APICS Operations Management Body of Knowledge Framework, Third Edition

3.2 Supply chain visibility, synchronization, and bullwhip minimization

In the simplest terms, supply chain management is balancing or synchronizing supply with demand. Lead time considerations and demand variability can make this a difficult task. The bullwhip effect is the phenomenon of variability magnification as the view moves from the customer to the producer in the supply chain. The effect indicates a lack of synchronization among supply chain members where, for example, a small change in consumer sales ripples backward in the form of magnified oscillations upstream, resembling the result of a flick of a bullwhip handle. Because the supply patterns do not match the demand patterns, inventory accumulates at various stages, and shortages and delays occur at others. Collaboration and communication between supply chain members is one way to minimize the impact. Information visibility in inventory levels, anticipated production, and material in transit is needed by supply chain members to successfully coordinate the supply chain.