ITMPI FLAT 001
Main Menu
Home / Uncategorized / The Bullwhip Effect and Your Supply Chain

The Bullwhip Effect and Your Supply Chain

In supply chain, the “bullwhip effect” is when customer demand (the handle of the whip) causes increasingly large swings in inventory (or “waves” of the whip leaving the handle) as you go further back in the chain. Brent Misso writes for Entrepreneur about the deeper implications this has for your business in the supply chain.

Cracking the Whip

The surface reason for why the bullwhip effect occurs has been made pretty clear over the years, namely owing to the challenge of managing lead times. But Misso looks to human behavior as another underlying cause. He says there is a “fear factor” where panic or greed leads people to make poor decisions. Another factor is people being unable to identify market “bottoms” where it is time to buy. Misso believes the smart thing to do is to develop a “contrarian” attitude, not just for its own sake of course, but because bullwhip effect derives from a herd mentality, and so it is up to you to go against the herd when practical. For a more in-depth discussion, you can read Missos’ original article here: http://www.entrepreneur.com/article/232953#

About John Friscia

John Friscia is the Editor of Computer Aid's Accelerating IT Success. He began working for Computer Aid, Inc. in 2013 and continues to provide graphic design support for AITS. He graduated summa cum laude from Shippensburg University with a B.A. in English.

Check Also

The Robot Will See You Now: AI and Your Health Care

Health care is–as some have recently realized–complicated. Robots and apps will only make things more …

Leave a Reply

Your email address will not be published. Required fields are marked *

Sorry, but this content
is for our subscribers only!

But subscribing to ACCELERATING IT SUCCESS is FREE and only one click away!
Join more than 40,000 IT Professionals and get the best IT management articles to your mailbox with Accelerating IT Success!

Unsubscribe at any time