Supply Chain Management and Bull Whip Effect : A Conceptual Framework for Efficiency Improvement in Supply Chain

Supply Chain Management (SCM) is essential for the survival and growth of any organization. It removes the communication barrier and helps in reducing redundancies through coordinating, monitoring and controlling processes. A supply chain involves two cycles and each is performed at the interface levels of two successive stages of a supply chain process. The SCM process works as an interface of sequenced steps where one step precedes another step. There are established linkages between business operations and supply chain in terms of interactions between flow of information, materials, money and manpower. SCM as a process has its scope covering the point of origin to the point of consumption. It requires coordinated efforts and cooperation between a company's business operations in supply chains. The stocking level variability in supply chains tends to be distorted as it is moved from upstream in the supply chain. It may so happen that there is a variance of orders which can be larger than the sales and distribution cycle as one moves upstream in the SCM process. This is known as blue whip effect. We can observe such phenomenon in frequently purchased product categories and also with products with large variations in their demand and supply due to seasonality of demand and supply. This research paper introduces the concept of blue whip effect and how it impacts supply chain. Attempts are made to crystalize the blue whip effect through a framework that explains the impact of this effect. The paper also highlights how this effect can be minimized or removed from the supply chain cycles by bringing changes in business operations. The counter-strategies suggested in this article are based on both earlier research reference as well as business practices followed by large organizations. This article will help researchers and students to understand the impact of blue whip effect and apply counter-strategies for improving supply chain efficiency