supply chain management

1. Presentation By:
Gagandeep Sohanpal
Vaibhav Kakkar
Sanchit Bahl
Gaurav Dora

2.  Bullwhip effect is a phenomenon in Forecast
driven distribution channels
 It is the increase in the variability of order as it
moves from the Customer to the Manufacturer

3. In a supply chain plagued with Bullwhip effect, the
distortion in information is escalated as it moves up in the
chain
Some symptoms of Bullwhip are:
1. Excessive inventory
2. Poor product forecast
3. Insufficient capacities
4. Long backlogs
5. Uncertain Product planning

6. BULLWHI
P EFFECT
DEMAND
FORECASTING
UPDATING
ORDER
BATCHING
PRICE
FLUCTUATION
RATIONING
AND
SHORTAGE
GAINING

7. Based on the order history
Amount of safety stock contributes
bullwhip effect
Lead time longer fluctuation more
significant

8. Two types
• Periodic Ordering
 Inventory systems based on order cycles
 Reduces order, billing and shipment cost
 amplifies variabilty and contributes bullwhip
• Push
 Company experiences regular surges in demand
All customers orders should be spread out
evenly throughout a week or month

9. Forward buy – items were bought in
advance of requirements
Forward buying has a negative effect
Forward buy a good idea-If cost of holding
inventory is less than the price differnetial
“the Dumbest marketing ploy ever “ as
price fluctuation is set by marketers
themselves

10. EXCESS INVENTORY AND UNNECESSARY CAPACITY INCREASE
WHEN DEMAND COOLS,ORDERS DISAPPEAR & CANCELLATION STARTS
CUSTOMER EXAGGERATES THEIR REAL NEEDS
RATIONS PRODUCT TO CUSTOMERS
PRODUCT DEMAND EXCEEDS SUPPLY

12.  Forecasting at each level of supply chain.
 Processing the demand input from the
immediate downstream member.
 The downstream data should be made
available to the upstream site – VMI/CRP
 Companies using VMI are P&G, Nestle, HP
etc.
 Multiple organizations in a supply chain
should use the same forecasting method.
 Bypassing the downstream site like in case of
Dell.
 Just-in-time replenishment.

13. Variable, non-periodic schedule from the
downstream.
Total Cost = Ordering Cost + Carrying Cost
Use of Electronic Data Interchange(EDI).
Use of full-truckloads – Mixed-SKU(P&G),
Composite Distribution(eg. TESCO,
Sainsbury), third party logistics.

14. Reduce the frequency and level of
wholesale price discounting.
No exaggeration of orders.

15. THANK YOU