Information Distortion Bullwhip Effect

  Bullwhip effect

• The bullwhip effect is a well-known symptom of

  Information coordination problems in (traditional) supply chains It refers to the effect that the amount of periodical

• orders amplifies as one moves upstream in the supply chain towards the production end.

  Distortion &

  Bullwhip Effect

• The term was first coined around 1990 when Procter&Gamble perceived erratic and amplified order patters in its supply chain for baby diapers. The effect is

  Supply Chain Management also known by the names whiplash or whipsaw effect .

• – The Bullwhip Effect Bullwhip Effect Distorted Information
• Distorsi informasi merupakan salah satu ken
• The amplification of uncertainty and order untuk menciptakan efisiensi pada supply supply overstatement that cascades upstream through the chain nodes of the supply chain.
• BULLWHIP EFFECT  Demand and sale pada
• The variance of orders is greater than that of

  sales peritel relatif stabil namun permintaan/aliran

  , and the distortion increases as one moves upstream. barang dari produsen ke suplier/distributor sering sangat fluktuatif

• Semakin ke hulu semakin fluktuatif

  The Bullwhip Effect Penyebab Bullwhip Effect Demand

  Demand Forecast Updating

  800 Consumer Demand

  700 600

  Retailer Order to

  Order Batching

  500 Wholesaler

  400 Wholesaler's Order to

  300 Manufacturer

  200 Manufacturer's Order Fluktuasi Harga

  100 to Supplier 50 100

  Rationing and Shortage Gaming Time Demand Forecast Updating Order Batching

  Ukuran pemesanan yang jumlahnya kecil sering tidak efisien

  Peramalan pada satu periode tertentu dan perlunya

  dalam ongkos sehingga dilakukan pemesanan dalam jumlah updating terus menerus besar dalam satu satuan waktu

• Kebijakan reorder point atau order up-to level
• Produksi juga sering dilakukan sistem batch , jumlahnya

   menyebabkan variabilitas order pesanan ritel besar dalam satu satuan waktu, serta pengirimannyapun lebih besar dibandingkan dengan permintaan jumlahnya besar dalam satu satuan waktu untuk

  menghindari ongkos yang tinggi

  pelanggan akhir

• Order mingguan atau 2 mingguan dari peritel lebih
• Model ramalan yang digunakan juga dapat fluktuatif dibandingkan penjualan ke pelanggan akhir.

  berpengaruh terhadap intensitas bulwhip effect.

  Fluktuasi harga Rationing and Sortage Gaming

• Adanya diskon  menyebabkan perubahan Rationing  Permintaan lebih tinggi dari

  persediaan permintaan  seperti forward buying

• Permintaan sering tidak terpenuhi 100%

  Produksi dapat saja kekurangan saat ada harga Peritel sering berusaha untuk meningkatkan

  khusus pada pelanggan akhir permintaan

• Kasus seperti ini sering terjadi saat menjelang hari
• raya dan tahun baru (Tidak setiap saat)

  Pada saat harga normal  Stok diperitel banyak 

• pemesanan ke ditributor dapat distorsi selama 2-3 Pada saat persediaan cukup dari peritel maka bulan.

  pelanggan merubah pesanan atau membatalkannya.

• Stok menumpuk Ongkos produksi meningkat

  Bullwhip Causes 1) Lack of information

• No information except for the order amount is

  The bullwhip effect is mainly perpetuated up the supply chain. caused by three underlying

• Without actual customer demand data, all

  problems:

  forecasting has to rely solely on the incoming orders at each supply chain stage.

• a lack of information
• In reality, in such a situation traditional forecasting

  methods and stock keeping strategies contribute to

• the structure of the supply chain creating the bullwhip effect.

  and • a lack of collaboration.

2) Supply chain structure 3) Local optimisation

• The longer the lead time, i.e. the longer it takes for Local optimisation, in terms of local forecasting

  an order to travel upstream and the subsequent and individual cost optimisation, and a lack of delivery to travel downstream, the more aggravated cooperation are at the heart of the bullwhip the bullwhip effect is likely to be. problem.

• Hence, the longer the lead time is, the more

  A good example for local optimisation is the batch increase in forecasted demand (especially in order phenomenon. In practice, ordering entails fix conjunction with updating the safety stock levels, cost, e.g. ordering in full truck loads is cheaper then see above), which again contributes to the bullwhip ordering smaller amounts. Furthermore, many effect. suppliers offer volume discounts when ordering larger amounts.

• pronounced an order will be as an reaction to an

  Causes of Bullwhip Effect Impact of Bullwhip

• Local information and decisions at each >High inventory/lost sales/backlog
• Different forecast mechanisms at each node
• Low operational efficiency
• Information and communication lead time
>underutiliza
• Production and distribution lead time
>over
• Order “padding”
• Poor customer service levels
• Batch/opportunistic purchasing
>Unnecessary capacity investment
• Unsynchronized ordering poli
• Swings in working capital
• Blaming others; frustration, helplessness

  Fast and Rich Information is Distorted and late, make Information sharing inappropriate response Information is distorted and late Day 1

  Promotion takes place order order order

  Day 5, stock run out, order

  larger and earlier than normally

  Factory Distributor Wholesaler Retailer Day 7, distributor deliver larger and earlier Day 10, distributor runs out of stock,

  Information is fast and more accurate, factory reacts more responsively

  order larger quantity to factory

  Factory Distributor Wholesaler Retailer Day 11, factory increase production

  volume through overtime

  Day 8, promotion ends Day 17, distributor receives large

  delivery from factory Demand, stock level, events,

  Day 20, retailer receives large irregular patterns, etc.

  delivery from distributor, while demand disappear

  160 _{120 140} Bullwhip Causes and _{100 80} Countermeasures _{60 Demand @ Retailer} Order Batching ₄₀

   High order cost Electronic data interchange ₂₀ (EDI) & computer aided _{1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31  Full truck load economies 3rd party logistics; assorted} ordering (CAO) truckloads _{1200 1600 1400}

   Random or correlated ordering Regular delivery appointments _{1000 800}

  Shortage Gaming _{600 400 Inventory @ Retailer}

   Proportional rationing scheme Allocation based on past sales ₂₀₀  Ignorance of supply conditions Shared capacity and supply _{-200 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 31} information _-400

   Unrestricted orders & free Flexibility limited over time; return policies capacity reservations

  Bullwhip Causes and Avoiding the ‘Bullwhip’ effect Countermeasures (cont.) Fluctuating Prices

  Information  High-low pricing Every day low pricing sharing

  (EDLP) Demand Signaling  No visibility of end demand Access point of sale (POS)

  Channel data alignment

   Multiple forecasts Single control of replenishment or vendor managed inventory (VMI)  Long lead time Quick response or lead time Operational reduction efficiency

  Information sharing Channel Alignment

• Barcoding, electronic data interchange tau Memperpendek dan merubah struktur

  teknologi lainnya yang dapat supply chain mentransmisikan data penjualan POS

  Collaborative, planning, forecasting dan Order online system replenishment Operational Efficiency

  Pemendekan leadtime

  Pengurangan ongkos-ongkos tetap

• Mengubah struktur atau konfigurasi supply chain, mengubah m
• Untuk bisa pengiriman dalam batch kecil

  transportasi, atau cara inovatif seperti cross docking dan perbaikan manajemen penanganan order, penjadwalan produksi maupun dibandingkan besar pengiriman lebih baik.

• Waktu setup dikurangi  Just in time
>Menciptakan stabilitas h
• Pengurangan harga secara kontinu sehingga tidak

  menimbulkan forward buying

• Informasi promosi dari perusahan harus diterima

  transparant pada seluruh chain

  Ways to Reduce Variability and Collaborative Planning, Forecasting Uncertainty and Replenishment (CPFR)

• Close collaboration with

  Traditionally :

  business partners, information

• Each function and each supply chain channel could have

  sharing with technology

  different forecast figures

• Reduce fixed cost components

  (setup cost, transportastion

  Plans are developed in isolation from other supply chain channels

• policies, outsurcing,

  standardization)

• Reengineer the supply chain
• Minimal communication and coordination between channels

  (shorten lead time, use local

  takes place for corrective actions when actual production deviates

  suppliers)

  from the plan

• New business models (such as

  Dell’s direct model)

• Better planning capabilities

  CPFR Kenapa CPFR penting ?

  Setiap channel punya informasi yang berbeda (kalau informasi

• PRINSIP :
• tersebut dibagi, akurasi forecast bisa ditingkatkan) SC channels menggunakan forecast yang sama untuk seluruh kegiatan mereka
• Contoh : setiap channel punya program promosi yang berbeda, sedangkan manufaktur punya informasi kapasitas
• Mereka juga meng-exploit supply process constraint
• Contoh : short order cycle dengan long production cycle. Caranya bisa dengan memperpendek manufacturing cycle atau memperpanjang order cycle sehingga terjadi sinkronisasi

A Leading Pilot Langkah “Beer Game”

  1. Terima kiriman (persediaan bertambah) dan majukan inventory in transit satu periode. Pabrik memajukan work in process satu

• Wal-Mart vs Warner Lambert
• Now Wal-Mart is engaged with some 600 trading partners periode
• Benefits :

  2. Lihat incoming orders dan kirim sebanyak yang diminta. Kalau

   Promotional planning improvements

  permintaan lebih besar dari inventory, kirim sebanyak stock

   Service level increases

  ynag tersedia

   Reduction in inventories

  3. Catat inventory atau backlog pada record sheet. Backlog adalah

   Better warehouse utilization

  akumulasi kekurangan yang harus dipenuhi. Semua

   Better capacity allocation

  permintaan harus dipenuhi (tidak ada lost sales)

  4. Majukan order satu periode. Pabrik mengambil bahan baku sebanyak yang tertulis di “production request”

  5. Tentukan besarnya pesanan dan catat dalam record sheet (Pabrik memesan ke lantai produksi/production request.)

  Bullwhip dapat menyebabkan masalah dalam rantai pasokan antara lain: (1) persediaan yang berlebihan di seluruh rantai suplai keseluruhan;

  (2) perkiraan produk yang buruk, (3) kapasitas yang tidak cukup atau berlebihan; (4) layanan pelanggan yang buruk karena ketidaktersediaan produk atau backlogs panjang;

  (5) perencanaan produksi yang tidak pasti; (6) biaya yang tinggi untuk koreksi ; dsb.