About the elimination of the bullwhip effect in the supply chain
“As a supply chain manager, you must eliminate the bullwhip effect in your supply chain”
Word count: 1624 words
The bullwhip effect is a shadow tendency enlightened by Forrester in 1958 and
Procter and Gamble Executives.
Their findings were the stumbling blocks of the current definition of the bullwhip effect which can be described as the amplification of the order variability upstream the supply chain.
The objective of this work is to understand if a manager should consider the elimination of the bullwhip effect or not.
In the first part are exposed two reasons against the bullwhip effect fighting, as one must consider that it is an inherent feature of supply chain and that the bullwhip effect eradication is just an investment possibility.
In the second part are presented the reasons supporting the elimination of the bullwhip effect under three aspects: competitive advantage, customer service and cost reduction.
It is hard to find reasons against the supply chain propagandists who claim that inventories should be minimized, information along the supply chain should be undisrupted and that every phenomenon playing against the chain should be eradicated. Amongst all the information filtered to support this work, no argumentation against the bullwhip effect elimination has been encountered.
However, a manager dealing for the first time with the bullwhip effect in his business should address the following questions before going further.
Is the elimination really possible?
The pure elimination would be too expensive as it would require a tremendous flexibility and synchronism from all the channel members (for example, a paper manufacturer can not stick perfectly to the demand of notebooks in libraries). Moreover, the final customers demand will still push the retailers to store a “just in case stock”, because the demand, especially for consumer goods such as Philips DVDs players,