Whipping the Supply Line into Shape

If a company makes purchases from its suppliers more unpredictably than it sells to its customers, it is said to “bullwhip.” Bullwhips can cause problems in the supply chain because it may be difficult for suppliers to adjust production in response to the changeable demand.

“Up until now,” says Robert Bray, an assistant professor of managerial economics and decision sciences at the Kellogg School, “anyone who has considered the bullwhip effect has only considered a total bullwhip measure. However, we argue that lumping [everything] together ignores valuable information, as the different [products] have different information lead times, and hence different operational implications. We can’t properly mitigate the bullwhip without knowing which information lead time it stems from.”

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