Bullwhip Effect in the Supply Chain:A Danger

We live in the “Information age”. Data Warehouses, Web services, XML, Wireless, the Internet and Portals are just a few technologies dominating the business page of the daily newspaper. Distorted information from one end of a supply chain to the other can lead to tremendous inefficiencies: excessive investment in inventory, poor customer service, lost revenues, misguided capacity plans, ineffective transportation, and missed production schedule. And thus causes the Bull Whip Effect. The bullwhip effect is the magnification of demand fluctuations, not the magnification of demand. The bullwhip effect is evident In a supply chain when demand increases and decreases. The effect is that these increases and decreases are exaggerated up the supply chain. The essence of the bullwhip effect is that orders to suppliers tend to have larger variance than sales to the buyer. The more chains in the supply chain the more complex this issue becomes. This distortion of demand is amplified the farther demand is passed up the supply chain. Here in this paper it is explained with the help of some cases and it has shown that how the information causes the variability on the order.