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BULLWHIP EFFECT TERRY CHIN

BULLWHIP EFFECT TERRY CHIN. What is bullwhip effect?. Occurs when companies significantly cut or add inventories. Small increase in demand can easily cause a big snap. Causes. Customer demand is hard to predict, relatively unstable Demand forecast is always inaccurate, based on statistics!.

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BULLWHIP EFFECT TERRY CHIN

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  1. BULLWHIP EFFECT TERRY CHIN

  2. What is bullwhip effect? • Occurs when companies significantly cut or add inventories. • Small increase in demand can easily cause a big snap

  3. Causes • Customer demand is hard to predict, relatively unstable • Demand forecast is always inaccurate, based on statistics!

  4. Causes • Poorly maintained and unmanaged Supply Chain • Lack of communication • Lack of coordination

  5. Causes • Orders batching • Shortage gaming

  6. As a result! • When demand rises, participants will increase their orders • When demand falls, orders fall or stop

  7. Countermeasures • Providing access to point of sale (POS) data. • Vendor Managed Inventory (VMI)

  8. Countermeasures • Smaller but more frequent orders • Make use of Electronic Data Interchange (EDI) and Computer Aided Ordering (CAO)

  9. Countermeasures • Reduce minimum batch sizes • Allocate units based on past sales instead of current sales

  10. THANK YOU

  11. Bibliography http://www.quickmba.com/ops/bullwhip-effect/ http://sloanreview.mit.edu/improvisations/2010/01/27/understanding-the-bullwhip-effect-in-supply-chains/ http://www.youtube.com/watch?v=Te3YC1GeLaE http://www.counterfeitchic.com/entryimages/wall_bull1.jpg http://www.murphywhips.com/Whip_Collectors_-_Scobie_Stock_Whip.jpg http://www.shjconsulting.co.uk/gifs/demandPlanning.jpg http://2.bp.blogspot.com/_6BTY_R3aBUo/TI-p72fBEfI/AAAAAAAAACw/VbsRnuMXvBI/s1600/inventory.jpg http://bionicbong.com/wp-content/uploads/2011/03/broken-supply-chain.jpg http://cstpr.colorado.edu/prometheus/archives/UKMET%20Short%20Term%20Forecast.png http://connect.mytmc.com/resource/resmgr/exec_blogs/bullwhipeffect1.gif http://connect.mytmc.com/resource/resmgr/exec_blogs/bullwhipeffect1.jpg.gif http://packaginghypermarket.co.uk/wp-content/uploads/image/vendor-managed-inventory.jpg http://promotedprofits.com/wp-content/uploads/2010/11/affiliate-marketing-sales.jpg http://photos.travelblog.org/Photos/40711/247612/f/2049462-The-famous-wall-street-bull-0.jpg http://www.bigtopmania.co.uk/images/peteza_cowboy_bull-whips.jpg

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