Question

The ‘Bullwhip effect represents the dynamic behaviour of product supply chains. Discuss the nature of this behaviour and give examples of three measures or practices an organization may take to try to minimize any detrimental impact of a supply chain’s dynamics.

Answer 1

The ' bullwhip effect' is the excess inventory that is created in the supply chain due to reasons like fluctuating demand from consumers. The bull whip effect is created across the supply chain from the retailer to distributor to wholesalers and suppliers. It leads to increase in costs due to accumulation of inventory, lesser sales and more Investments.

The measures that can be taken to minimize any detrimental effect on supply chain is to do market research for understanding the patterns of consumer buying. Close coordination between suppliers, manufacturers, wholesalers and retailers across the supply chain can also prevent accumulation of excess inventory. The use of data analytics to understand the demands and flexibility in the supply chain and forecasting can also help to minimize any adverse impacts of bull whip effect.