An Experience with Bullwhip Effect in a Supply Chain - A Case Study

Abstract

According to supply chain pundits, information has replaced inventory. Now, Information affects the design and operations of the supply chain more efficiently and effectively than ever before. At the same time distorted information from retailers to wholesalers and distributors can cause serious damage to a supply chain in the form of increased inventory, manufacturing chaos, poor customer service and loss of revenues. This phenomenon is known as bullwhip effect in business jargon. Instead of succumbing to its ill effects, successful supply chain have been using various newer techniques such as collaborative planning, forecasting and replenishment, vendor managed inventory, just in time and continuous replenishments. The present article is an attempt to understand the concept of bullwhip effect with the help of a case study of a light commercial vehicle manufacturer. Since error in demand forecasting is a major cause of bullwhip effect in a supply chain, therefore it is clarified that if the members of a supply chain share information, the 'extended-bullwhip effect' can be completely eliminated. Primary data for the study has been collected from the firm itself.