The influence of multi-product production strategy on factory induced bullwhip

Abstract

Conventional thinking suggests bullwhip should necessarily be minimised within the supply chain. While this may be good practice where no constraints exist, in reality companies have shared resources and capacity limits that affect their ability to do this. Consequently, there is an influence upon their production strategy. This can introduce some bullwhip into the supply chain but, managed effectively, can actually be useful. We call this useful strategy 'minimum reasonable bullwhip' (MRB). The aim of this paper is to examine the relationship between production strategy and bullwhip where constraints exist. In doing so, three case studies are presented where distinct clusters of product types exist, each with different observed levels of bullwhip. By considering total supply chain costs, we explain why these clusters exist. The paper contributes to the literature by challenging the contention that bullwhip should always be minimised, given that it is important to achieve performance objectives across the product range. It also identifies areas for future research to extend the MRB concept.