Bullwhip Effect in Supply Chains - PowerPoint PPT Presentation

1 / 13
About This Presentation
Title:

Bullwhip Effect in Supply Chains

Description:

Pamper order to factory much more erratic than sales in stores ... 8/24/09. Bullwhip Effect. 12. 8/24/09. Bullwhip Effect. 13. Last Bull Whip Slide ... – PowerPoint PPT presentation

Number of Views:191
Avg rating:3.0/5.0
Slides: 14
Provided by: fwd6
Category:

less

Transcript and Presenter's Notes

Title: Bullwhip Effect in Supply Chains


1
Bullwhip Effect in Supply Chains

2
Why was it discovered?
  • Pamper order to factory much more erratic than
    sales in stores
  • Computer sales less erratic than factory orders
  • 100 days of supply in chain chainmembers
  • Year of inventory in entire supply chain
  • Grocery industry had 30 billion in inventory
    (excess)

3
Each Order Process Makes Orders More Erratic
4
Cause of Bullwhip Effect
  • Demand Forecasting Updating
  • Order batching
  • Price fluctuations
  • Rationing and shortage gaming

5
Demand Forecasting
  • Based on Orders received
  • Based on smoothing of sales and safety stock data
  • Not uncommon to have weeks of safety stock
  • Accuracy increases if you can get to lowest level
    of inventory activity

6
Order Batching
  • Cost of Ordering (time process)
  • Cost of Transportation (TL vs. LTL)
  • Hockey stick effect (Wait till last minute)
  • Accounting period
  • EDI or XML to reduce ordering cost
  • Alternative delivery methods to allow LTL
  • 3PLs
  • Regional warehouses
  • Mixed loads

7
Orders Jitters
8
Price Promotion
  • Price promotions encourage forward buying
  • Trade deals 47 of buying
  • Consumer promotion 28
  • How do you respond to promotions?

9
Effect of Promotions
10
Rationing and Shortage Gaming
  • If product is in short supply
  • Suppliers ration
  • Buyer overbuy to get what they need

11
Approaches
  • Data interchange rather than forecasting
  • Frequent orders
  • Short frequent lead times
  • Every Day Low Prices (EDLP)

12
(No Transcript)
13
  • Last Bull Whip Slide
Write a Comment
User Comments (0)
About PowerShow.com