Bullwhip in supply chains ~ Past, present and future


Jay Forrester has been rightly viewed in many quarters as the father of modern-day supply chain management. His seminal work on demand amplification studied via Systems Dynamics simulation demonstrated phenomena which many practicing managers had experienced. This included such events as demand waveforms being propagated upstream in the supply chain, the inducing of rogue seasonality in the order patterns, and the consequent wrong-footing of decision-makers. Nor was such demand amplification a relatively recent phenomenon, since evidence of its existence has been recorded at least as far back as the start of the twentieth century and is well known to economists. The situation facing much of industry worldwide is exacerbated because bullwhip, as it is now termed, tends to be either misunderstood or ignored. But industry, in the meantime, has to cope with bullwhip measured not just in terms of 2:1 amplification that is bad enough, but sometimes as high as 20:1. This can be very costly in terms of capacity on-costs and stock-out costs on the upswing and stockholding and obsolescence costs on the downswing. In this paper, we have identified 10 published causes of bullwhip, all of which are capable of elimination by re-engineering the supply chain. We offer evidence on the present health of a family of supply chains and pinpoint much good practice in anticipation that this will become normative in the near future as the learning experience gathers momentum.

17th International Conference on Production Research, 3rd-7th August, Virginia, USA, 14 pages