Antoine Tzavaras Monday 18 March 2019 Section 5 Supply Chain Simulation & Case Studies Report: • The bullwhip effect you experienced in the two rounds • The differences between the traditional supply chain (round1) and the collaborative supply chain (round2)? • The impact of information sharing on both individual and group performance? First of all, let’s expose my understanding of the bullwhip effect. The bullwhip effect begins when there is an increase in demand for a product coming from the consumers. Then the retailer makes an order to its supplier, which is actually more important than the real demand of the consumers, in order to have a safety stock, or to benefit from discounts on the volume of purchase. As we move up in the supply chain, the demand continues to increase because at each level of the chain additional units of safety stocks will be added. Moreover, the demand will also increase because of the larger order volumes to be able to benefit from better prices. In order to save transports costs suppliers will wait and delays will occur. This phenomenon will create the tendency to request more security stock and backorders will occur. The manufacturer will perceive a huge increase in demand artificially amplified and which could lead to increase production in response to a much larger demand than the demand real. At the first round my role was retailer and I was directly linked to the demand of the end consumer. I have tried to prepare a safety stock in case of a strong increase in demand for both beers. Since the beginning the distributor and the wholesaler have had some problems to satisfy my orders. Indeed, I had ordered too much at the beginning: It is much more interesting to order 3 times 3000 units rather than 9000 units because of the delays of delivery. Without communicating with the other actors of the supply chain it was very difficult to manage my inventory and had backorders all the time. During round 2, my role was wholesaler. As I had already performed as a retailer I could definitely better understand how to manage the distribution of the wholesaler. Moreover, we had access to the demand of the end users. Unfortunately this last factor was one who tricked our team. Indeed, the retailers had wrongly forecasted the demand for the Igloo beer. This is why we produced and distributed a huge amount of Igloo, which was much higher than the actual demand. This phenomenon has had huge consequences in the inventory costs at each stage of the supply chain. However, thanks to communication and a good forecast of demand for the Calore beer we had very few backorders. Communication between the different actors of the supply chain has had tremendous consequences on our project. Indeed, thanks to communication we could order in way that satisfied each of our suppliers. On the other hand, we could better manage our transport costs by sending full trucks rather than half filled trucks. Unfortunately we had this little misunderstanding with the retailer regarding the demand of igloo, we could have managed a positive end result.
