The document discusses the bullwhip effect, which is an increase in variability of orders as they move up the supply chain from customer to manufacturer. Some symptoms of the bullwhip effect include excessive inventory, poor forecasts, insufficient capacity, and long backlogs. The bullwhip effect can be caused by factors such as forecasting methods, order batching, price fluctuations, rationing during shortages, and gaining behavior. Strategies to mitigate the bullwhip effect include improved forecasting methods, visibility of downstream demand data through approaches like VMI/CRP, bypassing intermediaries, and reducing price discounting and order exaggeration.

1. Presentation By:
Gagandeep Sohanpal
Vaibhav Kakkar
Sanchit Bahl
Gaurav Dora

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. 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

6. BULLWHI
P EFFECT
DEMAND
FORECASTING
UPDATING
ORDER
BATCHING
PRICE
FLUCTUATION
RATIONING
AND
SHORTAGE
GAINING

7. Based on the order history
Amount of safety stock contributes
bullwhip effect
Lead time longer fluctuation more
significant

8. 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

9. 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

10. 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

12.  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.

13. 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.

14. Reduce the frequency and level of
wholesale price discounting.
No exaggeration of orders.

15. THANK YOU