A Google search on the "bullwhip effect" returned more than 10,000 ref- erences. Terms like "taming the bullwhip," "cracking the bullwhip," "dampening the bullwhip," or "con- trolling the bullwhip" could be found extensively. When companies overstated their orders in prepa- ration of 2000-the Y2K syndrome-the press referred to this phenomenon as the bullwhip effect. In disaster relief operations, when relief agencies like the Interna- tional Federation of Red Cross and others duplicated their independent estimates for demands of blankets and food, leading to an oversupply by suppliers, the press also referred to it as the bullwhip effect. When the market went south in 2001, companies like Cisco and Solectron (see discussion earlier) had huge excess inventory, and these companies blamed the problem on the bullwhip effect. We have seen lawsuits about companies being accused of distorting their sales pic- tures, and the term bullwhip had also been used. An example of business press using the bullwhip effect to explain some of the above supply chain inefficiencies and disruption is The Economist (2002). The bullwhip effect has also been used to describe the impact of technology innovations. Industry experts and analysts have cited extensively how two recent innovations can help improve supply chain performance through their ability to help companies "dampen" the bullwhip effect. The first technological innovation was the Internet. One of the often-cited potential benefits of e-business was facilitation of This content downloaded from 126.96.36.199 on Sun, 20 Sep 2015 11:16:26 UTC All use subject to JSTOR Terms and Conditions
Lee, Padmanabhan, and Whang: Comments 1892 Management Science 50(12S), pp. 1887-1893, a 2004 INFORMS information sharing, which was a key ingredient to counter the bullwhip. The second, more recent, tech- nological innovation was radio-frequency identifica- tion (RFID). More ambitious are new technologies for tagging based on monitoring and communications using low-earth orbiting satellites (LEOS) systems. Again, in reports after reports, companies recognized that the potential value of RFID was more real-time, accurate, and extensive information sharing. The use of the term "bullwhip" was also extensive in these reports. Although the bullwhip effect seems well known among practitioners, it is not clear if companies have completely succeeded in taming the bullwhip. The incentive barriers are still huge for companies to take action. We are sure that some companies (such as Barilla, P&G, and Wal-Mart) have made major inroads in this respect. The evidence of the bullwhip seems to be overwhelming, including many examples with hard data that illustrate its existence. But of course one cannot infer that the bullwhip is everywhere. It would certainly be worthwhile for our community to conduct empirical researchto estimate the magni- tudes of the bullwhip effect in different industry seg- ments, identify practices of companies that have been successful in containing the bullwhip, and understand why bullwhip containment is possible in some com- panies and not in others.
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