Bullwhip Effect in Supply Chains In today’s interconnected world, businesses depend on supply chains to deliver products efficiently and meet customer demand. However, a common challenge that disrupts this flow is the bullwhip effect — a phenomenon where small changes in customer demand ripple through the supply chain, causing significant fluctuations in orders and inventory. What Is the Bullwhip Effect? The bullwhip effect occurs when minor changes in customer demand at the retail level lead to increasingly larger changes in demand as they move upstream in the supply chain. This creates inefficiencies like overproduction, excess inventory, or shortages. Breaking Down the Supply Chain To understand the bullwhip effect, let’s look at the key players in a supply chain: Customer : The starting point of demand. Customers purchase products based on their needs. Retailer : The store or platform selling to customers. Retailers place orders with distributors based on sales trends. Di...