Diagnosis and reduction of bullwhip in supply chains

Abstract

“Bullwhip” describes the general tendency for small changes in end‐customer demand to be amplified within a production‐distribution system. A 10 per cent increase in sales to end‐customers can precipitate a 40 per cent upswing in production and subsequent downswing (as excess stocks are depleted) within a three‐echelon supply chain. It is shown how proven material flow control principles significantly reduce bullwhip in a global supply chain. The evidence demonstrates that a methodology, which has evolved over several decades, provides a suitable framework for effective change. Bullwhip is not a new problem; it is a new name coined to describe a very well‐known problem. Some observed barriers to change are briefly reviewed.