Understanding the Bullwhip Effect in Supply Chain Dynamics
Explore the concepts of the bullwhip effect, supply chain dynamics, factors contributing to disruptions, countermeasures, and information systems to mitigate risks and optimize efficiency in the supply chain process. Learn how small fluctuations in demand can lead to larger disruptions up the supply chain and discover strategies to minimize these effects.
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Presentation Transcript
5 Supply Chain and the Bullwhip Effects CYCU Prof. CK Farn mailto: ckfarn@gmail.com http://www.mgt.ncu.edu.tw/~ckfarn/cycu 2023.03 CYCY Prof CK Farn 1
Supply Chain CYCY Prof CK Farn 2
Supply Chain: Logistics CYCY Prof CK Farn 3
Bullwhip Effects A supply chain phenomenon Small fluctuations in demand at the retail level can cause progressively larger fluctuations in demand up stream: wholesale, distributor, manufacturer and raw material supplier levels. CYCY Prof CK Farn 4
Larger fluctuations up stream CYCY Prof CK Farn 5
Supply chain dynamics WH Order Order Qty Retailer Order Customer Demand Production Plan Time Source: Tom Mc Guffry, Electronic Commerce and Value Chain Management, 1998 CYCY Prof CK Farn 6
Factors resulting in bullwhip effects Disorganisation Lack of communication Free return policies Order batching Price variations Demand information Simply human greed and exaggeration Long supply chain Long lead-time CYCY Prof CK Farn 7
Counter measures Reduce lead-time Information sharing across the supply chain Order smoothing Strategic partnership Coordinate with retailers to spread deliveries evenly Reduce minimum batch sizes Smaller and more frequent replenishments CYCY Prof CK Farn 8
Information systems Information sharing through information systems See through the POS data Demand based replenishment Better forecasts, rolling forecasts CPFR: Continuous Planning, Forecast and Replenishment Automation of order processing Frequent orders with smaller quantity Smaller orders quantity CYCY Prof CK Farn 9
Supply chain Evolution https://www.youtube.com/watch?v=uDrQv8Z7owU https://www.youtube.com/watch?v=B9OSy-JM8mQ Value Chain https://www.youtube.com/watch?v=MC_hByD8nBY Logistics https://www.youtube.com/watch?v=YugqpSfG87Y CYCY Prof CK Farn 10
