‘Bullwhip’ and ‘backlash’ in supply pipelines

Abstract

‘Bullwhip’ is the phenomenon experienced in practice, signifying the propagation and amplification of orders as they pass upstream in a supply chain pipeline. ‘Bullwhip’ creates uncertainty for managers who then create stock and/or maintain excess capacity leading to increased total costs. A well known descriptor of the phenomenon is the MIT Beer Game simulation. We use the Beer Game to describe and explore a different phenomenon we term the ‘backlash’ effect. This is the resulting impact of the ‘bullwhip’ effect on shipments downstream. The two effects described have analogue with amplitude pressure wave propagation (‘bullwhip’) and reflection (‘backlash’) in physical systems such as flow ducts. We use the Fourier transform method to describe the ‘bullwhip’ propagation and ‘backlash’ reflections. We conclude that the ‘backlash’ effect occurs due to the ready availability of capacity in the whole supply chain and inventory in the final echelon.

Keywords:

• supply chain management
• Beer Game
• backlash effect
• simulation, Fourier transforms

Acknowledgements

The authors would like to thank the anonymous reviewers for their valuable suggestions and comments. We are also grateful to Steve Disney for sharing his Beer Game data.