Bullwhip Effect in the Information Flow of a Supply Chain: A Role of Culture

Abstract

<jats:p> The main goal of our research is to analyze and display causes of a bullwhip effect formation within a supply chain, as well as to provide the appropriate solutions to limit the occurrence of the bullwhip effect by using the proper information flow and partners’ cooperation within the supply chain. The bullwhip effect is one of the most important issues in the supply chain management and it is present in many companies. It preserves a character of invisibility because there are lots of causes for its formation and they are usually difficult to discern. The bullwhip effect is a phenomenon of an increase in the order variability within a supply chain. The higher we are within the supply chain, the higher is the order variability. The company encountered with the whip effect can successfully reduce its impact by improving the information flow, as well as improving partners’ cooperation within the supply chain. In this way the company can limit its negative repercussions and increase the profit. The article focuses on the overview of the bullwhip effect within a distribution chain, from its causes to suggestions and measures how to ease its negative repercussions on the organisation. Part of the causes could be found in the market demand variability and in the lack of communication about the actual marked demand within the supply chain. The rest of the causes are related to obstacles that emerge among different partners within the supply chain (role of culture). A qualitative analysis is applied on the basis of the selected cognitions from the supply chain management. The quantitative analysis is based on the theoretical research of the effective flow of information among the participants and its contribution to the reduction of the bullwhip impact. The article discusses two research questions: 1) The correct information flow within the supply chain and the improvement of the communication among partners can lead to the bullwhip effect reduction, and 2) A reduction of the bullwhip influence can lead to the increase of cooperation among partners. The results of the analysis can be used for further research.

Document type: Article