Factors affecting the effect of leather whip

Many factors can cause this to happen. The most important of these factors include the following:

Incorrect forecasting of demand: Many sets may make mistakes when forecasting demand and estimate the amount of demand more or less than the requirement. The difference that may not be seen at the first stage of the supply chain, but becomes more and more as the process continues. For example, the retailer may order 10% more than the actual demand. The wholesaler should adopt the same policy. At the end of the supply chain, these differences may be several times the real demand.
Batch ordering: Many businesses use fixed and defined categories when placing their orders. For example, retail may order in cartons of 30, or wholesale in pallets of 15 cartons. What may happen in this case, the sum of all these differences between the real demand and the standard volume of the categories in the final stage can be much higher than the real demand.
Price fluctuations: Price fluctuations and events such as inflation can affect the amount of ordering collections at different levels and also increase the possibility of errors in demand forecasting.
Solutions to prevent the effect of leather whip

All the available solutions to prevent the occurrence of the leather whip effect can be summarized in a few concepts; Reducing uncertainty, reducing variability and strategic cooperation among members of a supply chain.

The whole set of this solution can be seen in ERP systems today. By providing solutions related to communication with suppliers and customers of the collection, ERP systems can lead to the discovery of unusual demands and the possibility of leather whip effect. It is also possible to reduce uncertainty and heterogeneity by predetermining things such as the break-even point of the order, delivery time, standard size of packages, etc. VMI stock replenishment solutions are one of the main available solutions to prevent the occurrence of the leather whip effect.

What is the effect of leather whip?

What is the effect of leather whip?

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