Hockey Stick Phenomenon: Supply Chain Management Challenge in Brazil

Lars Meyer Sanches,Orlando Fontes Lima Jr

doi:10.1590/1807-7692bar2014130044

Lars Meyer Sanches, Orlando Fontes Lima Jr

Open Access

https://doi.org/10.1590/1807-7692bar2014130044

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Abstract

The objective of this study is to investigate a phenomenon that occurs in Brazil, specifically the spike in demand at the end of the sales period, known as the hockey stick phenomenon. This analysis will encompass the causes as well as the impacts of this phenomenon, in a way that allows alternative policies to be evaluated. Data was collected from a Brazilian branch of a large multinational in the non-durable consumer goods industry and in semi-structured interviews conducted face-to-face with executives of 26 clients. The data was used to generate a continuous simulation model based on the methods of systems dynamics. The findings showed that the phenomenon negatively impacted the manufacturer’s financial performance in the long term and indicated required changes necessary to remediate the phenomenon. This is an empirical study on the hockey stick phenomenon, a problem that affects diverse companies in Brazil. The study showed that companies should not assume the hockey stick phenomenon to be an exogenous problem; it showed that there are policies able to improve financial performance; and it provided ideas regarding ways to carry out the change process.

Highlights

Companies must consider particular characteristics if they wish to be successful in their ventures in emerging markets (Lorentz, Wong, & Hilmola, 2007)
There are references in the literature to companies in highly diverse industries and countries suffering from the effects of the hockey stick phenomenon (Bradley & Arntzen, 1999; Chen, 2000; Hines, Holweg, & Sullivan, 2000; Hoole, 2005; Lee, Padmanabhan, & Whang, 1997a; Neale & Willems, 2009; Nyaga, Closs, Rodrigues, & Calantone, 2007; Oyer, 1998; Shaw, 1996; Singer, Donoso, & Konstantinidis, 2009; Slone, Mentzer, & Dittmann, 2007; Sohoni, Bassamboo, Chopra, Mohan, & Sendil, 2010; Stank, Dittmann, & Autry, 2011; Sterman, 2006; Umble & Srikanth, 1990; Villegas & Smith, 2006; Zotteri, 2013)
One of our goals is to evaluate the adequacy, with an empirical study, of the policies proposed by previous authors to eliminate the hockey stick phenomenon and to test new alternatives

Summary

Introduction

Companies must consider particular characteristics if they wish to be successful in their ventures in emerging markets (Lorentz, Wong, & Hilmola, 2007). There are references in the literature to companies in highly diverse industries and countries suffering from the effects of the hockey stick phenomenon (Bradley & Arntzen, 1999; Chen, 2000; Hines, Holweg, & Sullivan, 2000; Hoole, 2005; Lee, Padmanabhan, & Whang, 1997a; Neale & Willems, 2009; Nyaga, Closs, Rodrigues, & Calantone, 2007; Oyer, 1998; Shaw, 1996; Singer, Donoso, & Konstantinidis, 2009; Slone, Mentzer, & Dittmann, 2007; Sohoni, Bassamboo, Chopra, Mohan, & Sendil, 2010; Stank, Dittmann, & Autry, 2011; Sterman, 2006; Umble & Srikanth, 1990; Villegas & Smith, 2006; Zotteri, 2013). Some authors point that demand amplification and bullwhip effect referred to the same phenomenon H. Taylor, 1999; Towill, Zhou, & Disney, 2007) but according with Lee et al (1997b) their work differs from Forrester (1961) regarding members’ behavior. Known as Forrester Effect (Disney & Towill, 2003), is related demand signal processing and non-zero lead times (Forrester, 1961)

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