Minimum reasonable inventory and the bullwhip effect in an automotive enterprise: A foresight vehicle demonstrator

SAE 2002 World Congress. In Foresight Vehicle Technology: Consumer Driven Design, Manufacturing, Supply Chain, and Purchasing, an SAE Publication, edited by Sporton, M., Proceedings of the Society of Automotive Engineers World Congress, 4th-7th March, Detroit, USA, 103-111.

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Abstract

Demand amplification, or the bullwhip effect, has been identified as contributing to increased uncertainty in the supply chain and hence poor performance in terms of increased costs, protracted lead-times and poor customer service levels. This paper shows the application of a simulation based improvement activity focussing on the ordering decisions within a supply chain. An example of a preliminary business diagnostic and subsequent redesign in a four-tier automotive supply chain is presented including value-volume analysis, variability-volume analysis, part clustering and service level – stocking profiles. Specific improvements of up to 5 to 1 in stock holding are realised for continued customer service levels.