SCM 303 Lecture Notes - Lecture 24: Electronic Data Interchange, Standard Deviation, Net Profit

• School: MSU
• Department: Supply Chain Management
• Course: SCM 303
• Professor: B.Jacobs

Document Summary

If one firm is fast, efficient, and effective: hurry up and wait! If one firm runs faster than the other, they will run out of material. But if all sc partners are fast, efficient, and effective: 13683$ Coordination across multiple firms in the supply chain to reduce: bullwhip effect, local optimization, poor decision-making, risks. Much of this course has focused on internal practices of a firm or buyer-supplier practices (not easy) Globalization (cid:1372) firms are spread out across regions and cultures. Competition (cid:1372) every potential advantage (or weakness) is critical. Demand fluctuations are amplified as they move upstream in the supply chain. Increasing customer demand variability increases the bullwhip effect. The bullwhip effect has the largest effect on inventory carrying costs. Classic example: campbell soup: commodity item with steady demand, occasional heavy promotions at grocers. Bullwhip effect: why: inability to see the actual demand, just-in-case mentality. Example: 1 factory, 2 distributors, each with 5 wholesalers, each with 13 retailers.