Measuring information distortion in real-world supply chains (original) (raw)
Related papers
Impact of Information Distortion Under Service Supply Chain Management
2009
Although there are a number of academic studies about supply chain management, the subject of service supply chain has still waited to receive much more attention to be searched and explained as supply chain. It is generally believed that supply chain management is one of the most vital issues in manufacturing industry. Nowadays, with the development of service industry, some of research papers have showed us that the supply chain theory can be considered and applied in service industry. Although there are several evidences on the impact of information distortion – bullwhip effect – on supply chain management, there are limited studies about bullwhip effect on service supply chains. According to these scarce studies, capacity planning is one of the main causes of the bullwhip effect. Purpose of this study is to analyze the bullwhip effect for a four-stage service supply chain by simulating Mortgage Service Game with Microsoft Excel.
Lee et al. (1997) advocated the idea of sharing demand and order information among different supply chain entities to mitigate the bullwhip effect. Even with full supply chain visibility afforded by IT systems with requirements planning and with no information distortion, we identify a ''core'' bullwhip effect inherent to any supply chain because of the underlying demand characteristics and replenishment lead times. In addition, we quantify an incremental bullwhip effect as various operational deviations (inaccurate order placements, batching, lag in sharing demand forecast) contribute incrementally to the variance of the order quantity not only at the node where the deviation is taking place but also at all upstream supply chain nodes. We discuss some managerial implications of our results in the context of a UK manufacturer.
Impact of Information Distortion in Service Supply Chains
2010
This study analyzes the information distortion problem within the context of service industries, and measures the amplification effect in a make-to-order environment for the Mortgage Service Game. In order to measure the impact of several factors managed by the service companies, such as capacity adjustment time, service delay time, information sharing, and variability of application start rate on information distortion, a simulation model is developed for Mortgage Service Game. Based on the original Mortgage Service Game settings, it is found that higher rates of information sharing on new application rates, and service delay times as well as lower capacity adjustment times speed up the system to reach stabilization. Under the different value combinations of the factors, it should be noted that amplification effect diminishes while information sharing and service delay time increase. Somewhat surprisingly, amplification effect weakens with increasing variability in the new applicat...
The Bullwhip Effect In Supply Chain Reflections After A Decade
A decade has passed since the publication of the two seminal papers by Lee, Padmanabhan and Whang (1997) that describes the “bullwhip effect” in supply chains and characterizes its underlying causes. The bullwhip phenomenon is observed in supply chains where the decisions at the subsequent stages of the supply chain are made greedily based on local information, rather than through coordination based on global information on the state of the whole chain. The first consequence of this information distortion is higher variance in purchasing quantities compared to sales quantities at a particular supply chain stage. The second consequence is increasingly higher variance in order quantities and inventory levels in the upstream stages compared to their downstream stages (buyers). In this paper, we survey a decade of literature on the bullwhip effect and present the key insights reported by researchers and practitioners. We also present our reflections and share our vision of possible future.
Information sharing as a coordination mechanism for reducing the bullwhip effect in a supply chain
2007
Abstract The bullwhip effect is an amplification of the variability of the orders placed by companies in a supply chain. This variability reduces the efficiency of supply chains, since it incurs costs due to higher inventory levels and supply chain agility reduction. Eliminating the bullwhip effect is surely simple; every company just has to order following the market demand, ie, each company should use a lot-for-lot type of ordering policy.