The bullwhip effect in supply chains: Review of recent development

Abstract

The bullwhip effect happens whenever the demand order fluctuations in the supply chain (SC) escalate as they are transferred up the SC. In fact, a small change in point-of-sale demand may be interpreted by SC participants as a much bigger variability in demand. This looks like a cracking a whip, where a small flick of the wrist may yield a large motion at the end of the whip. Misstate data from one side of a SC to the other part may yield substantial sloppiness. This includes increase in inventories, shortage of cash flow, weak customer satisfaction, etc. Enterprises may efficiently reduce the bullwhip effect by completely learning its root causes. This paper presents an overview on the concept and recent development of the bullwhip effect.