In today’s interconnected and fast-moving global economy, supply chain efficiency is paramount. Yet even the most advanced systems can fall prey to a persistent problem: the Bullwhip Effect. This phenomenon, where small fluctuations in consumer demand cause increasingly larger variations in orders up the supply chain , can lead to excess inventory, lost revenue, and disrupted operations. One of the most cited examples of this effect comes from Procter & Gamble (P&G). They noticed massive order fluctuations for their diapers despite steady sales at retail outlets. What they discovered was a classic case of the Bullwhip Effect – a disconnect between actual consumer demand and upstream supply chain responses. But this isn't just a P&G issue – it's a common challenge faced by businesses across industries. Behavioural Causes The first theories focusing onto the bullwhip effect were mainly focusing on the irrational behavior of the human in the supply chain, highli...
A Compendium of Concepts