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Bullwhip Effect Analysis

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In general, supply chain is the activity to added value on a product or services. From the process, it all the way channel or deliver from a typical raw materials to the end-users (consumers). Furthermore, Bullwhip effect is one of the key phenomena that happened in supply chain activities. Where, it can be observed in a forecast-driven distribution channels, which means the expected unit of product to be distributed through every layer of supply chain activity and even the final part of the supply chain layer; when the product or service is delivered from the retailer to the end-users. (Lee, 1997) Consumer demand are always not stable and this is the reason why the businesses need to predict the demand and optimize the inventory and resources. …show more content…

From the “Measuring the bullwhip effect in the supply chain” research paper, (Fransoo & Wouters, 2000) had discussed about the measurement of the bullwhip effect by a project so called SNEL. Throughout the project, they had identify that a correct measurement should start with investigate the problems caused by demand amplification and assess which method can reduce the amplification of bullwhip. The SNEL project was experiences and conducted in a food industry; where it was two chains of convenience foods which are salads and ready-made pasteurized meals. (refers to diagram 1) The food are produced and being manufactured by both supplier A and B, the product is produced in both chains and stored at single manufacturing site. After that, the product was cross-docked at a third part logistics service provider or stored at a regional distribution center of a supermarket chain and lastly transport to the retail …show more content…

Due to the elastic market trends, suppliers and customers are sharing information on demand and inventory details to improve their supply chain operations. VMI is a strategy for the vendor or suppliers to manage their customer’s stock and it had become popular in most of the grocery industry. One of the best example are Wal-Mart, they communication and sharing the inventory information with their suppliers so they can have sufficient inventory and avoid from the problem of having too much inventory as safety stock and product shelf life

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