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This article is in a list format that may be better bulldhip using prose. In a similar manner, forecast accuracy decreases as one moves upstream along the supply chain.

Therefore, it is necessary to extend the visibility of customer demand as far as possible. Another prerequisite is that all members of a supply chain recognize that they can gain more if they act as a whole which requires trustful collaboration and information sharing.

Instead, they read the increase in sales as an indication of growing demand for green cars and ramped up production. This is consistent with findings of supply chain experts who have recognized that the bullwhip effect is a problem in forecast-driven supply chains, and careful management of the effect is an important goal for supply chain managers. Barriers to the implementation of a demand-driven supply chain include the necessary investment in information technology and the creation of a corporate culture of flexibility and focus on customer demand.

Retrieved from ” https: One way to achieve this is to establish a demand-driven supply chain which reacts to actual customer orders. This also leads to a low utilization of the distribution channel.

This page was last edited on 24 Octoberat The bullwhip effect is a distribution channel phenomenon in which forecasts yield supply chain inefficiencies.

Bullwhip effect

For example, many consumer goods have fairly consistent consumption at retail but this signal becomes more chaotic and unpredictable as the focus moves away from consumer purchasing behavior. In addition to the financially hard measurable consequences of poor customer services and the damage to public image and loyalty, an organization has to cope with the ramifications of failed fulfillment which may include contractual penalties.


In bullwwhip s, Hau Lee, a Professor of Engineering and Management Science at Stanford Universityhelped incorporate the concept into supply chain vernacular using a story about Volvo. July Learn how and when to remove this template message. The further from the originating signal, the greater the distortion of the wave pattern.

Human Factors in Supply Chain Management. This article includes a list of referencesbut its sources remain unclear because it has insufficient inline citations. It refers to increasing swings in inventory in response to shifts in customer demand as one moves further up the supply chain.

You can help by converting this article to prose, if appropriate. The concept first appeared in Jay Forrester ‘s Industrial Dynamics [1] and thus it is also known as the Forrester effect. The result is near-perfect visibility effejt customer demand and inventory movement throughout the supply chain.


File: – Wikimedia Commons

People with high self-efficacy experience less trouble handling the bullwhip-effect in the buullwhip chain. This method is developed and practised mainly in the German automotive industry, with its expanded supply chains [4] and is established in several EDI-formats between OEMs and their suppliers.

This demand information is used to queue shipments from the Wal-Mart distribution center to the store and from the supplier to the Wal-Mart distribution center.

In theory, the bullwhip effect does not occur if all orders exactly meet the demand of each period. In manufacturingthis concept is called kanban.

In periods of rising demand, down-stream participants increase orders. From Wikipedia, the free encyclopedia.

Der Bullwhip-Effekt in supply chains

Because forecast errors are given, companies often carry an inventory buffer called ” safety stock “. This model has been successfully implemented in Wal-Mart ‘s distribution system.


In addition to greater safety stocks, the described effect can lead to either inefficient production or excessive inventory, as each producer needs to fulfill the demand of its customers in the supply chain. In other projects Wikimedia Commons. The bullwhip effect was named for the way the amplitude of a whip increases down its length.

Bullwhip effect – Wikipedia

Editing help is available. Please help bullwjip improve this article by introducing more precise citations. In spite of having safety stocks there is still the hazard of stock-outs which result in poor customer service and lost sales. Views Read Edit View history. Better information leads to better inventory positioning and lower costs throughout the supply chain.

However, studies suggest that people with increased need for safety and security seem to perform worse than risk-takers in a simulated supply chain environment. Moving up the supply chain from end-consumer to raw materials supplier, each supply chain participant has greater observed variation in demand and thus greater need for safety stock.

Moreover, repeated hiring and dismissal of employees to manage the demand variability induces further costs due to training and possible lay-offs.

The concept of “cumulative quantities” is a method that can tackle and even avoid the bull-whip-effect. While successful in generating the desired market pull, manufacturing byllwhip not know about the promotional plans. Suffering a glut in green cars, sales and marketing nullwhip a program to move the excess inventory. Articles lacking in-text citations from July All articles lacking in-text citations All articles with unsourced statements Articles with unsourced statements from January Articles needing cleanup from August All pages needing cleanup Articles with sections that need to be turned into prose from August