Passt Present and Future Trends of Bullwhip in Supply Chain

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Jay Forrester (1958) has been rightly viewed in
many quarters as a pioneer of modern day supply
chain management. His seminal work on demand
amplification as studied via Systems Dynamics

Corresponding author. Tel.: +781 254 5351;
fax: +781 665 5174.
E-mail addresses: steve@scvisions.com (S. Geary),
disneysm@cardiff.ac.uk, scottd1@cardiff.ac.uk (S.M. Disney).

simulation demonstrated phenomena which many
practising managers had experienced. This in-
cluded such events as demand waveforms being propagated upstream in the supply chain, the inducing of ‘‘rogue seasonality’’ in the order patterns and the consequent wrong-footing of decision makers. Such demand amplification as shown in Fig. 1 (Fisher, 1997) is not new phenomena, since evidence of its existence has

been recorded at least as far back as the start of the
20th century. The situation facing much of

0925-5273/$ - see front matter r 2005 Elsevier B.V. All rights reserved. doi:10.1016/j.ijpe.2005.05.009

ARTICLE IN PRESS

8
FALSE DEMAND
BY SUPPLIER
PEAK INDUCED
DISCOUNT!
6

4

S. Geary et al. / Int. J. Production Economics 101 (2006) 2-183

Paradigm, he was arguing against the Economic
Batch Quantity concept and in favour of the
SHIPMENTS‘‘Batch of One’’ supply (Burbidge, 1981). Hence, if we traditionally manufacture in large batches then
his solution to queuing problems was to reduce
these long set-up times, and aim for small batches
as a way of life. So much so that even 40 years ago
he was postulating ‘‘only to make in a week what
ACTUALyou can use in a week’’. In the present operating CONSUMPTION

environment we would simply substitute ‘‘day, or

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even hour’’, for ‘‘week’’, and his ‘‘5Rules for Avoiding Bankruptcy’’ would thus have an amaz-
ing relevance to modern pipeline controls. Histori-
cally the bullwhip problem has also been of
considerable interest to economists via their study
of trade cycles (Mitchell, 1923). In this context the
little-known paper by Zymelman (1965) provided
an interesting proposal to reduce bullwhip in the

Fig. 1. Who bears the on-costs? Example of bullwhip generated via price promotion (Source: Fisher et al., 1997).

industry worldwide is exacerbated because ‘‘bull-
whip’’, Lee et al. (1997), tends to be either
misunderstood, or ignored (McCullen and Towill,
2002). Familiar arguments include that such
‘‘whiplash’’ behaviour (Hayes and Wheelwright,
1984) is someone else’s problem, or it does not cost
anything to this particular ‘‘player’’, or it is an unavoidable fact of life. But industry, in the
meantime, has to cope with bullwhip measured
not just in terms of the frequently quoted 2:1
amplification which is bad enough, but 20:1 and
even higher (Holmstrom, 1997). This behaviour
can be very costly in terms of capacity on-costs
and in stock-out costs (Metters, 1997). Equally,
because there are consequential downturns in
demand stock-holding and obsolescence costs will
also increase.
If effective supply chain management is now seen as a move towards ‘‘Swift and Even Material Flow’’ (Schmenner, 2001), then another major contributor to our present day understanding of
bullwhip is Jack Burbidge, who during his lifetime
was in turn an experienced production manager,
consultant, and then a distinguished academic.
Even prior to the ‘‘Japanisation’’ of much of US
and European industry via the ‘‘Lean Thinking’’

cotton industry via a control law he established via
analogue simulation.
Fortunately the writings of both Forrester and
Burbidge considered a range of possible solutions
to the bullwhip problem. These may have been...
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