Bullwhip Effect and Supply Chain Management

Bullwhip Effect and Supply Chain Management

Introduction

A supply chain is an organization of a network that connects producers, marketers, distributors, and consumers in a complex manner to move a commodity from producers to consumers. A supply chain contains various actors, from producers to consumers, technology, regulations, activities, resources, information, and forms of governance. The supply chain, also known as the global commodity chain is currently one of the most widely used approaches to studying interfirm relations in the global business system. Within this framework, however, there is a proliferation of overlapping names and concepts, such as global value chains, value system, production networks, value networks, commodity system analysis, and so forth, as various authors have developed the idea in different ways. Most firms must acquire materials or services from their suppliers (Cachon,Fisher,2000). They use these materials or services, add value to them, and sell them to others. Supply disruptions, commonly known as the bullwhip effect, have been a major challenge facing supply chain firms. Supply chain management and strategic and operational information requires skill and decision-making, which may make sense to complicate the situation. Despite many years of investment in supply chain systems, a few teams in the supply chain can easily useful information on the supply chain.

Supply Chain Visibility

In the supply chain management, the supply chain visibility is to adopt a strategy is suitable for the particular product and an effective step in the development of a strategy. supply chain visibility is considered important, due to organization's demand for the product, suggesting that they are either functional or innovative. Functional products are like goods, they tend to be stable. They are the fast moving consumer goods that are available to the public and meets basic needs, which do not change over time. As a result, functional products should have a very efficient low-cost supply chain. On the other hand, innovative products have short life cycles with volatile demand that is difficult to predict (Cachon,Fisher,2000).According to 70% of companies surveyed, the biggest challenge that lies ahead is to improve the visibility, not only internal (operations, logistics, etc) but also the external visibility of the activity they have with their network of companies members or "partners" (subcontractors, suppliers, technology partners etc). Having the right information, timely and complete (both internal and external) is a strategic element in making good decisions. Although visibility is your biggest challenge, the companies surveyed say their activity is focused on achieving other goals, such as process improvement or cost reduction. In addition, the executives surveyed say several impediments to obtaining this visibility, such as a departmental barriers or compensation systems that do not encourage or reward collaboration (Cachon,2005).

The survey reveals that companies with better economic participants themselves are implementing collaborative programs to improve visibility, such as joint planning with suppliers or continuous replenishment between supplier and customer. Strategic of supplier relationships are complex and it is difficult to manage teams in the category of procurement. Through the network to the product ...