{"id":6622,"date":"2022-08-24T07:47:25","date_gmt":"2022-08-24T06:47:25","guid":{"rendered":"https:\/\/www.aloer.fr\/glossary\/bullwhip-effect-what-is-the-bullwhip-effect\/"},"modified":"2023-10-20T13:00:50","modified_gmt":"2023-10-20T11:00:50","slug":"bullwhip-effect-what-is-the-bullwhip-effect","status":"publish","type":"glossary","link":"https:\/\/www.aloer.fr\/en\/glossary\/bullwhip-effect-what-is-the-bullwhip-effect\/","title":{"rendered":"Bullwhip Effect \u2014 What is the Bullwhip Effect?"},"content":{"rendered":"\"Ricochet<\/a>\n

The sup­ply chain<\/strong> is orga­nized around mul­ti­ple flows of mate­ri­als, infor­ma­tion, and finances. Their plan­ning, man­age­ment and con­trol along the chain is essen­tial to enable down­stream cus­tomer ser­vice. As the sup­ply chain is made up of mul­ti­ple actors with dif­fer­ent prac­tices and reg­u­la­tions, this tends to increase the degree of uncer­tain­ty and dynam­ic behav­ior of the sup­ply chain.<\/p>\n

A good exam­ple of this dynam­ic is the rather explic­it bull­whip<\/strong> effect<\/strong> — also known as ampli­fi­ca­tion of demand variability.<\/p>\n\n

What is the bullwhip effect?<\/h2>\n

In con­crete terms, the APICS<\/strong> <\/a>defines this effect as fol­lows: ”<\/em> The ampli­fi­ca­tion of demand change up the sup­ply chain is caused by a minor change down the chain<\/em>. Inven­to­ries can then quick­ly go from being out of stock to being in sur­plus ”<\/em> (Apics Dic­tio­nary, 2008).<\/em><\/p>\n

The bull­whip effect<\/strong> results in either an increase in inven­to­ries when demand weak­ens, or a short­age when demand increases.<\/p>\n

It gen­er­ates exces­sive fluc­tu­a­tions in demand or stor­age points through­out the sup­ply chain. This is con­firmed by the APICS<\/strong><\/a> “This phe­nom­e­non is due to the cas­cade effect of orders ‘going up’ the chain and prod­uct trans­port delays ‘going down’ the chain”<\/em>(Apics Dic­tio­nary, 2008<\/em>).<\/p>\n

 \n\n\"graph<\/a>\n<\/p>

Even a small change in con­sumer sales results in an increase in orders up the chain. This increase in orders increas­es the fur­ther up the sup­ply chain you go (from the retail­er’s orders to the man­u­fac­tur­er’s)… Orders caus­ing an increase to an inven­to­ry build-up sit­u­a­tion as already mentioned. <\/p>

To main­tain ser­vice rates, over­stock­ing will occur. This over­stock­ing even­tu­al­ly leads to a poor use of resources, a decrease in the prof­itabil­i­ty of the orga­ni­za­tion (decrease in WCR, increase in fixed assets in stock…).<\/p>\n

This effect stems from the irra­tional behav­ior of the actors in the sup­ply chain. <\/strong><\/p>\n\n

Some examples<\/h3>\n

In the last few years, there have been two sig­nif­i­cant events in irra­tional con­sumer behav­ior<\/strong>:<\/p>\n\n