The Bullwhip Effect - Explained - Tips to Reduce Losses

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Players throughout the Supply Chain use a variety of tools to reduce the bullwhip effect, ranging from new technology to the changes in terms & conditions they offer to their customers. …

Players throughout the Supply Chain use a variety of tools to reduce the bullwhip effect, ranging from new technology to the changes in terms & conditions they offer to their customers.

But accurate market research will help them to make the effect negligible.

This presentation give subtle details on how the effect of bullwhip can be made negligible to avoid losses!!

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  • 1. The Bullwhip Effect Explained……….. Tips to Reduce Losses No. 1
  • 2. No. 2 In An Ideal World, Supply Chains Would Be In Equilibrium http://upload.wikimedia.org/wikipedia/commons/thumb/5/5c/Fra_Carnevale_‐_The_Ideal_City_‐_Walters_37677.jpg/640px‐Fra_Carnevale_‐_The_Ideal_City_‐_Walters_37677.jpg (Labeled for Reuse)
  • 3. No. 3 At Every Link In The Chain, Each Participant Would Be Armed With Accurate Information About Demand And Inventory, Enabling Them To Make Rational Choices And Order Only What They Needed At Any Time. http://upload.wikimedia.org/wikipedia/commons/0/04/Kette_Kettenkurve_Catenary_2008_PD.JPG (Labeled for Reuse) http://upload.wikimedia.org/wikipedia/commons/8/80/Field‐Map_birdie.jpg (Labeled for Reuse)
  • 4. No. 4 In The Real World, However, Buyers Often Have Outdated Or Inaccurate Information About Demand Trends. http://farm3.staticflickr.com/2350/1676588431_572d2a81e4_o.jpg ((Labeled for Reuse)
  • 5. No. 5 Caught Between The Twin Threats Of Excess Inventory And Empty Shelves, They Guess Or Hedge Their Bets Based On The Supplier’s Past Performance At Meeting Delivery Promises. http://upload.wikimedia.org/wikipedia/commons/b/bf/FEMA_‐_28948_‐_Photograph_by_Win_Henderson_taken_on_03‐10‐2007_in_Arkansas.jpg (Labeled for Reuse)
  • 6. No. 6 Fearful Of Shortages, They Intentionally Over‐order If Free Returns Make It Easy For Them To Do So. http://upload.wikimedia.org/wikipedia/commons/b/b2/Logistics_Specialist_aboard_USS_George_H.W._Bush.jpg (Labeled for Reuse)
  • 7. No. 7 The Resulting And Increasingly  Inaccurate Order Activity Is  Called  “The Bullwhip Effect”  ………………….. http://upload.wikimedia.org/wikipedia/commons/7/7f/Bullwhip_effect.png (Labeled as Reuse)
  • 8. No. 8 ……………………Because Minor  Variations Are Amplified As  They Move Up The Supply  Chain, Costing Material  Suppliers, Manufacturers,  Distributors And Retailers An  Estimated Millions Of Money A  Year. http://upload.wikimedia.org/wikipedia/commons/4/48/Flagellants.png (Labeled for Reuse) http://upload.wikimedia.org/wikipedia/commons/4/4d/Debret_‐_L'Ex%C3%A9cution_de_la_Punition_de_Fouet.jpg (Labeled as Reuse)
  • 9. No. 9 When Manufacturers, Distributors And Retailers Over‐order, They Tie Up Excess Capital In Inventory, And Are Forced To Discard Perishable Raw Materials They Don’t Need Or Pay Inflated Prices For Inventory (And Its Shipping And Storage) To Meet Demand That Doesn’t Exist. http://upload.wikimedia.org/wikipedia/commons/6/61/Allentown_Project_042.jpg (Labeled for Reuse with Non Commercial Use – With Modification)
  • 10. No. 10 If They Under‐order, They Lose Sales When Customers Turn Away From Their Bare Shelves To A Competitor, Or Lose Profit By Paying Premium Shipping And Production Rates To Meet Demand. http://upload.wikimedia.org/wikipedia/commons/2/2a/Ethunu_kaduwa.jpg (Labeled for Reuse)
  • 11. No. 11 Players Throughout The Supply Chain Use A Variety Of Methods To Reduce The Bullwhip Effect, Ranging From New Technology, To Changes In The Terms And Conditions They Offer Customers. http://upload.wikimedia.org/wikipedia/commons/2/29/Supply_and_demand_network_(en).png (Labeled for Reuse Non commercial with Modification)
  • 12. No. 12 However, These Fixes Often Do Not Work Because They Are Not Aimed At The Decision‐makers Whose Actions Do The Most Harm upload.wikimedia.org/wikipedia/commons/9/90/Vincent_Hancock_at_2008_Summer_Olympics_men's_skeet_finals_2008‐08‐16.JPG (Labeled for Reuse Non Commercial with Modification)
  • 13. No. 13 Market Research Can Help Business Leaders Understand The Needs, Desires, Fears And Assumptions Of Consumers At The End Of The Supply Chain, But It Can Also Serve A Higher Purpose http://122.182.4.125/infiniumwebsite/images/ContentImages/RFID/SupplyChain.jpg (Labeled for Reuse) http://upload.wikimedia.org/wikipedia/commons/d/d7/Developing_countries.png (Labeled for Reuse Non Commercial with Modification0
  • 14. No. 14 Market Research Will Identify The Stakeholders Who Contribute The Most To The Bullwhip Effect And Understand Why They Act As They Do http://upload.wikimedia.org/wikipedia/commons/d/d2/The_Thinker_Musee_Rodin.jpg (Labeled for Reuse ‐ Non Commercial with Modification) http://upload.wikimedia.org/wikipedia/commons/8/81/A_woman_thinking.jpg (Labeled for Reuse ‐ Non Commercial with Modification)
  • 15. No. 15 http://122.182.4.125/infiniumwebsite/images/ContentImages/RFID/SupplyChain.jpg (Labeled for Reuse) These Insights Can Help Companies Create Customized Solutions With A Higher Return On Investment Than Scattershot Efforts To Remediate The Bullwhip Effect http://upload.wikimedia.org/wikipedia/commons/6/63/Sodium‐hydroxide‐crystal‐3D‐vdW.png (Labeled for Reuse ‐ Non Commercial) with Modification
  • 16. No. 16 By Focusing On The Most Critical Causes Of The Bullwhip Effect, Organizations Can Save Time And Money And Reduce The Most Inefficient Behaviors Most Quickly. http://pixabay.com/static/uploads/photo/2012/04/11/12/28/zoom‐27958_640.png (Free Vector Graphic www.pixbay.com (Labeled for Reuse)
  • 17. No. 17
  • 18. I m a g i n e Yo u r O r g a n i z a t i o n W i t h O p t i m u m U s e O f I n v e n t o r y & S u p p l y C h a i n I n P e r f e c t E q u i l i b r i u m ! ! ! No. 18
  • 19. W o u l d n ' t T h a t M a k e A D i f f e r e n c e To A l l T h e S t a k e h o l d e r s O f Yo u r O r g a n i z a t i o n ? No. 19
  • 20. W e A t A C T S o l & A s s o c i a t e s ( w w w . a c t s o l . i n ) H e l p I n M a k i n g T h e E f f e c t o f B u l l w h i p N e g l i g i b l e ! ! W e H e l p Y o u O p t i m i z e I n v e n t o r y & S u p p l y C h a i n P r o c e s s ! ! Email: sadashiv@actsol.in  Cellular: +919483511055