A novel study of the impact of supply chain complexity on the bullwhip effect

Abstract

Background: The coronavirus pandemic exposed global supply chain vulnerabilities, causing fluctuating demand for products. This resulted in the bullwhip effect, which posed a substantial challenge for supply chain management. This study focusses on the analysis of the effect of supply chain configurations and structure on the bullwhip effect. Objectives: The research quantitatively studies the effect of the strategic supply chain structure at the design phase on amplifying the bullwhip effect. Furthermore, it studies the expected interaction during operation, which may further amplify or dampen it. Method: The study introduces a simulation model and examines the influence of several design decisions and operations parameters and their interactions on the efficiency of supply chain operations. A simulation model is created for several supply chain configurations, each with distinct structure complexity. The bullwhip effect measures are collected and a factorial analysis is conducted to examine the interactions among the parameters and their impact on the performance. Results: The findings indicate that an increase in demand unpredictability results in a greater bullwhip effect, irrespective of the inventory strategy or structural intricacy. But the level of increase does not necessarily match the increase in complexity and can be amplified or damped by interactions between operating parameters. Conclusion: Supply network architects should consider the level of structural complexity to mitigate amplifications of demand variations and to optimise the supply chain’s overall operation. Contribution: The research represents a novel work to quantitatively link the bullwhip effect of a supply chain to the complexity of its supply chain structure.

Keywords

• bullwhip effect
• simulation
• factorial analysis
• supply chain configuration
• supply chain structure
• supply chain complexity