
Tunde Morakinyo
4.8K posts

Tunde Morakinyo
@TundeMoraqs
Data | Automation | Insight














Dear supply chainers, Welcome to today's episode of getting to know about your Supply Chain, grab a seat and let's dive in! Story Caption: 𝐀 𝐬𝐦𝐚𝐥𝐥 “𝐫𝐮𝐧𝐧𝐢𝐧𝐠 𝐥𝐨𝐰” 𝐢𝐧 𝐀𝐢𝐬𝐥𝐞 𝟔 𝐭𝐮𝐫𝐧𝐞𝐝 𝐢𝐧𝐭𝐨 𝐚 𝐧𝐚𝐭𝐢𝐨𝐧𝐚𝐥 𝐬𝐡𝐨𝐫𝐭𝐚𝐠𝐞. 𝐖𝐡𝐚𝐭 𝐝𝐨 𝐲𝐨𝐮 𝐜𝐚𝐥𝐥 𝐭𝐡𝐚𝐭? I'm sure you once might have had an experience similar to the caption above. What started with as rumor for instance; your favorite paper towel is running out and would be out of stock till whenever. What do you do? You rush to stock up. Thereafter, you tell your friends and loved ones to do likewise. As a result, shelves become empty and cleared, retailers saw sales spike about 200% overnight. I'm sure they are wondering what was going on and to react to the event, they decided to restock by massively from their supplier. Wholesalers, in turn, out of panic over-order from their manufacturers. Manufacturers turned on the engines and started mass producing, raw material suppliers are also not left behind in the rush hour game. Then, 𝒔𝒖𝒅𝒅𝒆𝒏𝒍𝒚, demand dropped, and everything is back to normal 😐 What? What happens next would be the aftermath of the ripple effect of the above scenario. Which are; 𝒘𝒂𝒓𝒆𝒉𝒐𝒖𝒔𝒆𝒔 𝒃𝒆𝒄𝒐𝒎𝒆 𝒇𝒖𝒍𝒍, 𝒕𝒓𝒖𝒄𝒌𝒔 𝒂𝒓𝒆 𝒔𝒊𝒕𝒕𝒊𝒏𝒈, 𝒊𝒏𝒗𝒆𝒏𝒕𝒐𝒓𝒚 𝒊𝒔 𝒇𝒖𝒍𝒍 𝒕𝒐 𝒕𝒉𝒆 𝒎𝒂𝒙𝒊𝒎𝒖𝒎. This event is called 𝐁𝐮𝐥𝐥𝐰𝐡𝐢𝐩 𝐄𝐟𝐟𝐞𝐜𝐭. 𝐁𝐮𝐥𝐥𝐰𝐡𝐢𝐩 𝐄𝐟𝐟𝐞𝐜𝐭 happens when a small change in customer demand at store level causes increasingly bigger changes in demand upstream(up the ladder to the manufacturer) in the supply chain. This happen not only to paper towels, it happens to food, electronics or anything in the supply chain simply as a result of panic and poor visibility. Bullwhip effect results to 𝒘𝒂𝒔𝒕𝒆, 𝒍𝒐𝒔𝒕 𝒐𝒇 𝒎𝒐𝒏𝒆𝒚, 𝒐𝒗𝒆𝒓𝒔𝒕𝒐𝒄𝒌𝒊𝒏𝒈. Notable antidotes are; improved forecasting, collaboration across the chain and sharing real demand signals. Also, Companies in recent times, have improved by engaging 𝑟𝑒𝑎𝑙-𝑡𝑖𝑚𝑒 𝑑𝑎𝑡𝑎 𝑠ℎ𝑎𝑟𝑖𝑛𝑔, 𝑑𝑒𝑚𝑎𝑛𝑑 𝑠𝑒𝑛𝑠𝑖𝑛𝑔 𝑤𝑖𝑡ℎ 𝐴𝐼/𝑀𝐿, 𝑙𝑜𝑐𝑎𝑙𝑖𝑧𝑒𝑑 𝑠𝑢𝑝𝑝𝑙𝑦 𝑐ℎ𝑎𝑖𝑛𝑠, 𝑠𝑒𝑛𝑑-𝑡𝑜-𝑒𝑛𝑑 𝑣𝑖𝑠𝑖𝑏𝑖𝑙𝑖𝑡𝑦 𝑡𝑜𝑜𝑙𝑠 𝑎𝑚𝑜𝑛𝑔 𝑚𝑎𝑛𝑦 𝑜𝑡ℎ𝑒𝑟𝑠 to prevent or cushion bullwhip effect. As a reader, you would help the supply chain to avoid this effect by trying to confirm possible shortages from Company website or news, this will help businesses to reduce bullwhip effect from happening at least from your end because the losses recorded during bullwhip effect are also passed on to you as customers in market prices. The next time items sells out suddenly or quickly in your favorite store, the question to ask would be: Is this a reaction to real demand.......or to whip? I hope you learnt something today about supply chain, have a nice day! #supplychain #storytelling #bullwhipeffect












