Managing Supply Chains

The Great Recession that started in 2007 is “very likely over at this point” claimed Federal Reserve Chairman Ben Bernanke during his address at The Brookings Institution.  (Refer to his address to The Brookings Institution on Tuesday, September 15, 2009). When I started my previous post on the lessons I have learned from this recession, I dwelled on the fact that the recession was affecting all equally – manufacturers and retailers, and recovery was going to be a long road. The fed chairman seems to concur and as he put it – recovery may be moderate because of the depth of the recession. There are countless articles out there talking about the need for improvement in Consumer Confidence. That makes sense. As a consumer you are worried about the decline in your net worth, the stagnation in your wage growth and the rising unemployment numbers. These issues affect your spending patterns. (Refer to my previous article on “ Bull Whip Effect ” and how your spending patterns can af...

Have you ever wondered about how small things that we do on a daily basis can impact the supply chain of products? Here is an interesting example for you: Often times when I forget to bring lunch from home, I run to the vending machine down the hall to grab something quick. To my dismay, a majority of the items in the machine are things that I don’t really want! But, since I am pressed for time and I cannot drive to the retailer down the road – I end up buying something that “I may be OK with”. Let’s call this – “Product A”. Think about how that affects the replenishment of the products in the vending machine. The owner of the machine sees that as an increased demand for "Product A". The consequence is that you continue to see more of that product in the future! Can we assume that the Vending Machine is an approximate representation of the larger retail environment? Is it safe to say that if we are faced with certain limitations (in this example - time and/or money), and we h...

I remember when I was first introduced to this term during a Supply Chain/Operations class at the University of Wisconsin - Madison . It sounded unusual. It makes you think - "What could be the relationship between bull whips and Ford car sales?". Wikipedia defines it as follows:"The Bullwhip Effect (or Whiplash Effect) is an observed phenomenon in forecast-driven distribution channels. The concept has its roots in J Forrester's Industrial Dynamics (1961) and thus it is also known as the Forrester Effect. Since the oscillating demand magnification upstream a supply chain reminds someone of a cracking whip it became famous as the Bullwhip Effect." Feel free to read the full article on Bullwhip Effect at this link . The article is well written and provides a good high level overview. In layman terms consider the following example. You are thinking about buying a Ford Mustang - more specifically you are looking for a " Red " Ford Mustang. You go to the on...