Abstract:“Bullwhip Effect” in supply chain severely affects its promptnessin response and efficiency in operation. This paper, on the basis of analysisof the rooting factors of the Bullwhip Effect, makes a deep discussion with anattempt to solve, remove or alleviate its negative influence.

KeyWords:supply chain; the Bullwhip Effect; solution

1.Introduction

  Along with further economic globalization and keen competition, marketdemand is being more and more varied. As market competition in the 21st centuryactually turns out to be a competition in supply chain, Supply Chain Management(SCM) occupies a more important place in enterprises, and arouses deep academicresearch interests in problems like means to improve the agility of supplychain, operation efficiency and competitiveness.

In supply chain, there lies the phenomenon of “Bullwhip Effect”,nicknamed as “Butterfly Effect” by the American meteorologist Lorenz, which wasfound out by P&G Co. when it studied the distribution pattern of its ordersfor pampers, and also proved true by investigations made by HP and otherenterprises. “Bullwhip Effect” is an amplified demanding variance coming out ofthe supply chain components’ wishful thinking, in which the transmission ofinformation fails to achieve communion and whose graphical description presentsa releasing bullwhip, hence the name. (See Fig 1) Any fluctuation at the lowestcustomer end, however weak, will lead to supplicant’s acute response at thefarthest end, causing results as disorderly production, heavily-packed stock,higher cost, blocked communication, panicked market and intensified risk; itsmaladjustment will do great harm to the operation and bring about loss to eachmember in the supply chain.