The impact of bullwhip on supply chains: Performance pathways,control mechanisms,and managerial levers |
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| Institution: | 1. College of Business Administration, Georgia Southern University, P.O. Box 8151, Statesboro, GA 30460-8151, USA;2. Department of Management Science, Moore School of Business, University of South Carolina, Columbia, SC 29208, USA;1. College of Business and Innovation, University of Toledo, 2801 West Bancroft St., Toledo, OH 43606, United States;2. W. P. Carey School of Business, Arizona State University, 400 E. Lemon St., Tempe, AZ 85287, United States;3. Desautels Faculty of Management, McGill University, 1001 Sherbrooke Street West, Montreal, QC, Canada H3A 1G5;1. UCD Michael Smurfit Graduate School of Business, University College Dublin, Carysfort Avenue, Blackrock, Co. Dublin, Ireland;2. Ivey School of Business, The University of Western Ontario, 1151 Richmond Street North, London, ON, Canada N6A 3K7;3. Operations Management and Information Systems, Schulich School of Business, York University, 4700 Keele Street, Toronto, ON, Canada M3J 1P3;1. Supply Chain and Information Management Group, D’Amore-McKim School of Business, Northeastern University, Boston, MA 02115, USA;2. Department of Supply Chain Management, Sam M. Walton College of Business, University of Arkansas, Fayetteville, AR 72701-1201, USA;1. Department of Logistics and Supply Chain Management, College of Business Administration, Georgia Southern University, PO Box 8036, Statesboro, GA 30460, USA;2. Department of Management, College of Business, Ohio University, Copeland Hall, Athens, OH 45701, USA;3. Department of Information Systems and Supply Chain Management, Neeley School of Business, TCU Box 298530, Fort Worth, TX 76129, USA;1. Business School, University of Mannheim, Schloss Schneckenhof Ost, 68131 Mannheim, Germany;2. Department of Management, Technology, and Economics, Swiss Federal Institute of Technology Zurich, Weinbergstrasse 56/58, 8092 Zurich, Switzerland;1. Oregon State University, USA;2. Florida State University, USA |
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| Abstract: | Even though few empirical studies have tried to actually explicate the relationship between the bullwhip effect and performance of the supplier firm, there exists a common perception for over 30 years among both practitioners and academics that the bullwhip effect naturally results in decreased firm profitability. Anecdotal evidence further suggests that this decline in profitability arises from a decline in operational performance. However, the results of our study, which empirically examines the bullwhip effect across supply chain partners through an analysis of 383 actual customer base-supplier dyads, challenge this commonly held position by suggesting that while traditional bullwhip often yields reduced ROA, it ultimately has no relationship with the firm's operating margin. Additionally, our results also call into question whether or not production coordination between customers and suppliers can minimize the need for inventory and capacity buffers, which are the two commonly utilized methods for battling the bullwhip effect. Thus the relationship between bullwhip and firm performance is far more nuanced and complicated than previously believed. We also show how the managerial bullwhip levers of coordinating production across supply chain partners, or deploying inventory and capacity buffer control mechanisms, can help maximize a firm's performance along different dimensions. |
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| Keywords: | Bullwhip effect Supplier performance Empirical Supply chain |
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