What is the bullwhip effect? How can Vendor Managed Inventory help mitigate the bullwhip effect?
Bullwhip effect is the occurrence of variance of the orders that is sent to the manufacturer and supplier to that sent to the customers. This large variance is identified in supply chain.
There are many factors that contribute to this effect. They are:-
Bullwhip effect impacts the financial performance of an organization. It may result in inefficient production or excess production in order to fulfill the demand. The situation of stock-out leads to poor customer service and lost sales. There is also a low utilization of distribution channel. It also damage the reputation of the organization. The cost incurred by the organization due to bullwhip effect include contractual penalties for coping up with the consequences of failed fulfillment. In order to meet the demand variability, the organization is required to hire or dismiss employees that adds training cost, hiring cost and lay-offs cost.
Vendor-managed inventory (VMI) use communication link which is nothing but EDI (electronic data interchange) or the internet. This helps in providing sales and inventory data to the supplier. these data are used to plan inventory and to place orders.
VMI can help mitigate bullwhip effect in following ways:-
What is the bullwhip effect? How can Vendor Managed Inventory help mitigate the bullwhip effect?
How can the bullwhip effect impact a company’s operations and its marketing functions
1. What does the term “bullwhip effect” mean? 2. What role does the “bullwhip effect” have on the effective management of the supply chain?
explain how action anxity can effect group decsion and what managers can do to mitigate its influence in poor group decsions? explain how action anxiety can affect group decision making and what managers can do to mitigate its influence in poor decisions?
What is the impact of the bullwhip effect on the distribution and warehousing of a supply chain? What are some methods that can be used to prevent it?
How did Campbell soup reduce their bullwhip effect?
Answer the following questions around Bull whipping; A) Price fluctuations help to mitigate the effects of the Bullwhip Effect. True or false B)The Bullwhip Effect is a supply chain concept that relates to: A)The importance of putting pressure on suppliers to provide better quality inputs. B)The increasing variability in demand orders from downstream customers to upstream suppliers C)The decreasing uncertainty in supply chain ordering based on the adaptation of order whipping D) All of the above
Which of the following can happen as a result of the bullwhip effect? a) Excess costs for each firm in a supply chain b) Increase in defective products c)Decreased levels of safety stock d)Quicker distribution to warehouses
1. a. Discuss the critical role of inventory for a company and its supply chain. b. Identify the key metrics organizations use to assess how well their inventories are being managed. c. Use the ABC classification method to categorize the various items at a local supermarket store. For example, in which category would fresh fruit and vegetables be listed? Why? d. Briefly explain the bullwhip effect. What steps can organizations take to minimize the bullwhip effect?
With respect to the Bullwhip effect, please discuss in your own words on what order amplification and is and why purchasers will use it.
What methods can management use to mitigate risk in the procurement planning process? How do these methods differ from methods used to mitigate other types of risks?