Bullwhip effect

1. Supply Chain Management

The objective of supply chain management is to provide a high velocity flow of high quality, relevant information that will enable suppliers to provide an uninterrupted and precisely timed flow of materials to customers. In other worlds it would be responsible to put the right product and quantity, at the right place and at the right time.
The logistic performance has a strong influence over the financial performance of the industrial companies and commercial. With the development, together with development of the information technology, among other factors, show up the possibility of supply chain managed, which is know as Supply Chain Management.
It is very important to understand first the objectives of the Supply Chain Management therefore give a close up at the Bullwhip Effect and understand its causes and understand how to minimize it.

2. Bullwhip Effect

Supply Chain coordination functions well as long as all stages of the chain take actions that together increase total supply chain profits. Each part of the chain should maintain its actions in a good relation to other participants and the supply chain in general and make decisions beneficial to the whole chain. If the coordination is weak or does not exist at all, a conflict of objectives appears among different participants, who try to maximize personal profits. Besides, all the relevant information for some reason can be unreachable to chain participants, or the information can get deformed in non-linear activities of some parts of chain which leads to irregular comprehension. All these lead to the so-called Bullwhip Effect resulting from information disorder within a supply chain. Different chain phases have different calculations of demand quantity, thus the longer the chain between the retailer and wholesaler the bigger the demand variation.

It is possible to say that bullwhip effect is the discrepancy between real demand and the forecasted one, connected to the