How to Shut Down the Bullwhip Effect in Supply Chain
Yesterday, we dove into what causes the Bullwhip Effect in supply chain. Today is the fun part: how to shut it down.
It’s all about getting out of reactionary mode. Connecting the dots.
Shutting down the Bullwhip Effect requires everyone from consumer-level retail up to the top level of supply chain to stay up to date on the most recent trends in buying.
To recap for a sec, the Bullwhip Effect is a phenomenon caused by constant fluctuation or oscillations in demand. Companies chase that fluctuation; but because demand signals become fuzzier and the forecast error multiplies the higher you go up the supply chain, production/inventory decisions being made at the top lag behind and never match what's going on at the consumer/retail level – a very costly disconnect.
Especially with the demand and supply @#*% show caused by COVID-19, upstream partners must be super in-tune with accurate data so their forecast can react instantly.
Well, how do we do that?
Connect the supply chain to the consumer and automate collaborative forecasting processes. Now.
Seek out demand planning and collaboration solutions that work together to integrate retail data into your forecast for all to see, in real time.
Newer technologies that encompass the entire supply chain from retail up to manufacturing are shutting down the Bullwhip Effect by delivering these 3 critical things in the supply chain:
- Near real-time demand signals; not lagging, error-prone data that needs massaging
- Seamless collaboration; - one platform to incorporate clean demand signals and facilitate accurate, collaborative demand planning
- Speedy, accurate decisions (everyone on the same page)
For example, Blue Ridge’s Demand Planning Solution recently partnered with ReSight, a fully managed data collection, visualization and reporting platform tailored to CPG companies that collects, cleans and aggregates data for each level of supply chain and gets that information into Blue Ridge for fast, accurate forecasting.
Leveraging ReSight, the Blue Ridge system delivers clean, fresh demand forecasting that was previously restricted or time-consuming to attain. No need to make a bunch of calls to retailers or distributors. Blue Ridge automatically consumes and crunches ReSight sell-through data to provide CPG manufacturers with the most up-to-date forecasting information and a platform that enables the entire collaborative planning process.
The Benefits are Massive
Connecting and automating collaboration via a seamless inventory planning cloud accelerates and improves decisions about production, order replenishment and demand fulfillment, while reducing the working capital required to keep end-customers happy.
This minimizes the Bullwhip Effect because now, the blinders and speed bumps are lifted:
- Solve coordination problems, minimize variability, automate time-consuming/error-prone processes
- Establish a collaborative environment between companies to maximize coordination in the supply chain
- Identify and fix obstacles that lead to misalignment of inventory
- Unleash systemic inefficiencies that spread and get amplified along the different companies and entities of a supply chain
- Improve profits and reduce operational expenses and costs
ReSight + Blue Ridge Demand Planning
ReSight collects, cleans and aggregates sell-through data to eliminate time-consuming manual work and human error. These data get integrated into the overall demand plan within Blue Ridge SCP, resulting in industry-best forecasting to meet demand at the lowest possible inventory/operating costs.
Rather than planning in silos and putting out “demand fires” by adding safety stock, manufacturers can use ReSight + Blue Ridge Demand Planning to generate deep, SKU-level and category-level analysis across all products, locations and channels. Through powerful automation and intelligent recommendations, companies can shut down the Bullwhip effect and achieve the highest degree of planning accuracy, speed and agility.
Learn more about Demand Planning Solutions here
Take me back to Part 1: