Bullwhip Effect Quantification and Demand Variability Estimation

Understanding the bullwhip effect helps secure your supply chain. It is difficult to predict the complex interactions of inventory plans, sourcing policies, and demand variability – even small events can cause significant disruption. With simulation modeling it is possible to capture business processes and operations across multiple tiers to create a supply chain digital twin that can quantify the bullwhip effect.

With the anyLogistix (ALX) supply chain design and simulation tool you can account for the bullwhip effect in your network, identify its causes, test different scenarios and find the best mitigation policies.

To do this, ALX enables you to:

  • Gain insight into supply chain operations and the interaction of network elements
  • Improve inventory and sourcing policies
  • Cut inventory costs by optimizing safety stock
  • Align production plans with point of sale demand

By using simulation modeling, ALX makes it is possible to capture and evaluate the details and behavior of your supply chain as in reality, including the uncertainties and random events that can lead to the bullwhip effect. This model can also be combined with current operational data to create a digital twin of your supply chain for up-to-date diagnostics and forecasting.

Important factors that can be captured include:

  • Demand variability, including random peaks, with probabilities and seasonality
  • Multi-echelon inventory policies with real values, operating over time
  • Transportation policies and lead times, including uncertainties and in-transit inventory
  • Manufacturing and supplier lead time variability, taking into account production operations inside four walls and supplier reliability

Bullwhip Effect Quantification and Demand Variability Estimation

Why ALX?

The bullwhip effect is about uncertainties and random events. To quantify demand variability, you need to represent your supply chain in a dynamic simulation model, see the inside interactions in motion, and measure their results. Traditional analytical supply chain design tools cannot do this.

ALX is the only supply chain planning software tool that provides a range of simulation modeling capabilities, including agent-based modeling. With ALX, you can:

  • Simulate your supply chain dynamics
  • Account for risks, uncertainties, and random events
  • Evaluate your supply chain operations with specific values rather than averages

How Digital Twins Help Manage Risks
in Supply Chain

Learn from the white paper
read now