Stephen Disney

 

Faculty Speaker Professor Stephen Disney [Cardiff University]
Title Talk Summary: The Bullwhip Effect in Supply Chains
Date & Time Friday, October 30, 2015 at 10:30am
Place UCLA Anderson School of Management 
Room D-310 

 

Abstract
Supply chains are victims of a dynamical effect called the Bullwhip Effect. The bullwhip effect refers to the tendency of the variability of replenishment orders to increase as they pass through the echelons of a supply chain from retailers towards producers and raw material suppliers. A classic example of the effect is baby nappies or diapers. Babies are fairly regular in their use of nappies - they have a new nappy (almost) every time they feed. Sure, the retail sales on a day-to-day basis fluctuate a little, but the demand patterns experiences by the diaper manufacturer are the widely fluctuating and the erratic production rates experienced in the factory can result in a lot of easily avoidable costs.
This bullwhip effect is caused by the fundamental structure of a supply chain. As it takes time to order, manufacture and deliver product, forecasting procedures have to be used to predict future demands and position the supply chain to meet them. These forecasting mechanisms are used inside replenishment systems and together they amplify the variability of replenishment orders. This talk first discusses the bullwhip effect and explains why it is important. A (very) brief introduction of the theory behind the phenomena is highlighted, this includes, stochastic processes, harmonic frequencies, stability, chaos and the impact of stochastic lead times. The talk is structured around an awarding winning case study where we have successfully implemented bullwhip reduction strategies.

Stephen Disney