Empiriceme · Evidence · Empirical Regularity

Bullwhip Effect

Also called Forrester effect; whiplash effect

Small changes in end demand amplify into large swings further up a supply chain.

Small retail fluctuations become large factory swings because each tier orders extra to cover its own uncertainty. The MIT Beer Game was built in the 1960s to demonstrate it, and players reproduce it reliably.

In practice

  • A retailer's 5% dip in weekly sales becomes a 15% cut in orders, a 30% cut at the distributor and an idle production line.
  • A team's slightly reduced hiring plan reaches the recruitment agency as a freeze and the agency stops sourcing entirely.
Further reading
Wikipedia
Subject
Design & Systems
Essay
The limits every design runs into

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