Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

The bullwhip effect in supply chains

supply chain management

  • Login to see the comments

The bullwhip effect in supply chains

  1. 1. Presentation By: Gagandeep Sohanpal Vaibhav Kakkar Sanchit Bahl Gaurav Dora
  2. 2.  Bullwhip effect is a phenomenon in Forecast driven distribution channels  It is the increase in the variability of order as it moves from the Customer to the Manufacturer
  3. 3. In a supply chain plagued with Bullwhip effect, the distortion in information is escalated as it moves up in the chain Some symptoms of Bullwhip are: 1. Excessive inventory 2. Poor product forecast 3. Insufficient capacities 4. Long backlogs 5. Uncertain Product planning
  4. 4. BULLWHI P EFFECT DEMAND FORECASTING UPDATING ORDER BATCHING PRICE FLUCTUATION RATIONING AND SHORTAGE GAINING
  5. 5. Based on the order history Amount of safety stock contributes bullwhip effect Lead time longer fluctuation more significant
  6. 6. Two types • Periodic Ordering  Inventory systems based on order cycles  Reduces order, billing and shipment cost  amplifies variabilty and contributes bullwhip • Push  Company experiences regular surges in demand All customers orders should be spread out evenly throughout a week or month
  7. 7. Forward buy – items were bought in advance of requirements Forward buying has a negative effect Forward buy a good idea-If cost of holding inventory is less than the price differnetial “the Dumbest marketing ploy ever “ as price fluctuation is set by marketers themselves
  8. 8. EXCESS INVENTORY AND UNNECESSARY CAPACITY INCREASE WHEN DEMAND COOLS,ORDERS DISAPPEAR & CANCELLATION STARTS CUSTOMER EXAGGERATES THEIR REAL NEEDS RATIONS PRODUCT TO CUSTOMERS PRODUCT DEMAND EXCEEDS SUPPLY
  9. 9.  Forecasting at each level of supply chain.  Processing the demand input from the immediate downstream member.  The downstream data should be made available to the upstream site – VMI/CRP  Companies using VMI are P&G, Nestle, HP etc.  Multiple organizations in a supply chain should use the same forecasting method.  Bypassing the downstream site like in case of Dell.  Just-in-time replenishment.
  10. 10. Variable, non-periodic schedule from the downstream. Total Cost = Ordering Cost + Carrying Cost Use of Electronic Data Interchange(EDI). Use of full-truckloads – Mixed-SKU(P&G), Composite Distribution(eg. TESCO, Sainsbury), third party logistics.
  11. 11. Reduce the frequency and level of wholesale price discounting. No exaggeration of orders.
  12. 12. THANK YOU

×