Supply chain coordination bullwhip effect

Describe supply chain coordination and the bullwhip effect, and their impact on supply chain performance. 

LACK OF SUPPLY CHAIN COORDINATION AND THE BULLWHIP EFFECT... 

One outcome of the lack of supply chain coordination is the bullwhip effect, in which fluctuations in orders increase as they move up the supply chain from retailers to wholesalers to manufacturers to suppliers, as shown in Figure 10-1. The bullwhip effect distorts demand information within the supply chain, with each stage having a different estimate of what demand looks like. 

Describe supply chain coordination and the bullwhip effect, and their impact on supply chain performance. Supply chain coordination requires all stages to take actions that maximize total supply chain profits. A lack of coordination results if different stages focus on optimizing their local objectives or if information is distorted as it moves across the supply chain. The phenomenon that fluctuation in orders increases as one moves up the supply chain from retailers to wholesalers to manufacturers to suppliers is referred to as the bullwhip effect. This effect results in an increase in all costs in the supply chain and a decrease in customer service levels. The bullwhip effect moves all parties in the supply chain away from the efficient frontier and results in a decrease of both customer satisfaction and profitability within the supply chain. 

The lack of coordination in a supply chain increases variability and hurts the supply chain surplus. We discuss the impact of the bullwhip effect on various costs in the P G diaper supply chain. 

The lack of coordination increases manufacturing cost in the supply chain. As a result of the bullwhip effect, P G and its suppliers must satisfy a stream of orders that is much more variable than customer demand. P G can respond to the increased variability by either building excess capacity or holding excess inventory (see Chapter 8), both of which increase the manufacturing... 

Lack of coordination inCTeases replenishment lead times in the supply chain. The increased variability as a result of the bullwhip effect makes scheduling at P G and supplier plants much more difficult than when demand is level. There are times when the available capacity and inventory cannot supply the orders coming in. This results in higher replenishment lead times. 

What is the bullwhip effect, and how does it relate to lack of coordination in a supply chain ... 

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