From the course: Supply Chain and Operations Careers: Certification Tips and Tricks (2019)

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Introduction to the bullwhip effect

Introduction to the bullwhip effect

From the course: Supply Chain and Operations Careers: Certification Tips and Tricks (2019)

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Introduction to the bullwhip effect

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- When you think about it, customer orders are actually a type of information. They provide a signal about how much demand there is for a product, but these signals can get distorted and that creates big problems for the entire supply chain. In this video, we'll talk about a common supply chain problem called the bullwhip effect, and what you can do to avoid it. Let's start with an example of a retailer and a wholesaler. The retailer sells individual widgets to their customers, the wholesaler sells widgets in cases of 1,000. So the demand signal looks very different to these two companies. The retailer may sell a few widgets each day, one today, four tomorrow, none the next day. Let's say they sell about 1,000 widgets per year. Even though the retailer has steady demand throughout the year, the wholesaler has a very lumpy demand because they're selling full cases, so they only get one order per year for the same product.…

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