The impact of business policy on bullwhip induced risk in supply chain management

Abstract

Purpose

To minimise business risk of incurring increased marketability and acquisition costs due to volatile demand exacerbated by the bullwhip phenomenon.

Design/methodology/approach

Based on the vision of the seamless supply chain and the active support of the decision support system exploiting the automatic pipeline inventory and order based production control system (APIOBPCS) algorithm. The approach has been tested on simulated real‐world value stream data.

Findings

Demonstrates that it is possible to reduce risk via a combination of the APIOBPCS algorithm plus optimal location of the material flow de‐coupling point separating lean and agile pipelines.

Research limitations/implications

The methodology only substantially reduces risk generated within the supplier echelon. External bullwhip must be reduced via other routes to streamline flow.

Practical implications

Provides businesses with a composite methodology for matching their ordering systems to enable risk minimisation within their span of control.

Originality/value

The Bullwhip On‐costs Johari Window is a unique tool for mapping supply chain ordering policy risks.

Citation

Towill, D.R. (2005), "The impact of business policy on bullwhip induced risk in supply chain management", International Journal of Physical Distribution & Logistics Management, Vol. 35 No. 8, pp. 555-575. https://doi.org/10.1108/09600030510623339