• Unit 9: Supply Chain Integration and the Bullwhip Effect

    This unit covers supply chain integration as an analysis of dealing with uncertainty in supply and demand, the tradeoffs between efficiency and responsiveness in supply chains, and different metrics of supply chain performance used in the analysis. Further, the Bullwhip effect, as one aspect of uncertainty, describes the variability magnification moving from customer to producer in the supply chain.

    Completing this unit should take you approximately 13 hours.

    • 9.1: Demand and Supply Uncertainty in Supply Chains

      Supply chains serve a strategic purpose, from moving products to enhancing key business outcomes. These supply chains must also contend with globalized uncertainties that can be attributed to shifting product demand to political instability, weather-related disasters, or even man-made problems. How a firm's supply chain responds and reacts to uncertainty will determine its success at navigating the challenge at hand.

      • 9.1.1: Supply Chain Strategies

        Supply chain strategy has become an ever-growing area of importance in many organizations. Managing the people, processes, and technologies of these supply chains is vital to achieving efficient and effective systems. Since there are many elements, components, and complex relationships, it is imperative to carefully manage the interdependencies to address strategic priorities.

      • 9.1.2: Push- and Pull-Based Systems

        A supply chain usually consists of both push-based and pull-based systems. A push-based system is where demand projections determine what will enter the process and what will stop at retail stores for customers. A pull-based system is related to just-in-time (JIT) inventory focusing on last-second deliveries.

    • 9.2: Types of Supply Chains

      In simple terms, a supply chain starts with raw materials and ends with a sale of a finished good. There are many different types of supply chains based on industry, product, services, and deliverables. Most large corporations employ multiple supply chain approaches to fulfill customer orders and are monitored by supply chain managers.

      • 9.2.1: The Efficient, Responsive, and Agile Continuum

        Accurately anticipating and forecasting demand and delivering on time will continue to be an evolving business requirement for supply chains. Efficient supply chains are fairly stable when dealing with functional products. In contrast, responsive supply chains are more efficient when dealing with innovative products. Finally, agile supply chains are geared toward a fast-evolving process and highly innovative products.

      • 9.2.2: The Effects of Demand and Supply

        Demand and supply continuously exert pressure on supply chains and uncertainties within the system. Increasing customer demand forces the supply chain to respond by speeding up production, decreasing logistics times, and increasing quality. Yet uncertainties in inventory supply can cause variations in available stock and potential discrepancies in delivery time.

      • 9.2.3: Agile and Lean Production Processes

        Agile and lean are key concepts in project management that strive to produce fast and sustainable results. An agile focus emphasizes individual interactions, collaboration with customers, and a plan to respond to change. A lean method focuses on the quality of products and increases in production and efficiency.

    • 9.3: Supply Chains and Product Types

      Various products should be matched to a specific supply chain to optimize supply chain performance. Furthermore, as the industry and product lines evolve, so should the supply chain management strategy. In selecting the most appropriate supply chain type, operations managers should consider whether they operate in a just-in-time environment, low inventory turnover conditions, or quick-moving inventory with perishables.

    • 9.4: Measuring and Optimizing Supply Chain Performance

      Performance metrics and models are tools to manage how well a supply chain is operating. Through analysis, organizations can identify what aspects need attention to respond appropriately and maintain continuity. Using data and analytics, a firm's supply chain can be proactive instead of reactive, which is key to helping navigate any rapid changes occurring in a business.

    • 9.5: The Bullwhip Effect

      The bullwhip effect in supply chains is a concept used to describe fluctuating inventory due to demand changes. These fluctuations start small but can end up generating much larger problems upstream or downstream of the chain. This phenomenon is named as such because when an individual snaps their wrist while holding a whip, it creates fluctuating wave patterns.

      • 9.5.1: Variability and the Magnification of Demand

        Fluctuating product demand leads companies today to continually seek ways to minimize and reduce uncertainty. Varying demand, coupled with ripples in sales, can magnify issues at any point in the supply chain and adversely affect distribution nodes, also known as physical locations, of a network. A supply chain can address this uncertainty by either holding inventory, maintaining a safety capacity, or analyzing changes in sales through data and information.

      • 9.5.2: Distortion, Coordination, and Information Sharing

        Members within a supply chain are often separate and independent entities with distinct operations. A key mechanism to supply chain optimization is coordination, collaboration, and accurate information sharing. This collective engagement in sharing real-time information can mitigate the consequences of the bullwhip effect.

    • 9.6: IT and e-Commerce

      Information technology has changed the way in which business organizations operate. This technology paved the way for e-commerce, where businesses and consumers can interact and trade effortlessly. In addtion, the ease of transactions has significantly influenced the way in which supply chains operate and the way they are managed.

    • Study Guide: Unit 9

      We recommend reviewing this Study Guide before taking the Unit 9 Assessment.

    • Unit 9 Assessment

      • Receive a grade