Manufacturing supply chains are long and complex with multiple players and as you move upstream. So essentially in more in order to prevent shortages and lost sales of goods the “extra” inventory begins to increase or decrease during the normal market fluctuations of supply and demand. When demand increases, the companies closest to the consumer will increase inventory to meet consumer demand. When the demand falls, the front-end of the supply chain will decrease inventory, amplifying the extra inventory on each company up the supply chain.
During the financial crisis, these decisions that were taken to supply more (extra) turns into waste accumulated by companies. Companies reduce their working capital targets due to the global crisis. This reaction introduced a significant shock in the world’s supply chains essentially creating an inventory-driven bullwhip effect.
The primary driver of the bullwhip impact originates from demand forecasts from each organization in the supply chain which causes an increase in the supply chain. Absence of correspondence is likewise pervasive during operational causes; organizations may not be flexible with data increase in the supply chain with respect to current economic situations, thus resulting in inappropriate levels of stock.
MRD’s Bullwhip Simulator models the bullwhip effect in businesses and can help organizations at different positions in the supply chain. It assesses the impact of fluctuating demand for themselves and plans their supply chain functions accordingly.
We understand that a business would like support with the efficient planning of supply chain activities such as manufacturing capacity planning, warehousing, etc. The current COVID-19 pandemic has caused end-market disruptions resulting in a bullwhip effect in businesses that supply chain specialists would like to simulate and plan. This simulator is an interactive tool that provides Supply Chain Specialists an indication of the effect of end-market demand swings and the expected demand at different time periods to allows adjustments in supply chain planning to avoid sub-optimal decision making. This tool can be configured to the business in 2 week’s time.
MRD provides a data-science driven solution of quantitative predictions and simulations of output, stock, and demand behaviour. If you think your business needs a ‘Supply Chain Sale – Wave Prediction‘ then get in touch now!