BU435 Chapter Notes - Chapter 10: Supply Chain, Bullwhip, European Cooperation In Science And Technology
Document Summary
Lack of supply chain coordination and the bullwhip effect. Bullwhip effect: fluctuations in orders increase as they move up the sc from retailers to wholesalers to manufacturers to suppliers: distorts demand information within the supply chain, results from a loss of supply chain coordination. Effect on performance: lack of coordination increases variability and hurts supply chain surplus o. Labor cost for shipping and receiving (increase) Key point: lack of coordination hurts both responsiveness & cost in sc by. Making it more expensive to provide a given level of product availability. Incentive obstacles: occur when incentives offered to different stages/participants in sc lead to actions that increase variability & reduce total supply chain profits, local optimization within functions or stages of a supply chain, sales force incentives. Operational obstacles: occur when placing & filling orders lead to an increase in variability, ordering in large lots: majority of orders arrive in certain focal-point period, large replenishment lead times, rationing and shortage gaming.
