Why Are Supply Chains Difficult to Manage? Bull Whip Effect

1. Why are supply chains difficult to manage?

The first reason that supply chains are difficult to manage is demand and supply are hard to match. Consumer’s demand varies over the time. And the forecast of demand is hard to be accurate especially for new products since there is no historical record to compare. Also demand is affected by economic downturns. Consumers may have no capability to require new products. Company cannot control this external environmental factor. For supply side, there are raw material shortage issue, lean times issues, delay in transportations and quality issues hard to control. The second reason is difficulty to maintain all the manufacturers on schedule. Since manufacturing is dispersed globally, it’s hard to get all of them on the same pace.

2. What is Bull Whip Effect?

Bull Whip Effect is a phenomenon that a small change in customers’ demand lead to increasing magnification of variance in inventory as moving further up the supply chain. There are several factors that affect the Bull Whip Effect such as demand variation, lean times, and availability of sharing information. And the major cause of Bull Whip Effect is lack of sharing information. Because each part of supply chain can only see the demand which is right next to themselves but not the consumer’s change in demand. 2. What is Bull Whip Effect?

Bull Whip Effect is a phenomenon that a small change in customers’ demand lead to increasing magnification of variance in inventory as moving further up the supply chain. There are several factors that affect the Bull Whip Effect such as demand variation, lean times, and availability of sharing information. And the major cause of Bull Whip Effect is lack of sharing information. Because each part of supply chain can only see the demand which is right next to themselves but not the consumer’s change in demand.

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