From the course: Supply Chain Foundations: Risk and Resilience

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The supply chain complexity triangle

The supply chain complexity triangle

From the course: Supply Chain Foundations: Risk and Resilience

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The supply chain complexity triangle

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- Bullwhip effect, Forrester effect, ripple effect, chaos effect, these are all great names for well investigated phenomena that create oscillations in demand and inventory within supply chain networks as orders progress through the system the uncertainty and risk generated by these oscillations can result in late deliveries, canceled orders and an increased reliance on inventory. All of which means more cost for the supply chain and ultimately for the customer and consumer. So by understanding the causes of these oscillations and uncertainty, we can manage things better and reduce risk. Let's explore three things that can lead to these oscillations. The first is demand amplification, sometimes called the Forrester effect or Bullwhip effect. It's caused by demand changes at the end of the supply chain resulting in waves of demand orders flooding up the supply chain. For example, a retail store ends up getting lots of…

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