Operations
Bullwhip effect
The bullwhip effect describes how small demand changes become progressively larger order swings across the supply chain.
Also known as
Demand amplification
Direct answer
What is Bullwhip effect?
The bullwhip effect describes how small demand changes become progressively larger order swings across the supply chain. Overreacting to short peaks creates excess stock, expensive rush orders, and unstable supplier planning. Shared data and shorter planning cycles reduce it.
Practical example
A ten percent sales increase triggers a 25 percent retailer order increase and a 40 percent production increase.
What teams should remember
The bullwhip effect describes how small demand changes become progressively larger order swings across the supply chain.
Overreacting to short peaks creates excess stock, expensive rush orders, and unstable supplier planning. Shared data and shorter planning cycles reduce it.