minimise material flow lead times, Minimise information flow lead times,

Mitigation through decision making?

Sharing decision making, Fine tuning the parameters of the whole system

How is SCM like driving whilst only being able to look in the rear view mirror?

You can only look at past results (behind you) and what others are doing/what is trending (looking out the side windows

What are the consequences of the bullwhip effect?

You needing to have: Increased stock levels (to cater for the uncertainty), Inefficient allocation of resources (needing to hold more), Increased transportation costs, Damages trust and collaboration (people acting on a whim and not giving warning and/or information) RESULTS IN REDUCED PROFITS FOR ALL