On bullwhip in supply chains-historical review, present practice and expected future impact

Demand amplification (or “bullwhip” as it is now called) is not a new phenomenon, since evidence of its existence has been recorded at least as far back as the start of the 20th century and is well known to economists. Yet industry worldwide still has to cope with bullwhip measured not just in terms of the 2:1 amplification which is frequently quoted, but sometimes it is as high as 20:1 from end-to-end in the supply chain. This can be very costly in terms of capacity on-costs and stock-out costs on the upswing and stockholding and obsolescence costs on the downswing. In this paper we have identified 10 published causes of bullwhip, all of which are capable of elimination by re-engineering the supply chain. We offer evidence on the present “health” of a family of supply chains, and pinpoint much good practice. This is in anticipation that such excellence will become normative in the near future as the learning experience gathers momentum and provided that human factors are properly addressed.