Diagnosis and reduction of bullwhip in supply chains

Abstract

Abstract: “Bullwhip” describes the general tendency for small changes in end-customer demand to be amplified within a production-distribution system. A 10 per cent increase in sales to end-customers can precipitate a 40 per cent upswing in production and subsequent downswing (as excess stocks are depleted) within a three-echelon supply chain. It is shown how proven material flow control principles significantly reduce bullwhip in a global supply chain. The evidence demonstrates that a methodology, which has evolved over several decades, provides a suitable framework for effective change. Bullwhip is not a new problem; it is a new name coined to describe a very well-known problem. Some observed barriers to change are briefly reviewed.