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Bullwhip effect

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

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

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Transcript

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