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Want to reduce the bullwhip? Measure it. Here’s how

Ming Jin (Department of Operations and Information Systems, David Eccles School of Business, University of Utah, Salt Lake City, Utah, USA)
Nicole DeHoratius (Booth School of Business, University of Chicago, Chicago, Illinois, USA)
Glen Schmidt (Department of Operations and Information Systems, David Eccles School of Business, University of Utah, Salt Lake City, Utah, USA)

Supply Chain Management

ISSN: 1359-8546

Article publication date: 12 June 2017

Abstract

Purpose

The popular “beer game” illustrates the bullwhip effect where a small perturbation in downstream demand can create wild swings in upstream product flows. The purpose of this paper is to present a methodical framework to measure the bullwhip effect and evaluate its impact.

Design/methodology/approach

This paper illustrates a framework using SKU-level data from an industry-leading manufacturer, its distributors, end-users and suppliers.

Findings

Firms benefit from tracking multiple intra-firm bullwhips and from tracking bullwhips pertinent to specific products, specific suppliers and specific customers. The framework presented in this paper enables managers to pinpoint bullwhip sources and mitigate bullwhip effects.

Research limitations/implications

This paper presents a framework for methodically measuring and tracking intra-firm and inter-firm bullwhips.

Practical implications

A disconnect exists between what is known and taught regarding the bullwhip effect and how it is actually tracked and managed in practice. This paper aims to reduce this gap. For the various products analyzed herein, the authors show how using this framework has the potential to reduce delivered product cost by 2 to 15 per cent.

Social implications

Properly managing the bullwhip leads to lower inventories and potentially lower product prices while simultaneously increasing firm profits.

Originality/value

This paper presents a novel approach to systematically tracking intra-firm bullwhips along with bullwhips specific to a given supplier or customer.

Keywords

Acknowledgements

The authors would like to thank Dr. Beverly Wagner and two anonymous reviewers for their support and constructive comments.

Citation

Jin, M., DeHoratius, N. and Schmidt, G. (2017), "Want to reduce the bullwhip? Measure it. Here’s how", Supply Chain Management, Vol. 22 No. 4, pp. 297-304. https://doi.org/10.1108/SCM-02-2017-0088

Publisher

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Emerald Publishing Limited

Copyright © 2017, Emerald Publishing Limited