Impact of Sharing Point of Sales Data and Inventory Information on Bullwhip Effect

Abstract

This paper reports the effect of sharing point of sales data and inventory information of downstream partners to mitigate the bullwhip effect in the fast moving consumer goods supply chain. The paper uses the "beer distribution game" in a laboratory setting using four treatments. The game was developed using Excel Macro and Visual Basic for Application Programing. In the control group, existence of the bullwhip effect is found due to order batching, shortage gaming and price fluctuation. The treatments investigate the existence of the bullwhip effect when either point of sales or inventory level information of downstream members are shared alone or the combination of both among supply chain partners. The results of these experiments conclude that, sharing point of sales data or inventory information individually will not reduce the bullwhip effect. However sharing point of sales data and inventory information together, will reduce the bullwhip effect in the focal industry to some degree.