An exploration of ripple effects of advertising among major suppliers in a supply chain network

Abstract

In this research, we explore a new phenomenon where advertising expenditure is found to oscillate between supply partners of a supply chain network (SCN) in a predictable manner. We refer to this oscillation as the ripple effect of advertising in supply chain networks. These oscillations are similar to the bullwhip and reverse bullwhip effects and are expected to impose similar operational inefficiencies in supply networks. Using the ripple effects and bullwhip effects literature as its underlying theoretical foundation, this paper uses longitudinal data from the apparel industry to analyze the advertising differences among the major suppliers of a supply chain (SC) system holistically using a bilinear mixed model. The results support the presence of the ripple effect of advertising and suggest that advertising should be better coordinated across supply chain members to reduce operational and financial inefficiencies.