Bullwhip effect

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Fluctuations intensity increases as Demand changes traverse across supply chain from customer to suppliers.

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Bullwhip effect

  1. 1. The Bull Whip Effect<br />From<br />DeveshDubey<br />PGDIE 38<br />NITIE Mumbai<br />
  2. 2. Doesn’t place order to manufacture<br />Doesn’t buy Raw Material from Supplier<br />Doesn’t place order to Wholesaler<br />6 Beer Bottles/Day<br />Sufficient Stock at Retailer<br />Factory reduces Production Quantity<br />
  3. 3. Sufficient stock to meet normal Demand<br />Finished Goods Stock Reduces<br />Demand Increases to 40 Bottles/day<br />Stock reduces<br />Raw Material Stock vanishes<br />
  4. 4. Places Huge Order to Supplier<br />Places Huge Order to wholesaler<br />Places Huge Order to Manufacturer<br />40 Bottles Order <br />Stock Out<br />Stock Out<br />Stock Out<br />Stock Out<br />
  5. 5. Waiting for <br />Replenishment<br />Raw Material Supplied<br />Production Starts<br />NO<br />STOCK<br />
  6. 6. Demand returns to 6 Bottles/day<br />Full Store<br />Finished Goods Inventory piled up<br />Replenishment occurs<br />Replenishment occurs<br />Full Warehouse<br />
  7. 7. Material Flow<br />Order = (+/-) 80% <br />Change by<br />Demand = (+/-) 40%<br />Forecast = (+/-) 40%<br />Order = (+/-) 20% <br />Change by<br />Demand = (+/-) 10%<br />Forecast = (+/-) 10%<br />HUGE<br />Change in<br />Raw<br />Material Supply<br />Demand <br />Change by<br />(+/-)10%<br />PO<br />PO<br />Order = (+/-)40% <br />Change by<br />Demand = (+/-) 20%<br />Forecast = (+/-) 20%<br />RO<br />Order Flow<br />
  8. 8. Down Stream Order Amplification<br />
  9. 9. Bullwhip Effect Impact<br />
  10. 10. Reduce Bullwhip Effect<br /><ul><li>Improve Information Flow
  11. 11. Reduce Delays along the Supply chain
  12. 12. Focus on point of Sale data
  13. 13. Reduce the purchase order size
  14. 14. Reduce pricing fluctuations</li></li></ul><li>Thanks A Lot<br />

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