Bullwhip Effect
Supply Chain
Bullwhip Effect
Phenomenon where small changes in end-customer demand create progressively larger demand swings upstream.
Examples
- 01A 5 % rise in retail sales of paint leads to a 40 % jump in orders to the pigment supplier: the bullwhip effect in action.
- 02The monthly supply review compares order swings at each stage of the chain with real end-customer sales to measure the bullwhip effect.
- 03Sharing point-of-sale data with suppliers reduces the bullwhip effect, so the pigment plant no longer swings between overtime and short-time work.