Question: MSc. - Strategic Supply Chain Management
SCM Strategies in Manufacturing & Logistics: Lean, Agile & Hybrid(AF4H17)
If the Bullwhip Effect can be reduced via "cleaner" demand information, discuss and debate strategies to enable supply chain visibilities.
Answer: Bullwhip Effect in the Supply Chain:
The Bullwhip Effect is one of the main causes of inefficiency in the Supply Chain. “It refers to the tendency of the variability of orders rates to increase as they pass through the echelons of a supply chain, towards producers and raw material suppliers”. The ‘Bullwhip’ invariably generates unreliable production plans. When information is not communicated, companies can invest huge amounts of money to increase their production capacity, in anticipation of growth in sales, however when the demand comes down there is a backlog. Bullwhip Effect causes the organisation to invest in unnecessary cost and time lags. This effect is also true at times of increasing demand if this is not communicated correctly; it will lead to less supply than needed to fulfil that demand. As an example, a retail store might have a huge inventory of a product which...(short extract)
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- Subject: Business and Management
- Course: Business
- Level: Degree
- Year: 2nd/3rd
- Mark: 71%
- Words: 2783
- Date submitted: November 02, 2012
- Date written: February, 2012
- References: No
- Document type: Essay*
- Essay ID: 4322
