36 lines
1.3 KiB
Markdown
36 lines
1.3 KiB
Markdown
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<!-- generated: provider=openrouter model=arcee-ai/trinity-large-preview:free date=2026-02-22 source=coordination-mechanisms -->
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# Bullwhip Effect
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## Definition
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The amplification of demand variability as signals travel upstream in a
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supply chain, such that small fluctuations at the retail level produce
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progressively larger swings in orders at distributor, manufacturer, and
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supplier levels. The amplification arises from batching, safety stock
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additions at each tier, and the use of lagged signals rather than
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real-time demand data. The result is a chain that oscillates between glut
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and shortage even when end-consumer demand is relatively stable.
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## Source
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Coordination Mechanisms in Modern Supply Chains, §The Bullwhip Effect
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## Supply Chain Domain
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Coordination
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## VSM Assignment
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S2 — The bullwhip effect is a failure of S2 (the anti-oscillation
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coordination layer). A functioning S2 dampens variance; the bullwhip
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effect describes what happens when S2 is absent or degraded.
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## WoN Concept
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Natural Price as Central Price — Smith describes market price as oscillating
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around natural price as a centre of gravity. The bullwhip effect is an
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analogous oscillation: orders oscillate around actual demand rather than
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converging to it, because the information infrastructure required for
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convergence (transparent, real-time demand signals) is missing.
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