BULLWHIP EFFECT – DEMAND
AMPLIFICATION
This effect creates large oscillations of
inventory in the supply chain network
Small changes in downstream demand create
large changes in the supply position
upstream
How can this effect be eliminated? By
synchronising the supply chain
,WHEN DOES BULLWHIP EFFECT
OCCUR?
When each limit in the supply does not fully
understand the dynamics of the consumer
sales pattern the pattern gets disturbed and
amplified as demand is transmitted up the
supply cahin
,WHERE CAN THE EFFECT OCCUR
With any range of products and at any level
in the supply chain
Most noticeable with consumer commodity
products
, MAJOR CAUSES OF BULLWHIP EFFECT
(i) Demand forecast updating
(ii) Order batching
(iii) Price fluctuation
(iv) Rationing and shortage gaining
AMPLIFICATION
This effect creates large oscillations of
inventory in the supply chain network
Small changes in downstream demand create
large changes in the supply position
upstream
How can this effect be eliminated? By
synchronising the supply chain
,WHEN DOES BULLWHIP EFFECT
OCCUR?
When each limit in the supply does not fully
understand the dynamics of the consumer
sales pattern the pattern gets disturbed and
amplified as demand is transmitted up the
supply cahin
,WHERE CAN THE EFFECT OCCUR
With any range of products and at any level
in the supply chain
Most noticeable with consumer commodity
products
, MAJOR CAUSES OF BULLWHIP EFFECT
(i) Demand forecast updating
(ii) Order batching
(iii) Price fluctuation
(iv) Rationing and shortage gaining
