Bullwhip

Bullwhip Effect

Illustration from Rollins College

Illustration from Rollins College

The bullwhip effect occurs when the demand order variability in the supply chain are amplified as they moved up the supply chain (Lee et al., 1997). A small increase in demand from retail customers towards the supply chain could result in large variations in orders placed upstream (QuickMBA, 1999).

This is known as the bullwhip effect. Distorted information from one end of a supply chain to the other has been observed across most industries, resulting in tremendous inefficiencies.

These tremendous inefficiencies also include excessive inventory, poor customer service, lost revenues, misguided planning, inefficient transportation and production schedule (Lee et al., 1997).

Illustration from Wikipedia

Hewlett-Packard

HP is an information technology corporation based in United States. It is renowned as one of the world's largest IT companies. It wants to be "it" when it comes to IT. Hewlett-Packard provides one of the tech world's most comprehensive portfolios of hardware, software, and services. Its products include PCs, servers, storage devices, printers, and networking equipment. The company's services unit provides IT and business process outsourcing, application development and management, consulting, systems integration, and other technology services. HP's software products include enterprise IT management, information management, business intelligence, and carrier-grade communications applications (Yahoo Finance, n.d.).

Few years ago, Hewlett-Packard (HP) management examine its one of its major reseller, they found some fluctuations over time. Expectedly, they found a bigger swing when they received the order from this reseller. Unfortunately, they also realized that the order to manufacturing division (inside the company) was in a greater fluctuation (Université Laval, n.d.).

In the past, without being able to see the sales of its products at the distribution...