The whip effect (also Forrester Aufschaukelung or bullwhip effect) represents a central problem of the Supply chain management, which results from dynamic processes of the creation of value chains. It describes that the different need processes and/or small changes of the final customer demand lead to fluctuations of the order quantities, which itself along the logistic chain like a whip blow up swings can do.

Causes and consequences of the whip effect

Wrong demand prognoses and information asymmetries along that logistics chain leading to the fact that on each stage of the logistics chain safety stock amounts are increased, there no Supply chain member the risk to run would like the future demand not to satisfy not to be able. This is because of the fact that each partner of a logistic chain knows only the Bedarfe, which is announced to it directly by its customer. Each stage provides local prognoses. In order to avoid shortfalls, on each stage a safety stock amount is held in stock, which drives again the capital freeze costs upward.

Bundle orders have the consequence that orders in larger quantities are given up, in order to lower orderfixed costs and to use quantity discounts or prices. Therefore periods with a large order quantity follow after periods without order. Suppliers promote these fluctuations by the grant of quantity discounts.

Price fluctuations between the individual stages of the delivery chain. Assumed for example a customer rising prices, then it is to be counted on the fact that the momentary demand rises and puts on themselves the customer of supplies, which are not co-ordinated with the current demand situation. Consequently its need will smaller fail in the next periods and thereby the order intervals will extend.

Feared scarceness and bottlenecks tempt customers usually likewise to generous planning of the order quantities. This sums itself over several stages of the delivery chain again to large surges of demand. Then however if the bottleneck is missing, the enterprises cover their Bedarfe first from the existence put on, which leads again to an extension of the Bestellintevalle.

The consequences of the whip effect are followed periods of overful camps of periods of the scarceness, since either too much or too little one produces. That leads to bad delivery service, lost incomes and ineffective transportation.

Counter measures

Information flow lacking between the enterprises involved in the logistic chain mostly leads to above causes. Therefore the counter measures aim at the improved exchange from information. An initiative, which aims at on that, is for example the Collaborative Planning, Forecasting and Replenishment (CPFR). A further method is Vendor Managed Inventory. The supplier worries about the stock of its customer.

References

• Supply chain management
• Collaborative Planning, Forecasting and Replenishment
• Beer play; extensive explanations to bullwhip effect

Literature

• Arndt, Holger: Supply chain Managenment: Optimization of logistic processes (2005)
• Corsten D., Gabriel C: SCM successfully convert (2002)
• Pippow, Ingo: Software agent in distribution nets (2004)
• Beautiful life, Paul: Integral logistics management, (2004)
• , Christof trained: Logistics, (2005)

Articles in category "Whip effect"

We found here 4 articles.

Related Websites

We found here 5 related websites.

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• freesound :: view sample :: whip.wav
  Description by FreqMan, This whip effect is made up of two elements - the whoosh sound is a USB direct link cable twirled in the air. ...


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