Sunil Chopra is IBM Distinguished Professor of Operations Management and Information Systems at the Kellogg School of Management. Contact him at s-chopra@kellogg.northwestern.edu.ManMohan S. Sodhi is associate professor of operations management at Cass Business School in London.Contact him at m.sodhi@city.ac.uk.
In a supply chain, the bullwhip effect occurs when each party gradually escalates an initially small spike in demand. Each member of the supply chain overcompensates for this demand with excess product, leading to increased production, inaccurate demand forecasting, and inconsistent inventories.
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Fortunately, you can mitigate or prevent the supply chain bullwhip effect with the right resources and planning. Let's look at the impact of the bullwhip effect on supply chain management and what you can do about it.
When a spike in demand occurs, each party in the supply chain adds additional products to their orders to act as a buffer. When one party does this, it serves the necessary function of ensuring in-stock products. However, when everyone does it, the result is inaccurate forecasting, stock hoarding, overstock inefficiencies, and out-of-stock products later.
Members of the supply chain can compound the bullwhip effect by hoarding stock. When items appear scarce upstream, many buyers will place large orders to buffer their inventory and stay ahead of low stock issues. This almost ensures that upstream sources will experience scarcity followed by increased production, despite only a slight change in demand. As demand moves up the chain, inventory becomes less controllable and difficult to predict, especially since many members of the supply chain don't cooperate as well as they could.
If you can keep the bullwhip effect to a minimum, you can ensure more predictable and profitable supply chain management. While the bullwhip effect can have a range of influences, it also has several solutions. Here are some tips on how to reduce the bullwhip effect.
The bullwhip amplifies because supply chain members don't have a full picture of why buyers are increasing demand. Improving visibility across the chain can help everyone see the context of demand changes. Is there an increase in orders because of a discount, seasonal needs, or something else? Members can see what may be causing overreactions and address them before the bullwhip gets out of hand.
Different members of the supply chain need to work together to avoid feeling the bullwhip effect. Shared information plays a large role here, allowing different entities to collaborate and see more of the supply chain than just the level they control. Collaboration is especially important in increasingly globalized supply chains, where products may cross borders and go through many different businesses.
The bullwhip effect can quickly get out of control and hit every part of the supply chain with adverse effects. Visibility and transparency are some of your best resources for fighting the bullwhip effect, and the right platforms can help you find both.
Whether you're a seller, supplier, 3PL, or another member of the supply chain, you can mitigate the bullwhip effect with TrueCommerce. We're your one-stop-shop for trading partner communications with solutions across the board, including fully managed EDI services, a comprehensive VMI solution, and next-generation supplier management portals. TrueCommerce helps you connect with every entity of the supply chain so you can better avoid the bullwhip effect and keep your inventory consistent. All of this comes with the 24/7 expertise of our support team.
Methods: A cross-sectional descriptive study was conducted from September 2010-January 2011 at selected public health facilities. A stratified random sampling method was used to include a total of 43 facilities which, were investigated through quantitative methods using structured questionnaires interviews. Focus group discussion with the designated supply chain managers and key informant interviews were conducted for the qualitative method.
Knowledge and understanding:by means of frontal lessons, the student acquires the method and knowledge required to describe, understand and design the supply chain, like strategic choices, product flows, KPIs and performance measurements.At the end of the course the student will understand how leading companies in their field (food, textile clothing, ebusiness, pharmaceutical) organize the suply chain to compete and generate competitive fictionApplying knowledge and understanding:Through practical classroom exercises connected to some important topics, students learn how to apply the acquired knowledge in a real context of design, as well as in multidisciplinary or non-familiar areas.In particular, the student will have to apply the acquired knowledge to the logistics network, stock management policies, KPIs measurements.Making judgements:The student must be able to understand and critically evaluate the supply netowork; using acquired knowledge, he will have to analyze existing systems and assess their performances and adequacy, assess the impact of strategic, planning and operational decisions, measure supply chain performances.The student must be able to understand the substantial differences in terms of strategic decisions, planning and supply chain operations required in the various industrial sectors analyzedCommunication skills:Through the front lessons and the assistance of the teacher, the student acquires the specific vocabulary inherent to the supply chain. At the end of the course, the student is expected to be able to communicate the main contents of the course, both written and orally, such as ideas, engineering issues and related solutions. The student must communicate his knowledge through appropriate tools, so numerical problems are solved using common methods in the industry such as tables, diagrams, flow charts, and numerical spreadsheets.Through the analysis of business case in english the student will be appropriated of the Anglo-Saxon terminology related to supply chain managementLearning skills:The student who has attended the course will be able to deepen his knowledge of production plants through the autonomous consultation of specialized books, scientific or divulgative journals, even outside the topics explained during lectures.The student who has attended the course will be able to deepen their knowledge on supply chain management in general, through the independent consultation of specialized texts, scientific or popular magazines, even outside the topics dealt with strictly in class.
The competition in today's globalized markets is increasingly based on the ability of organizations to create and deliver value to their customers. Today, this value is mainly created by the efficient and efficient management of the logistics system. The Supply Chain Management course aims to analyze how, through the efficient and effective planning and management of the logistic process phases, it is possible to achieve the strategic objectives of increasing the service at the minimum overall cost. The discussion starts from the main definitions inherent to the supply chain, examines the main processes and actors, the performance in terms of service, the economic and strategic aspects.Furthermore The course aims to analyze how it is possible to create competitive advantage through the efficient and efficient organization of the supply chain in different industrial sectors through the analysis of some real casesDuring the course the analysis of case histories of successful companies is proposed, and the realization of seminars with the intervention of SC managers of external companies is planned.The contents of the course and the terminology used are mainly in English
Introduction to the course.The supply chain: the actors, the company functions involved in a supply chain;The flows in a supply chain. Product flows, information flows, financial flows, service flowsCustomer service: pre-transactional, transactional, post-transactional service factors. Lead time. Accuracy. Flexibility. Delivery frequency. Degree of coverage.Objectives of a SC, sources of revenue and cost, supply chain surplus, concepts of effectiveness and efficiency of SC, supply chain management.The importance of decision-making on flows and the surplus SCDistribution strategies, inventory pooling, inventory costs, cross-dockingVariability in the supply chain: bullwhip effect.Business case: the beer game.Distribution requirement planning.Quick response, collaborative planning forercasting and replenishment, vendor managed inventory.supply chain management for a consumer goods producer - the Barilla casesupply chain management for a manufacturer of pharma products - the Chiesi casesupply chain management for a consumer goods retailer - the Conad casesupply chain management for a manufacturer in the fashion sector - - the I Max casesupply chain management in ecommerce - - the amazon / zalando casesupply management for a retail company - the omnichanneling case of maxima
This paper discusses the origins of the supply chain contracting literature as well as its current state. It argues that its origins go back further than many scholars realize. It also makes the case that the field expanded rapidly, creating a bubble that has largely burst. However, there have been lasting implications that affect both how we teach supply chain management and the kind of research that is done under the heading of operations management.
Consequently, I was delighted when I received the news that I had been named a fellow. After a bit, however, that excitement met the realization that I was now obligated to put together a talk I was unlikely to give a second time. So I began with the obvious-- looking at what my predecessor had done. I found that the talks of past fellows fall into two groups: some talk about the research they know best; others give philosophical presentations on the nature of research and the process of discovery. I was not feeling philosophical and so decided to go with the former approach and speak about supply chain contracting. My aim here is not to give a detailed literature review. Rather, I plan on giving a little history and then how I see the field today. That is, I will speak about how the supply chain contracting field goes from doughnuts to bubbles. 2ff7e9595c
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