Measuring the Bullwhip Effect

⇨ The bullwhip effect has existed in supply chains for decades. The fact is, the technology to address this has existed for a few years now. The issue is more rooted in trust among the players in a chain and the lack of will to invest in near real-time, seamless data sharing with each partner in the supply chain.

⇨ Technology exists today to help address the bullwhip effect, provided these players are willing to invest money and trust. Technologies like EDI have existed for decades to allow sharing the level of data that can help mitigate the bullwhip effect.

⇨ We will cover how we can quantify the magnitude of the bullwhip effect in our supply chains.

When the pandemic made the demand for certain products skyrocket, we started hearing the term "bullwhip effect" a lot. But the bullwhip effect has existed in supply chains for decades. The fact is, the technology to address this has existed for a few years now. The issue is more rooted in trust among the players in a chain and the lack of will to invest in near real-time, seamless data sharing with each partner in the supply chain. Many may argue that it is more a result of a lack of technology. Still, the fact is, for many supply chains where every player involved in the value chain is a major corporation, technology exists today to help address the bullwhip effect, provided these players are willing to invest money and trust. Technologies like EDI have existed for decades to allow sharing the level of data that can help mitigate the bullwhip effect. Collaborative planning processes like CPFR have also existed for years. The focus of this article, however, is more on measuring the impact of bullwhip and the impact of bringing visibility into the supply chain. We will cover how we can quantify the magnitude of the bullwhip effect in our supply chains.