The “Bullwhip Effect” refers to product shortages and overages businesses face due to ongoing assessment and projection of consumer demand that is constantly changing.  When customer demand experiences extreme demand spikes or shifts, the supply chain may struggle to successfully service demand with readily available product, when this occurs you’re seeing the bullwhip effect in action.

We began hearing more about this term as Covid-19 started taking its toll on supply chains around the world, although Proctor & Gamble coined the term “Bullwhip Effect” a long time ago in 1961.

More and more companies have experienced this detrimental impact over the past 24-36 months as changes in customer demand pushed organizations to manufacture or order more goods to meet new and growing demand.

For example, during the initial market rebound from shutdowns due to Covid-19, the demand side started to skyrocket and required companies to increase orders to meet current as well as projected future demand.

So what can you do to mitigate the “Bullwhip Effect”?  The overriding goal is trying to prevent the potential of lost sales of goods. Greater communication, finding closer suppliers, reducing the number of steps in production, and partnering with a 3PL similar to AW2 Logistics to provide both short-term and long-term warehouse solutions, each of these steps can decrease the chances of supply chain disruption and the amount of lead time needed to get goods into consumers’ hands. If you successfully apply recommended actions you will be rewarded with greater flexibility, allowing you to respond to shifts in demand while negating the bullwhip effect. 

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Supply Chain Trends for 2022

How can a 3PL such as AW2 Logistics provide your company support or solutions during challenges because of the “ Bullwhip Effect “? Do you need short- or long-term warehousing space (pallet or bulk) to support higher than normal inventory volumes? Do you need support to unload higher volumes of inbound ocean containers due to uneven arrivals and schedules? Are you challenged with solidifying
a dependable workforce to complete warehouse “ kitting or assembly “ projects?  

These are just a few highlights of how AW2 Logistics has been supporting the marketplace since the onset of Covid-19 during the past 24-36 months.

If you have similar needs or simply want to have a conversation regarding your respective “Bullwhip Effect” challenges, please contact us here.