The Bullwhip effect or the Forrester effect is the unexpected or unpredicted demand distortion that travels upstream in the supply chain. The customer holds the whip, gives it a crack and the ripples are felt all along the supply chain right back to the manufacturer. As the whip moves away from the source, i. Forecasting accuracy decreases as we move upstream along the supply chain. Even some consumer goods that have fairly consistent consumption at the retail fall victim to this effect. There may be six or more inventory points between the customer and the raw material supplier.
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Consider a series of companies in a supply chain, each of whom orders from its immediate upstream member. In this setting, inbound orders from a downstream member serve as a valuable informational input to upstream production and inventory decisions.
Actions that can be taken to mitigate the detrimental impact of this distortion are also discussed. Authors: Hau L. Lee , V. Padmanabhan , Seungjin Whang Hau L. Padmanabhan , Seungjin Whang. Search Search. Volume 66, Issue 5 May Volume 66, Issue 4 April Volume 66, Issue 3 March Volume 66, Issue 2 February Volume 66, Issue 1 January View PDF. Go to Section. Home Management Science Vol. Hau L. Seungjin Whang. Previous Back to Top. Figures References Related Information Cited By Data driven supply allocation to individual customers considering forecast bias.
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Information Distortion in a Supply Chain: The Bullwhip Effect
Distortion in the supply chain – beware the Bullwhip effect