Bullwhip Effect

Understanding bullwhip effect:

• A condition that occurs in the supply chain where customer demand is changing.
• These changes resulted in a series of effects that would disrupt the supply chain (Supply Chain).

Lack of coordination in the exchange informsi between retail, distributors, and companies can lead to bullwhip effect.

The cause of bullwhip effect:

1. new problems will occur when, for the sale of a reference period for the plan at a time when the future production.
2. And in fact, demand from customers continues to change. The uncertainty of customer demand which is the major cause of bullwhip effect.

Case Example: Causes bullwhip effect

P.T. Sinar Sosro Gresik Factory is a company that produces soft drinks industry Fruit Tea products Handheld. The instability resulted in product demand bullwhip effect. Companies must be able to make low cost with high service level. The focus of this study was to measure the bullwhip effect, identify the factors that cause the bullwhip effect, and propose solutions for bullwhip effect is reduced. Aggregation of data is based on the product / Sales Office (ω1), product (ω2), Sales Office (ω3), Echelon (ω4). Bullwhip effect is measured by the ratio between the coefficient of variation of demand that comes out of a channel (court) with a coefficient of variation requests received by the channel (Cin). Regression analysis was used to find the variables that contribute to the bullwhip efffect. Measuring bullwhip effect is based on the type of product (9 variants of flavor) and based on the type of packaging (packing a flavor, packaging three flavors). Measuring bullwhip effect based on the product yield value ω1 = 0.62, ω2 in upstream = 1.00 and at downstream = 1.44, ω3 = 0.63, and ω4 in the upstream and the downstream = 1.08 = 1.01. Measuring bullwhip effect based packaging value ω1 = 0.66, = 0.99 ω2 upstream and in downstream = 1.41, ω3 = 0.79, and ω4 in upstream = 0.96 and in dowmstream = 1.08. The results showed that the bullwhip effect happens in the supply chain caused by the distortion of information from downstream to upstream. From the calculation and analysis for the period January 2006 - December 2006 in case of reduction of the bullwhip effect is obtained by Rp.1.703.526.050 inventory cost savings, - and the sevice level increased from an average of 92.68% to 100%, so that profits will increase because not occur stockout cost of Rp.1.369.773.500, -Listen

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